All about small business in Georgia! Forms of small business, taxes, and taxpayer registration in Georgia.
To become the owner of a successful business, it is necessary to choose the right country to open it in! Learn all about small business in Georgia from our article. Right now, follow the link to find out what forms of small business are available in Georgia, and what taxes are provided for them.
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Georgia is open for investment inflows. The country's government is focused on attracting foreign entrepreneurs, so ideal conditions have been created here for small businesses. What awaits foreign entrepreneurs who decide to open their business in Georgia? Let's consider in this article what forms of small business are available in Georgia and what taxes are provided for them.
Small Business Forms in Georgia
To be considered a representative of small business in Georgia, an entrepreneur must strictly comply with the requirements established by the country's legislation. These include the level of income and the number of employees in the company.
Small business in Georgia is also divided into the following forms:
- Microbusiness
- Small business with an annual income of up to 100,000 lari
- Small business with an annual income of up to 500,000 lari
- Individual entrepreneur with an annual income exceeding 500,000 lari.
Microbusiness in Georgia
Microbusiness in Georgia is assigned to companies with income of less than 30,000 lari and no employees. This is often represented by family businesses, taxis, guides, hostels, and similar activities.
For this type of business in Georgia, there is a complete absence of income tax, but the owner of a microbusiness in Georgia must pay a 5% tax for renting premises.
For small businesses with an annual income of up to 100,000 lari
For small businesses with an annual income of up to 100,000 lari, hiring employees is allowed, but the annual income should not exceed 100,000 lari.
This type of small business in Georgia pays a tax of 1% of the annual turnover without deductions for expenses.
Small businesses with an annual income of up to 500,000 lari
Small businesses with an annual income of up to 500,000 lari differ from the previous form of small business in terms of annual income. They are subject to a value-added tax of 18% and a turnover tax of 1%.
Small businesses with an annual income exceeding 500,000 lari
Small businesses with an annual income exceeding 500,000 lari acquire the status of an individual entrepreneur and are subject to a profit tax of 20%. They also pay an 18% VAT.
When the threshold level of annual income of 100,000 lari is exceeded, the business owner is required to inform the tax authority to change the status of their enterprise. This must be done within two days from the moment the income limit for the last 12 months is exceeded. After this, the entrepreneur will be registered as a VAT payer.
To understand which activities are not subject to VAT, it is necessary to contact the Tax Service of Georgia directly for clarification.
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Accounting with the Tax Service of Georgia for Small Business
Before registering with the Tax Service of Georgia, it is necessary to thoroughly study the annual turnover of the company and determine which types of activities have preferential taxation. Based on the specifics suitable for your business, the company's legal form is chosen. Then registration takes two days. A foreign entrepreneur with a passport, a translator, and a completed application registers his business at the House of Justice.
After receiving confirmation of the registration of a small business in Georgia, the entrepreneur gains access to the personal account of the taxpayer. It is created for the convenience of using and tracking business operations, providing reporting, and communicating with the Tax Service of Georgia.
The main factors in determining the company's status are net profit and the number of employees. Entrepreneurs who illegally appropriate the status of a small business will be fined a significant amount. More detailed conditions are specified in the Tax Code of Georgia.
Note that small business owners are required to maintain a tax declaration of the company's income and expenses and to pay taxes on time. Annual tax returns can be submitted until April 15 of the following calendar year, while a report on the payment of monthly taxes must be submitted on a specific date of a particular month.
The Tax Service of Georgia requires companies to keep accounting records electronically, including cash and non-cash movements, and banking transactions. The first thing that needs to be provided to tax officials is electronic accounting, based on which tax reporting should be formed. At the same time, individual entrepreneurs are not required to keep electronic reporting.
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