Starting a small business in Georgia is increasingly popular as Georgia is ranked the second-fastest rate of start-up growth in the nation. Small businesses in Georgia is defined as independently owned businesses with less than 300 employees with less than $30 million in yearly gross receipts. So if you have decided to register company in Georgia, what else do you need to know? In this article, our team at Tetra Consultants has highlighted 4 things to know before you register small business in Georgia.
1. Economic outlook:
The Georgian economy remains relatively healthy with its gross domestic product (GDP) growth of 4.98% in 2019. Georgia is currently ranked 10th in the United States for its economic performance.
There are more than 1 million small businesses in Georgia which makes up about 99.6% of all businesses within Georgia. This not only shows that small businesses are the backbone of Georgia’s economy but it also leads to the high labour demand where small businesses employ more than 43% of all Georgia workers. The high demand for workers also results in low unemployment.
Higher skilled labour force
With a low unemployment rate of 3.7%, it is an indication of a healthy economy. It not only increases the consumption of individuals but also implies a higher demand for skilled labour. Due to the higher demand for skilled labour, workforce education and retraining programs are pushed out in Georgia.
2. Business-friendly environment:
According to Site Selection and Area Development magazines, Georgia is ranked first for business. Georgia possesses consistency in a few areas namely – a skilled workforce, reliable infrastructure, low taxes and high state crediting rating. This is due to the reasonable statutes, sound economic development policy and strong business development support in Georgia.
Georgia’s corporate tax rate was lowered from 6% to 5.75% in January 2019, where business owners in Georgia are able to take advantage of single-factor apportionment. Hence, the only factor that determines the in-state taxes would be the in-state sales.
From cutting of taxes to investing in the workforce, the state government’s effort of supporting the starting of a business in Georgia is evident.
3. Types of Business entities in Georgia:
Sole Proprietorship
- A sole proprietorship is the simplest form of business structure where the business is owned by a single person. It can be set up easily and is the most inexpensive option.
- A sole proprietorship is exempted from corporate tax. However, personal income taxes still apply.
- Since it is not a separate legal entity, there is unlimited liability where the owner will be liable for all debts, losses or legal action taken against the business. Moreover, it can be more difficult to raise capital via debt or equity.
Partnership
- Similar to sole proprietorship, a partnership shares the same benefits such as exemption from corporate tax. Instead of an individual, there will be two or more partners in a partnership.
- A partnership is exempted from corporate tax. However, personal income taxes still apply.
- There exist 2 types of partnership – General Partnership and Limited Partnership.
- The limited partnership is a hybrid between both a limited liability company and a general partnership. It consists of at least one general partner and any number of limited partners. General partners are given the entitlement to manage the affairs of the partnership and are faced with unlimited liability. Whereas limited partners are not allowed to manage affairs and are only faced with limited liability which is the amount of capital contributed.
Limited Liability Company (LLC)
- LLC requires one director and one shareholder of any nationality.
- There is no minimum paid-up capital required.
- LLC is a separate legal entity where the shareholder and directors are not liable for debts, losses or legal action taken against the business. Furthermore, it is easier to raise capital via debt or equity.
Joint Stock Company (JSC)
- JSC has very similar characteristics as LLC.
- JSC requires one shareholder.
- There is no requirement regarding the number, nationality or residence of the directors and shareholders
- The shareholders are a separate legal entity where they are not liable for debts, losses or legal action taken against the business.
- Generally, JSC is listed on stock exchanges where it can raise funds from the general public.
Free Zone Company
- Free Zone Company is an LLC that is located in one of the three free zones in Georgia namely – Poti Free Industrial Zone (Poti FIZ), Tbilisi Free Zone (TFZ) and Kutaisi Free Industrial Zone.
- Free Zone companies are able to benefit from the tax exemptions such as corporate tax, import and export tax, property and real estate tax and full VAT exemptions for overseas goods imported into the free zone.
Business Registration Process in Georgia:
If you have decided to register small business in Georgia, here is how to register company in Georgia:
Step 1: Planning of your business idea
Step 2: Choosing a suitable corporate entity
Step 3: Reserving of the company name and new business registration Georgia through Georgia Corporations Division and Georgia Secretary of State respectively
Step 4: Corporate bank account opening
Step 5: Obtaining a business licenses and permits
Step 6: Staying compliant with financial reporting and tax requirements
Conclusion:
The information of what you need to know before you register small business in Georgia may seem intimidating. With Tetra Consultants by your side, the registration process of your business in Georgia will be smooth and hassle-free. Our comprehensive service package includes planning and strategizing with our clients to select a suitable business entity, completing the registration process, obtaining required licenses, opening a corporate bank account, and ensuring your compliance with the government regulations.
Contact us to find out more about how to register company in Georgia and our dedicated and experienced team will revert within the next 24 hours.
