Accounting for LLCs in Georgia

A Georgian LLC pays 15% corporate tax when it distributes profit and 0% on profit it keeps in the business. Three obligations come with that rate: a declaration every month with or without activity, full accounts from the day of incorporation, and documents showing that each payment out of the company served the business.

Corporate Tax Rates for LLCs in Georgia

Georgia has taxed company profit on the Estonian model since 1 January 2017. Corporate income tax is charged at a flat 15% when profit is distributed, or when the Tax Code treats a transaction as a distribution, and not when the profit is earned. Profit left in the company is taxed at 0%, with no time limit and no minimum reinvestment.

Tax	Rate	When it applies
Corporate income tax	15%	When profit is distributed, or a payment is treated as a distribution
Retained profit	0%	While the profit stays in the company
Dividend withholding	5%	When a dividend is paid to an individual or a foreign shareholder
VAT	18%	Registration is mandatory once taxable turnover passes ₾100,000 in any 12 months
Reverse VAT	18%	On services bought from abroad, with or without a VAT registration

On ₾100,000 of profit distributed in full, the company pays ₾15,000 of corporate tax and pays out ₾85,000. The 5% withholding takes ₾4,250 of that, and the shareholder receives ₾80,750. A full payout costs 19.25%, and the same ₾100,000 left in the company costs nothing.

An LLC cannot hold Small Business Status, because the 1% turnover regime is open only to individual entrepreneurs. A Virtual Zone company is exempt from corporate tax on qualifying exported IT income, though the 5% dividend withholding still applies when it distributes.

What Counts as a Profit Distribution

A dividend, in cash or in kind, is a distribution. The Tax Code also taxes several other transactions at the same 15%, even when no money reached a shareholder:

• expenses with no business purpose or no document behind them, personal spending included
• goods, services or funds given away for nothing, such as an asset a related party uses at no charge
• loans from the company to its own owner or to a related party abroad
• interest paid at a rate above the annual ceiling set by the Ministry of Finance, currently 24%
• client entertainment and gifts above the statutory limit for representation expenses
• payments to entities registered in preferential-tax jurisdictions

The Revenue Service looks at whether a payment served the business, not at what it was called. Ordinary spending does not trigger the tax: salaries for real work, equipment, software, office costs and payments to unrelated suppliers at commercial rates are business expenses, as long as each one is documented. Transactions with related parties are treated more strictly, and one priced outside the arm’s-length range is taxed immediately on the adjustment.

Paying Yourself From an LLC: Salary or Dividends

An LLC is a separate legal person, so the money in its account belongs to the company until it is paid out. A working owner can take a salary or a dividend, and most use both.

• Salary. The company withholds 20% income tax. For an owner inside the funded pension scheme, which is mandatory for Georgian citizens and for foreigners who hold a permanent residence permit, it also withholds a 2% pension contribution and pays a further 2% employer contribution itself. A foreign owner without a permanent residence permit is outside the scheme, with no contribution withheld and none owed by the company. Salary is a deductible expense that never triggers corporate tax, and it is taxed monthly as it is paid.
• Dividend. The company pays 15% corporate tax on the distribution and withholds 5% from the payout, whether the shareholder lives in Georgia or abroad.

On ₾100,000 of company cost, a dividend leaves the owner about ₾80,750 in hand. The same amount paid as salary to an owner inside the pension scheme leaves about ₾76,863, with roughly ₾3,922 of the owner’s and the company’s contributions going into the owner’s pension account.

Georgian law sets no minimum salary for an owner, and many take dividends only. A tax treaty can lower the 5%, but only when the reduced rate is claimed with the Revenue Service, generally before or at the time of payment. Georgian tax settles the Georgian liability only, and an owner who stays tax resident elsewhere may still be taxed at home.

Monthly Tax Declarations for LLCs: Deadline and What to File

Every LLC files with the Revenue Service by the 15th of the month after the one being reported, so January is declared by 15 February. That includes Virtual Zone, International Company and Free Industrial Zone companies, and months with no activity.

What is filed depends on the month and the registration:

• The corporate tax declaration is due every month. With no distribution it shows nothing owed.
• A dividend withholding declaration is due for any month in which a dividend is paid.
• Reverse VAT at 18% is declared on services bought from outside Georgia, such as software, hosting or a foreign contractor, with or without a VAT registration.
• A separate VAT declaration is due once the company holds a VAT registration, which becomes mandatory when taxable turnover passes ₾100,000 in any 12 months.
• Payroll and pension declarations are due on the same date once the company has employees.

