# LLC or sole trader in Georgia — which to choose LLC vs individual entrepreneur in Georgia: liability, taxes (20%, 15%+5%, 1%), VAT, registration for foreigners and which suits your business. [Corporate law](https://mmlaw.ge/en/corporate-lawyer/) · October 14, 2026 · 5 min read 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 traderLLCLiabilityWith all your personal propertyPartners are not personally liable (except abuse)What it isYou yourself, registered as a businessA separate legal entityPartnersOne person onlyOne or several, with sharesRegistrationID/passport and an addressAlso a charter and a directorAccountingMinimalBookkeeping and annual reportsStandard tax20% on profit15% profit tax only when distributed + 5% on dividendsSpecial regime1% of turnover up to GEL 500,000 (3% above)NoneVATAbove 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 - [Law on Entrepreneurs](https://matsne.gov.ge/ka/document/view/5230186) - [Tax Code of Georgia](https://matsne.gov.ge/ka/document/view/1043717) - [Government Resolution No. 415 (2010) — small business status](https://matsne.gov.ge/ka/document/view/1164635) 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. [Corporate lawyer](https://mmlaw.ge/en/corporate-lawyer/) ## Frequently asked questions ### LLC or sole trader — which is better? If you work alone and your activity qualifies for the 1%, a sole trader is the cheapest. If you have a partner, carry real risk or your activity doesn't qualify for the 1%, an LLC is better. ### Which pays less tax? A sole trader with 1% status. Without it, a sole trader pays 20% of profit, while an LLC pays 15% only when profit is distributed plus 5% on dividends — about 19.25% in total. ### Can a sole trader be converted into an LLC? Not automatically. You register an LLC, move contracts and assets to it, then close the sole trader registration. Check the tax consequences of transferring assets in advance. ### Is an LLC partner liable for the company's debts? As a rule, no — the company answers with its own assets. Personal liability can arise if the company was abused. ## Related topics - [#Business](https://mmlaw.ge/en/corporate-lawyer/) - [#For foreigners](https://mmlaw.ge/en/foreigners/) - - [Corporate lawyer](https://mmlaw.ge/en/corporate-lawyer/) - - [Registering an LLC in Georgia: what you need](https://mmlaw.ge/en/blog/how-to-register-llc-in-georgia/) - - [Company & business · For foreigners](https://mmlaw.ge/en/foreigners/company-registration-in-georgia/) - - [Individual entrepreneur in Georgia: the 1% tax for foreigners](https://mmlaw.ge/en/blog/individual-entrepreneur-georgia-1-percent-tax/) - - [Work permit & sole trader · For foreigners](https://mmlaw.ge/en/foreigners/work-permit-and-sole-trader/) - - [IT companies and IT specialists · For foreigners](https://mmlaw.ge/en/foreigners/it-companies-in-georgia/) - - [Gambling licence · For foreigners](https://mmlaw.ge/en/foreigners/gambling-licence-georgia/) - - [Bank account for non-residents · For foreigners](https://mmlaw.ge/en/foreigners/bank-account-in-georgia-for-foreigners/) Blog ## All articles - [Criminal defense](https://mmlaw.ge/en/blog/foreigner-arrested-in-georgia/) — Foreigner arrested in Georgia: rights and first steps October 11, 2026 · 5 min read - [Administrative law](https://mmlaw.ge/en/blog/deportation-from-georgia/) — Deportation from Georgia: grounds, deadlines and appeal October 11, 2026 · 5 min read --- Source: https://mmlaw.ge/en/blog/llc-vs-sole-trader-georgia/ · MMLAW · +995 551 00 43 00 · info@mmlaw.ge