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Limited Liability Company (LLC/LTD)

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:

    • 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):

    • 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.

Joint Stock Company (JSC)

EXPLORING JOINT STOCK COMPANIES (JSCs) IN GEORGIA

 

INTRODUCTION:

 When it comes to establishing a business entity, Joint Stock Companies (JSCs) provide a flexible and advantageous option in Georgia. In a Joint Stock Company, the charter capital is divided into shares, which represent the ownership interests of the shareholders. This article will delve into the concept of a JSC in Georgia, highlighting its characteristics, formation process, and the benefits it offers to entrepreneurs. We will also discuss the requirements, including the number of shareholders and the involvement of Georgian nationals in the company.

Understanding Joint stock companies (JSCs):

 A Joint Stock Company (JSC) is a legal entity where the charter capital is divided into shares of equal nominal value. These shares serve as securities, certifying the ownership rights of shareholders over the assets of the company. The liability of a JSC is limited to its total assets, thereby providing a separation between the company’s obligations and the shareholders’ personal assets. Shareholders, as a result, are not personally liable for the debts and obligations of the JSC.

 Advantages of joint stock companies in Georgia?

  1. No minimum start-up capital requirement: In most cases, incorporating a JSC in Georgia does not mandate a specific amount of initial capital. This facilitates the establishment of businesses, making it accessible to a wide range of entrepreneurs.
  2. Non-resident ownership and management: A notable advantage of JSCs in Georgia is that they can be fully owned and managed by non-residents. There are no requirements for Georgian shareholders or directors, providing flexibility and ease of operation for international entrepreneurs.

process of establishing a joint stock company in georgia:

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

  1. personal visit to georgia:

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

  1. formation through a power of attorney (POA):

    • Provide a notarized and apostilled (or legalized) Power of Attorney (POA) to a trusted service provider;
    • The service provider will prepare the required documents and submit them for registration on behalf of the client;
    • The JSC 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 bank accounts, including internet banking facilities, for the JSC.

Conclusion: Joint Stock Companies (JSCs) provide entrepreneurs with a flexible and advantageous legal structure for conducting business in Georgia. The ability to divide the charter capital into shares, limited liability protection, and the absence of strict requirements for Georgian shareholders or directors make JSCs an appealing choice. By understanding the formation process and the options available, entrepreneurs can confidently establish their JSCs in Georgia and enjoy the benefits of this business structure.

Non-Profit Organization (NGO)

Opening non-profit organization (NGO) in Georgia

 
 

If you’re considering establishing a charitable organization in Georgia, the first step is to register it as a Non-Profit Organization (NGO) or Charitable Organization. This legal entity is recognized as the most suitable choice in Georgia for ventures focused on humanitarian, educational, healthcare, human rights, environmental, and related areas.

The non-profit advantage:

An NGO in Georgia operates as a non-commercial legal entity, offering limited liability to its creditors, which is confined to its entire property. While an NGO can generate income, founders are prohibited from distributing the company’s profit. Instead, these funds must be reinvested into the activities of the organization, aligning with its charitable mission. Remarkably, an NGO can be established by a single person.

simple incorporation process

One of the attractive aspects of establishing a Non-Profit Organization in Georgia is that no start-up capital is required. The entire incorporation process typically takes only two business days after submitting the original documents.

Company formation options:

  1. client’s visit to georgia:

    • Drafting necessary documents and submitting them for registration in collaboration with the client;
    • Company registration occurs on the next business day after submission;
    • Immediate opening of bank accounts for the company, including internet banking.

  1. power of attorney (POA) handling:

    • Client sends Notarized and Apostilled (or Legalized) Power of Attorney along with a copy of their passport;
    • Drafting necessary documents and submitting them for registration based on the provided POA;
    • Company registration is completed the next business day after submission.
    • The director of the Georgian company issues a new Notarized and Apostilled/Legalized POA for opening bank accounts;
    • Once the original POA is received, business bank accounts are opened for the company, including internet banking.

important considerations

While the process is streamlined, it’s essential to note that banks may request additional information or documents from the client. In such cases, clients are required to provide the requested information promptly to facilitate the smooth establishment of the Non-Profit Organization.

In conclusion, the process of opening a charitable organization in Georgia through the registration of a Non-Profit Organization offers simplicity, efficiency, and flexibility. Whether you choose to personally visit Georgia or opt for a remote approach with the assistance of a Power of Attorney, the goal remains the same — to establish a legal entity dedicated to making a positive impact in various humanitarian and social causes.

