A GUIDE TO LIMITED LIABILITY COMPANIES (LLCs) IN GEORGIA

Introduction:

Establishing a business and choosing the right legal structure are crucial steps for entrepreneurs. In Georgia, a Limited Liability Company (LLC) offers an attractive option due to its convenience and benefits. This article will explore the concept of an LLC in Georgia, its advantages, and the process of forming one. Additionally, we will touch upon the virtual IT zone status and the main taxes applicable to businesses in the country.

Understanding the Limited Liability Company (LLC):

A Limited Liability Company (LLC) is a legal entity that provides limited liability protection to its owners, known as members. In Georgia, an LLC’s liability to its creditors is limited to its assets, offering personal asset protection to its members. Notably, an LLC can be established by a single person, who can simultaneously act as the sole shareholder and director.

Benefits of a Limited Liability Company in Georgia:

1. Limited liability protection: The primary advantage of forming an LLC is the separation of personal and business assets. Members’ personal assets are generally shielded from business liabilities, reducing personal financial risk.
2. No minimum capital requirements: In most cases, incorporating an LLC in Georgia does not necessitate a significant amount of start-up capital, making it accessible to a wide range of entrepreneurs.

Process of Establishing an LLC in Georgia:

There are two proposed methods for establishing an LLC in Georgia: personal visitation or utilizing a Power of Attorney (POA) for remote formation. Let’s examine both approaches:

1. Personal Visit to Georgia:

1. • Collaborate with a professional service provider who will assist in drafting necessary documents.
   • Accompany the service provider to submit the documents for registration.
   • The company will typically be registered on the next business day after submission.
   • Following registration, the service provider will assist in opening business bank accounts, including internet banking, for the company.

2. Formation through a Power of Attorney (POA):

3. • Provide a notarized and apostilled (or legalized) Power of Attorney, along with a copy of the passport, to a trusted service provider.
   • The service provider will prepare the required documents and submit them for registration on behalf of the client.
   • The company will generally be registered on the next business day after submission.
   • Once the company is registered, the director of the Georgian company will issue a new notarized and apostilled/legalized Power of Attorney for opening bank accounts.
   • Upon receiving the original POA, the service provider will proceed with the process of opening business bank accounts, including internet banking, for the company.

Virtual IT Zone Company:

For businesses engaged in 100% IT services, such as software development, web design, and SEO, Georgia offers the option of obtaining the status of a Virtual Zone Company. This status entails specific tax benefits:

• Dividend tax: 5% on income received from outside Georgia.
• Salary tax: 20% if employees are hired.
• No company tax: 15%.
• No VAT (Value Added Tax): 18%.

Main Taxes in Georgia:

It is important to familiarize oneself with the main taxes applicable in Georgia:

• Company tax: 15%.
• Dividend tax: 5%.
• Salary tax: 20%.
• VAT (Value Added Tax): 18% if the company’s annual turnover exceeds 100,000 Georgian Lari (GEL). VAT applies to the supply of products or services within Georgia.

Conclusion: A Limited Liability Company (LLCs) is an appealing legal structure for entrepreneurs in Georgia. Its advantages, including limited liability protection and flexibility in formation, make it a popular choice. Additionally, the virtual IT zone status provides specific tax benefits for businesses engaged in.