The monthly declaration is filed through rs.ge, the Revenue Service portal, which is in Georgian throughout. Filing and paying are separate actions, and the tax still has to be paid from a Georgian bank account by the same deadline.

Bookkeeping and Annual Reporting Requirements for LLCs

An LLC keeps full accounts from incorporation, whatever its turnover. A company with one shareholder and almost no transactions keeps them too, because the rule follows the legal form.

Three rules shape those accounts:

• Accrual timing. A service delivered and invoiced on 28 June and paid on 9 July belongs to June.
• A tax source document behind every transaction. Under Article 72 of the Tax Code it identifies both parties, carries a date, states what was supplied and its value, and exists in at least two identical copies.
• Retention. Source documents are kept for at least three years after the end of the calendar year they relate to, and longer where a financial reporting obligation applies.

The documents are also the evidence for the 0% rate, because they show that no payment counted as a distribution. Payments to shareholders, directors and related parties need the most care.

SARAS Annual Financial Statements: 1 October Deadline

An ordinary LLC files no annual profit return, because its corporate tax is declared monthly. Annual financial reporting is a separate obligation. Companies file annual financial statements with SARAS, the Service for Accounting, Reporting and Auditing Supervision, by 1 October of the year after the reporting period.

SARAS sorts companies into four categories plus a public-interest tier by assets, revenue and headcount, and the category decides the accounting standard, the statements owed and whether an audit is required. The filing falls under the Law on Accounting, Reporting and Auditing, not the Tax Code, so correct tax declarations do not satisfy it.

Penalties and Common LLC Accounting Mistakes

Penalties for late filing and late payment are not discretionary. Interest accrues daily on any unpaid balance from the deadline until it is settled, and understating the tax in a declaration carries its own penalty on top of the shortfall.

Most problems come from ordinary mistakes:

1. Skipping the declaration in a month with no distribution or no activity.
2. Paying personal expenses from the company account or card.
3. Taking an informal loan from the company with no real intention of repaying it.
4. Missing reverse VAT on foreign software and overseas contractors.
5. Recording income in the month the payment arrived, not the month the work was delivered and invoiced.
6. Converting foreign-currency income and expenses to lari at the wrong rate for the period.
7. Missing the 1 October SARAS filing, which the monthly routine does not include.

Mistakes 2 and 3 cost the most and are most common among owners who operated as an individual entrepreneur (IE) first. An IE’s business account holds the owner’s own money, but the money in an LLC’s account belongs to the company, so the same payments can be taxed as a distribution at 15%.

A wrong declaration can be corrected, and the sooner it is, the smaller the interest and penalty tend to be. A pattern of missed months is a larger problem, which tends to surface when the company opens a bank account or is being closed. Missed months are filed one at a time through accounting restoration, at ₾270 per month of arrears.

Do You Need an Accountant for an LLC?

An LLC’s monthly filing and full accounts are required whether the owner or an accountant does them. The business that can reasonably file alone is an individual entrepreneur with Small Business Status, no VAT registration and a handful of invoices, who has no duty to keep formal accounts. An LLC is in a different position from its first month, because full accounts, accrual timing and the distribution rules all apply, and the portal is in Georgian.

VAT registration adds a second monthly declaration, and a first employee adds payroll and pension filings. Each new filing is added to the ones the company already has, and none replaces an earlier obligation.

With us, you upload the month’s invoices, bank statements and contracts. We keep the accounts, calculate reverse VAT, declare any distribution and file before the 15th, then tell you what to pay and where. Liability for a filing error we make sits with us, though not for errors caused by documents we were never given.

LLC Accounting Prices

The price depends on the package and on the number of transactions a month. One bank statement row, invoice, payment or expense is one transaction.

LLC profile	Package	Up to 10 transactions	11 to 30	31 to 60
Simple LLC, not registered for VAT, no employees	Lite	₾180	₾315	₾495
VAT registered, with employees, or holding Virtual Zone, International Company or Free Industrial Zone status	Business	₾315	₾495	₾855
Complex structure, or ongoing tax and legal support	Premium	₾675	₾855	₾1,305

More than 60 transactions a month is quoted. Prices are monthly and exclude 18% VAT, and Lite’s first quarter is paid upfront.

Every package includes the monthly declarations, corporate tax and dividend declarations and the General Journal. Business adds VAT returns with input VAT reclaim, pension declarations and the mandatory financial reporting to SARAS. Tax advice is separate on Lite and Business.

A single month slightly over the band usually costs nothing extra. If the company is over the limit two months in a row, we talk about moving up a package before any extra work is done or charged.