Branch Office (BO)

Establishing a Branch Office in Georgia

 

introduction:

Expanding business operations into new territories is an exciting opportunity for growth. In Georgia, establishing a Branch Office (BO) offers a viable option for companies seeking to establish a presence in the country. This article will delve into the concept of a Branch Office, its characteristics, the process of incorporation, and the required documents for registration. Additionally, we will discuss the liability implications for the founder and the possibility of conducting the incorporation procedure remotely through a Power of Attorney.

understanding branch office in georgia:

A Branch Office is a sub-unit of a business entity that operates as an extension of the head office. It is not a separate legal entity, meaning that the liability of the founder is not limited to the assets of the branch itself. The founder is financially liable for the obligations and debts incurred by the branch. While a Branch Office does not possess separate legal status, it allows companies to establish a physical presence and conduct business activities in Georgia.

incorporation process for a branch office

establishing a branch office in georgia involves the following steps:

  1. preparation of documents:

    • Obtain a decision from the head office of the company regarding the establishment of a Branch Office in Georgia. The decision should be signed by the director or authorized representative of the head office;
    • Obtain a decision from the shareholder(s) of the company regarding the establishment of a Branch Office in Georgia;
    • Secure the consent of the appointed director of the Branch Office;
    • Prepare a Power of Attorney in favor of a trusted representative or service provider for signing and submitting the necessary documents for Branch registration. The Power of Attorney should be signed by the director of the head office.

  1. document submission:

    • Submit the required documents to the registering authorities in Georgia. This can be done through a trusted representative or service provider;
    • The incorporation process typically takes around two business days after the original documents have been received.

required documents for branch office registration:

To establish a Branch Office in Georgia, the following documents must be submitted to the registering authorities:

  1. Decision of the head office regarding the establishment of the Branch Office, signed by the director or authorized representative.
  2. Decision of the shareholder(s) regarding the establishment of the Branch Office.
  3. Consent of the appointed director of the Branch Office.
  4. Power of Attorney in favor of the representative or service provider responsible for signing and submitting the necessary documents.
  5. Passport copy of the director of the Branch Office.
  6. Complete set of corporate documents of the head office, including information such as company name, address, date of registration, registration number, details of the director, shareholder(s), and Ultimate Beneficial Owner(s) (UBO(s)).

All documents mentioned above should be properly apostilled or legalized, depending on the country of issuance.

Conclusion: Establishing a Branch Office in Georgia provides companies with the opportunity to expand their operations and establish a physical presence in the country. While a Branch Office is not a separate legal entity, it allows companies to conduct business activities under the financial liability of the founder. By following the incorporation process and submitting the required documents, companies can successfully establish a Branch Office in Georgia and tap into the country’s dynamic business environment.

 

Individual Entrepreneur (IE)

Registering as an Individual Entrepreneur (IE) in Georgia

 

INTRODUCTION:

Becoming an Individual Entrepreneur (IE) offers a flexible and straightforward option for starting a business in Georgia. In this article, we will explore the key aspects of registering as an Individual Entrepreneur, including liability considerations, registration procedures, and the possibility of obtaining the status of a Small Business. We will also outline prohibited activities for Small Business status.

UNDERSTANDING INDIVIDUAL ENTREPRENEURSHIP IN GEORGIA:

An Individual Entrepreneur is a legal form of business activity where a single individual operates a business. It is important to note that as an Individual Entrepreneur, the person is personally liable to creditors with all of their assets for any obligations arising from their entrepreneurial activities. This means that personal assets can be used to satisfy business debts.

REGISTRATION PROCEDURES FOR INDIVIDUAL ENTREPRENEURSHIP:

Registering as an Individual Entrepreneur in Georgia involves the following procedures:

  1. PERSONAL VISIT TO GEORGIA:

    • If the client is personally visiting Georgia, the registration process can be completed in two business days;
    • We will assist in drafting the necessary documents and accompany the client to submit them for registration;
    • Once the registration is completed, we will help to prepare and submit documents for opening bank accounts for the Individual Entrepreneur, including internet banking services.

  2. REGISTRATION BASED ON POWER OF ATTORNEY:

    • If the client cannot personally visit Georgia, the registration process can be done through a Power of Attorney (POA);
    • The client must provide a notarized and apostilled (or legalized) Power of Attorney;
    • We will handle the necessary procedures for registration based on the provided POA;
    • The registration process typically takes 10-15 business days;
    • After the registration is completed, we will assist in opening bank accounts for the Individual Entrepreneur, including internet banking services.

STATUS OF SMALL BUSINESS FOR INDIVIDUAL ENTREPRENEURS:

If the expected annual income of the Individual Entrepreneur does not exceed 500,000 GEL, it is possible to obtain the status of a Small Business. This status offers certain tax benefits, including a reduced corporate tax rate of 1% on Georgian sourced income. However, income earned from abroad will be taxed at the regular rate of 20% income tax.

It is important to note that an Individual Entrepreneur cannot be granted the status of a Small Business if they engage in activities that are prohibited for small businesses. Prohibited activities include:

  • Activities requiring licensing or permits (except for activities related to Permits for M1 category of private taxis in the capital of Georgia);
  • Activities that require significant investment, such as the production of excisable goods;
  • Foreign exchange transactions;
  • Medical, architectural, legal, notarial or auditing consulting (including tax consultations);
  • Gambling business;
  • Recruitment services;
  • Production of excisable goods.

CONCLUSION:

Registering as an Individual Entrepreneur in Georgia provides a straightforward and accessible pathway to start a business. While personal liability is a key consideration, the ease of registration and the possibility of obtaining the status of a Small Business offer valuable advantages. By understanding the registration procedures and adhering to the regulations governing Small Business status, individuals can establish and operate their businesses successfully in Georgia.