If you’re setting up a business in Georgia — whether you’re a solo consultant, SaaS founder, digital nomad or launching a regional office — one of the first key decisions you’ll face is this:
Should you register as an Individual Entrepreneur (IE) or a Limited Liability Company (LLC)?
While both are viable legal structures, each comes with unique implications around taxation, liability, scalability, and profit access. There’s no one-size-fits-all answer — the right choice depends entirely on your business model, growth goals, and risk profile.
This guide breaks down the core differences between LLC and IE status in Georgia, helping you make a decision that supports long-term success.
1. Liability: Are Your Personal Assets Protected?
LLC (Limited Liability Company)
- Your business is a separate legal entity
- Your personal assets (home, savings, car) are shielded from business debts and lawsuits
IE (Individual Entrepreneur)
- You and your business are legally the same
- Unlimited personal liability — creditors can pursue your personal assets if things go south
If you’re in a higher-risk industry or planning to scale, an LLC offers peace of mind and a safety net.
2. Taxation: How Much Will You Pay — and When?
IE: Flexible Options, Especially for Small Operators
- Standard Rate: 20% Personal Income Tax on net profits
- Small Business Status (SBS): 1% tax on turnover (not profit) — if you earn under 500,000 GEL/year and qualify
- Micro Business Status (MBS): 0% tax on up to 30,000 GEL/year (for ultra-small traders)
Note: Not all professions (e.g. legal, consulting, etc.) qualify for SBS/MBS. If you exceed the income limits, you lose the benefit and may revert to the 20% standard rate.
LLC: Corporate Tax Model with Growth Benefits
- 0% tax on reinvested profits — money stays in the company for growth
- 15% Corporate Income Tax when profits are distributed
- 5% dividend tax
- Effective tax on distributed profits: approximately 19.25%
If you plan to reinvest heavily into your business, the LLC’s tax structure can be far more efficient.
3. Access to Profits: Can You Use the Money Freely?
IE
- Income is yours after tax
- No need for formal distributions — use funds without additional tax or paperwork
LLC
- Profits belong to the company
- You must formally distribute profits to use them personally, which triggers taxes
- Improper personal use of business funds can lead to legal complications and potential loss of liability protection
4. Scalability & Reputation: How Far Do You Plan to Grow?
LLC
- Built for growth and credibility
- Ideal if you are:
- Planning to bring on partners or investors
- Bidding for larger contracts
- Building a long-term, reinvestment-heavy business
IE
- Simpler setup, but not built for scale
- Low tax rates are attractive, but only if you stay within turnover and activity limits
- Surpassing 500,000 GEL under SBS can result in a sharp tax increase to 20%
Final Breakdown: Which Should You Choose?
Choose IE if:
- You’re a solo founder or freelancer in a low-risk field
- You qualify for SBS or MBS and plan to stay under turnover limits
- You value simplicity and direct access to income
Choose LLC if:
- Asset protection and legal separation matter
- You plan to reinvest profits into growth
- Your revenue may exceed 500,000 GEL
- Your business model or profession isn’t eligible for SBS
- You are looking to raise investment, onboard partners, or build long-term credibility
Let’s Talk About What’s Best for Your Business
Deciding between an LLC and an IE in Georgia is more than a legal formality — it’s a strategic move that can shape your tax position, personal risk, and ability to grow.
Want tailored advice based on your business model, revenue expectations, and long-term plans?Book a consultation with us — we will help you choose the structure that fits your goals, protects your assets, and positions you for success in Georgia.
