Natural persons who want to start their own business can open a sole trader in Georgia (also referred to as an individual entrepreneur). This structure represents the simplest way of starting a business activity, given that it has basic accounting and reporting obligations. Our consultants, specialized in company formation in Georgia, can assist investors in setting up this entity.
Please mind that the sole trader is a structure that does not have legal personality and, from a legal point of view, there isn’t any difference between the owner and the company, a situation which makes the owner fully liable for the debts of the company. However, the structure has many advantages, especially related to its tax obligations.
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Simple registration process
Those who opt to open a sole trader in Georgia will benefit from simple registration formalities, as there are minimal requirements concerning the documentation and approvals that must be obtained (the procedure is simpler in comparison to the registration of other Georgian business forms, this is why it is still highly recommended to request legal representation, especially as a foreign businessman).
Applicants must present their identity documents, make the proof of having a legal address assigned to their business, have a local bank account and other basic requirements, which can be detailed by our specialists in company incorporation in Georgia.
What are the advantages of a Georgian sole trader?
This business form is highly recommended to those who want to enter the business market but are not very experienced in the management of a business, or who do not have a large capital to invest in the said business. It is also suitable for freelancers and other individuals who plan to set up a small business.
In Georgia, sole traders can obtain the Small Business Status (SBS) which grants them the right to a preferential tax regime. Please mind that the SBS is not automatically granted to individual entrepreneurs – the owners must apply for it by submitting the necessary paperwork (the application can be made in person, online, or with the assistance of a legal representative).
It is also important to know that it is possible to open a sole trader in Georgia as a foreigner (it is not required to be a citizen, as it can be imposed in other countries, nor is it required to be a resident.
Tax considerations for an individual entrepreneur in Georgia
There are several tax advantages that can be obtained by investors who set up a company in Georgia as a sole trader. In the list below, our specialists present some of the tax matters that should be known by locals and foreigners who plan to invest in Georgia under this business form:
- sole traders that apply for the SBS will be taxed with a tax rate of only 1% on their gross turnover;
- this tax regime will apply as long as the company’s annual turnover is below GEL 500,000 and if the company carries out business operations that are not on the list of restricted activities;
- sole traders that do not qualify under these conditions will be taxed with the standard personal income tax rate (20%);
- the company can also be charged with the VAT (at a rate of 18%);
- the VAT is applied only when the taxable turnover exceeds GEL 100,000 in a financial year (which, in Georgia, is the calendar year).
Please know that you can set up a business in Georgia as a sole trader in just 1-2 business days; with the help of our team, the procedure will be completed without any impediments. Our services are not limited solely to company formation in Georgia, as we also offer post-incorporation assistance (tax and business advice, tax compliance and accounting services, provided by our accountants in Georgia).