Most founders reading about Georgia for the first time get stuck on the same question: which structure? The answer is genuinely simple once you know the three triggers — and I'll give you those — but the internet is full of incorporation websites that mush the three structures together to maximise their fee per inquiry. So here's the straight version.
The three structures, in 60 seconds
1. Limited Liability Company (LLC). A separate legal entity. Up to unlimited shareholders. Limited liability. Pays 15% Corporate Income Tax on distributed profit only — the Estonian model[]. Reinvested profit pays nothing.
2. Individual Entrepreneur (IE), standard regime. A sole-trader structure — the IE is the founder. No separate legal entity, no liability shield. Pays the 20% flat Personal Income Tax on all business income[].
3. Individual Entrepreneur with Small Business Status (SBS). Same sole-trader structure as (2), but if revenue stays under 500,000 GEL in a calendar year, the IE pays 1% of turnover instead of the standard 20% PIT[].
The three triggers
You don't need a multi-page comparison table. You need three yes/no questions:
Q1. Are you the only founder?
If no → LLC. Multi-founder structures need separate legal personality to define share allocations and exit mechanics. The IE forms cannot have multiple owners.
If yes → continue.
Q2. Do you expect annual revenue above 500,000 GEL (~$185k)?
If clearly yes → LLC. Above the SBS threshold, the 1% regime disappears. Above 500K, the LLC's 15% CIT-on-distribution model becomes more efficient than the IE's 20% PIT-on-all-income, especially if you reinvest part of your earnings.
If clearly no → SBS. The 1% regime is dramatically more efficient than either alternative under the threshold.
If "maybe" or "I'll cross it mid-year" → standard IE for the year you might cross, then plan to incorporate as an LLC the following year. Or incorporate as an LLC pre-emptively.
Q3. Do you expect to take outside investment, hire significant staff, or build something that could be acquired?
If yes → LLC. Investors and acquirers want to buy shares; only an LLC has shares. Employees want to work for an entity, not a person; only an LLC is an entity.
If no → SBS or standard IE per Q2.
That's it.
The worked examples — what does each actually cost?
Three foreign founders. Same revenue. Same costs (let's say 20% of revenue is deductible business expense). Different structure. What's the tax bill?
Founder A: 50,000 GEL/year revenue, single founder
| Structure | Tax base | Tax rate | Tax due | | --- | --- | --- | --- | | LLC (no distribution) | 0 | 15% on distribution | 0 GEL | | LLC (full distribution of post-cost profit, 40,000) | 40,000 | 15% | 6,000 GEL | | Standard IE | 40,000 (after costs) | 20% PIT | 8,000 GEL | | Small Business Status | 50,000 (turnover) | 1% | 500 GEL |
Winner: SBS, by an order of magnitude.
Founder B: 250,000 GEL/year revenue, single founder
| Structure | Tax base | Tax rate | Tax due | | --- | --- | --- | --- | | LLC (no distribution) | 0 | 15% | 0 GEL | | LLC (full distribution of post-cost profit, 200,000) | 200,000 | 15% | 30,000 GEL | | Standard IE | 200,000 (after costs) | 20% PIT | 40,000 GEL | | Small Business Status | 250,000 (turnover) | 1% | 2,500 GEL |
Winner: SBS, still dramatically. This is the regime's sweet spot.
Founder C: 750,000 GEL/year revenue, single founder
| Structure | Tax base | Tax rate | Tax due | | --- | --- | --- | --- | | LLC (no distribution) | 0 | 15% | 0 GEL (deferred) | | LLC (full distribution of post-cost profit, 600,000) | 600,000 | 15% | 90,000 GEL | | Standard IE | 600,000 (after costs) | 20% PIT | 120,000 GEL | | Small Business Status | NOT AVAILABLE — over threshold | — | n/a |
Winner: LLC, especially if reinvesting. Once revenue clearly exceeds the 500,000 GEL threshold, SBS isn't an option and the LLC is roughly 25% more efficient than the standard IE on distributed profit — and infinitely more efficient on retained profit.
Three traps founders fall into
Trap 1: Assuming SBS is automatic upon IE registration.
It isn't. Registering as an Individual Entrepreneur and applying for Small Business Status are two separate steps. The SBS application is filed with the Revenue Service after registration via RS.ge[], and SBS is granted prospectively — not retroactively. File on day one.
Trap 2: Crossing 500,000 GEL of turnover and assuming you're fine because you stayed under the threshold "most of the year".
The 500K threshold is a hard line[]. Cross it once and you lose SBS for the entire calendar year — which means the Revenue Service will recompute your liability at the standard 20% PIT rate retroactively, plus penalties for late payment of the difference. Founders who plan correctly either invoice carefully, defer late-November invoices into the following year, or — better — convert to an LLC before the threshold is breached.
Trap 3: Picking SBS when you have co-founders.
The IE form has one owner. If a co-founder is contributing capital, labour, or know-how and expects to share the upside, they cannot do that through your IE — they're either an employee, a contractor, or a silent (and legally unprotected) partner. An LLC with proper share splits is the only clean answer to multi-founder situations.
The decision in one sentence
Single founder, under 500K GEL revenue, no co-founders or investors on the horizon → SBS. Anything else → LLC.
The standard IE without SBS is the least common choice — it's specifically the structure for someone transitioning out of SBS because they're growing through the threshold but aren't ready to incorporate yet.