Assessing Small Business Status before becoming self-employed in Georgia

The status is not a legal form and is not granted automatically through registration as an Individual Entrepreneur or by setting up a tax account. It is available to natural persons, but not to a Limited Liability Company as a legal entity. Before applying, determine whether the specific activity is eligible for Small Business Status and which income is included in the tax base. The tax generally applies to eligible turnover, not to profit remaining after expenses are deducted. Business expenses therefore do not automatically reduce the tax base for the 1 percent tax. If gross income exceeds GEL 500,000 in a calendar year, a 3 percent tax rate may apply for the period specified by law. Exceeding the turnover threshold in two consecutive calendar years may result in the loss of the status. Income from eligible and ineligible activities must be kept clearly distinguishable and correctly classified for tax purposes. The entrepreneur needs ongoing records of turnover, payments received, supporting documents, and the allocation of individual income. Filing and payment deadlines must be monitored regularly; as a general rule, the 15th day of the following month is the relevant deadline for the monthly return and payment. Small Business Status does not replace any potential VAT registration or obligations relating to employment, withholding taxes, or other income types. Eligibility should be reviewed again if activities change, turnover rises sharply, or new income sources arise. Before using the regime, check the application process, excluded activities, tax base, and current consequences of exceeding the threshold against the Revenue Service’s applicable requirements.