In short: an individual entrepreneur (sole trader) is you, registered as a business — simple, but you are liable for debts with all your personal property. An LLC is a separate company — more formalities, but your personal property is protected and profit is taxed only when you take it out. For a small business, the sole trader's 1% regime is the cheapest — if your activity qualifies.
The main differences
| Sole trader | LLC | |
|---|---|---|
| Liability | With all your personal property | Partners are not personally liable (except abuse) |
| What it is | You yourself, registered as a business | A separate legal entity |
| Partners | One person only | One or several, with shares |
| Registration | ID/passport and an address | Also a charter and a director |
| Accounting | Minimal | Bookkeeping and annual reports |
| Standard tax | 20% on profit | 15% profit tax only when distributed + 5% on dividends |
| Special regime | 1% of turnover up to GEL 500,000 (3% above) | None |
| VAT | Above GEL 100,000 — registration, 18% | The same |
Taxes — an example
Say the annual profit is GEL 100,000. A sole trader without the 1% status pays 20% — GEL 20,000. An LLC that pays out all the profit as dividends pays GEL 15,000 profit tax and GEL 4,250 on the dividends — GEL 19,250 in total; if half the profit stays in the company, tax is due only on the part paid out. A sole trader with small business status pays 1% of turnover — GEL 1,000 on GEL 100,000 of turnover.
The 1% regime isn't for everyone
- Small business status is only for individual entrepreneurs; annual turnover up to GEL 500,000, 3% above
- A return and payment every month, by the 15th of the following month
- Excluded: activities that need a licence or permit, making excise goods, currency exchange, medical, architectural, legal, notarial, audit and consulting work, gambling business, staffing (Government Resolution No. 415)
- The 1% doesn't cover rent, loan interest, dividends, selling real estate or a car, or salary
When to choose a sole trader
- You work alone and your activity qualifies for the 1%
- Annual turnover stays under GEL 500,000
- The risk of debts or claims is small
- You want minimal paperwork
When to choose an LLC
- You have a partner or an investor
- Your activity doesn't qualify for the 1%
- You sign large contracts or carry real risk and need to protect your personal property
- You keep part of the profit in the business — tax only when it is paid out
- Banks and large clients prefer to deal with a company
For foreigners
A foreigner can register either form, also remotely — with a notarised, apostilled power of attorney and a Georgian translation. Since 1 March 2026, a foreigner working in Georgia — as a sole trader or as an LLC director — needs the right to work. Registration itself does not give a residence permit.
Legal basis
Official texts (in Georgian) — Legislative Herald of Georgia, matsne.gov.ge.
This article is general information and does not replace advice from a lawyer on your specific case.
Every case is different — don't rely on general information. Contact a lawyer for advice.
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