An Individual Entrepreneur (IE) is the simplest way to do business in Georgia: registration takes 15–30 minutes and costs less than 100 GEL. But it has a feature that promotional articles tend to leave out: the entrepreneur is liable with all personal property, including the apartment. Here is when an IE fits and when a company is the better answer.
- Registration: at the House of Justice, 15–30 minutes, a fee of roughly 26–75 GEL.
- Liability with personal property — an IE is not separated from you as a legal entity.
- By default tax is 20% on net income; the 1% rate appears only after a separate application for small business status.
- Pension contributions: for Georgian residents, 2% from the employee and 2% from the employer.
- Closing is filed at the House of Justice; with no debts the registration is cancelled within one working day after a tax check.
What an IE is in Georgia
An Individual Entrepreneur is not a separate legal entity but a status of a natural person granting the right to carry out business activity. Your tax number as an IE is the same as your personal ID number, there is no share capital, and the assets of the business are not legally separated from your own.
All the advantages follow from this — simplicity, speed, low cost — and so does the main drawback, covered below.
Registration: documents and timing
An IE is registered at the House of Justice (Public Service Hall). The procedure is quick: usually 15–30 minutes at the desk.
| What is needed | Details |
|---|---|
| Application | For registration as an individual entrepreneur |
| Identity document | Passport or ID card |
| Legal address | Confirmation of the address — a lease or the owner's consent |
| Receipt | Payment of the fee, roughly 26–75 GEL |
You do not have to come in person: a representative can file under a power of attorney, and the power of attorney may be drawn up in another country and another language — with translation and certification under the usual rules.
The address is where newcomers most often stumble. If you rent, you will need the owner's consent; if you own property in Georgia, the question closes itself. How ownership is verified is covered in our article on the Public Registry.
Default taxes and the 1% regime
The most common misconception is "I registered an IE, so I pay 1%". That is not the case.
| Regime | Rate | What you have to do |
|---|---|---|
| Default | 20% on net income (income minus expenses) | Nothing — this applies straight after registration |
| Small business status | 1% of turnover | A separate application to the Revenue Service |
| Micro business | 0% | Turnover up to 30,000 GEL, no employees |
Note the difference in base: the 20% applies to profit, the 1% to turnover with no deduction of expenses. With a high share of costs, the standard regime is sometimes better. A detailed look at the 1% regime, its thresholds and prohibited activities is in our article on the 1% small business tax.
Liability: the main drawback
An individual entrepreneur is liable to creditors with all of their personal property for obligations arising from business activity, unless otherwise agreed with the creditor. That means business debts put your personal apartment at risk too.
The practical conclusion: an IE suits low-liability activity — freelancing, services, consulting without large contractual guarantees. As soon as substantial sums, obligations to counterparties, goods deliveries or staff appear, it is worth considering an LLC, where liability is limited to the contribution.
Hiring employees
An IE may hire staff, but that brings withholding-agent duties:
- 20% income tax is withheld from the employee's salary;
- pension contributions for Georgian residents: 2% from the employee and 2% from the employer;
- monthly payroll reporting.
Remember separately that micro business status with its zero rate is incompatible with hiring employees.
An IE and rental income
For property owners this is the key section. Residential rent has two routes:
| Option | Rate | When it is better |
|---|---|---|
| As an individual, without deductions | 5% of the rent received | Costs are low: the flat is ready, no renovation needed |
| Through an IE with deductions | 20% of net income | Significant costs: renovation, maintenance, management |
Run the numbers on your own case: at 5% the base is the entire rent stream, at 20% only the profit. And remember that rent cannot be moved under the 1% regime. Details are in renting out an apartment, and yields by district can be compared on the district pages.
How to close it
Closing is as simple as opening: the termination documents are filed at the House of Justice. With no debts to creditors, the Revenue Service runs a tax check and cancels the registration — usually within one working day.
Do not forget that the monthly reporting duty continues until closure. You cannot simply "stop using" an IE — an open status keeps generating declaration obligations.
If you need the IE as a basis for being in the country, remember that business status and migration status are different things: residence permits are covered in a separate article, and where you pay tax in tax residency.