Banking for business owners in the Republic of Georgia
June 5th 2023
Do you require a business bank account in Georgia as a business owner?
This blog post aims to address this question.
Legal requirements: Who needs a business bank account?
Business owners in Georgia, particularly individual entrepreneurs, have the option to receive business income in their personal or business bank accounts. There is no legal obligation to open a dedicated business account or a bank account in Georgia.
However, there are several reasons why having a business bank account can be beneficial, which will be explained below.
Legal entities, such as LLCs, are not mandated to have a business bank account for transactions. However, operating without one can create significant administrative overhead. It would require accountants to record every money movement to or from a personal bank account as a cash transaction for tax purposes. Additionally, all VAT-registered businesses must link their local Georgian business bank account directly to the Revenue Service's online system to file mandatory tax declarations.
Bank Account Options in Georgia
If you are an Individual Entrepreneur (IE), you can receive business income in any bank account that belongs to you. While it is possible to accept money in both local and international accounts, it is generally advisable to have some separation between your business income and personal transactions. Depending on your needs, you may require a full business account, an online business account, a separate Georgian personal account, or continue to receive money in a foreign account.
When operating a legal entity such as a Limited Liability Company (LLC), accepting money in any bank account other than a business bank account in the name of your Georgian company would be considered a cash transaction and must be reported accordingly for tax purposes.
VAT-registered businesses are required to link their local Georgian business bank account directly to the Revenue Service's online system to file mandatory tax declarations.
Physical Georgian Bank
Opening a Standard Georgian Business (Corporate) Bank Account
This type of account is held at physical banks in Georgia, with Bank of Georgia and TBC being the most popular choices.
Advantages:
Online business accounts, such as Wise, PayPal, Paysera etc., can be used by legal entities and individual entrepreneurs with some limitations.
Advantages:
Sole Proprietors, Small Business entities and individuals can legally accept business income in their regular personal accounts, but it can be difficult to separate business- from personal transactions.
Advantages:
At GIC we are constantly exploring new, innovative and alternative options, so sign up for our newsletter here to stay in the know!
- Legal requirements: Who needs a business bank account?
- Bank Account Options in Georgia
- Choosing a Physical Georgian Bank
- Online Payment Processors
- Opening a Personal or Business Bank Account in Georgia?
- Other FAQs
Legal requirements: Who needs a business bank account?
Business owners in Georgia, particularly individual entrepreneurs, have the option to receive business income in their personal or business bank accounts. There is no legal obligation to open a dedicated business account or a bank account in Georgia.
However, there are several reasons why having a business bank account can be beneficial, which will be explained below.
Legal entities, such as LLCs, are not mandated to have a business bank account for transactions. However, operating without one can create significant administrative overhead. It would require accountants to record every money movement to or from a personal bank account as a cash transaction for tax purposes. Additionally, all VAT-registered businesses must link their local Georgian business bank account directly to the Revenue Service's online system to file mandatory tax declarations.
Bank Account Options in Georgia
If you are an Individual Entrepreneur (IE), you can receive business income in any bank account that belongs to you. While it is possible to accept money in both local and international accounts, it is generally advisable to have some separation between your business income and personal transactions. Depending on your needs, you may require a full business account, an online business account, a separate Georgian personal account, or continue to receive money in a foreign account.
When operating a legal entity such as a Limited Liability Company (LLC), accepting money in any bank account other than a business bank account in the name of your Georgian company would be considered a cash transaction and must be reported accordingly for tax purposes.
VAT-registered businesses are required to link their local Georgian business bank account directly to the Revenue Service's online system to file mandatory tax declarations.
Physical Georgian Bank
Opening a Standard Georgian Business (Corporate) Bank Account
This type of account is held at physical banks in Georgia, with Bank of Georgia and TBC being the most popular choices.
Advantages:
- PoS terminal for accepting in-person card payments and logging cash payments is available
- Cards for employees to make business purchases can be issued
- Income can be received in multiple currencies
- Required for connecting to the Revenue Service's online system
- Possible to accept credit card payments online
- Can be used for work-permit application
- Not straightforward for foreigners to open, especially if most transactions are from abroad
- Higher fees for receiving income in USD, EUR etc. due to international wiring fees
- Certain transactions may require in-person visits to the bank branch
- Tedious, continuous and at times lengthy KYC & KYB data requests
Online business accounts, such as Wise, PayPal, Paysera etc., can be used by legal entities and individual entrepreneurs with some limitations.
Advantages:
- Relatively quick and easier account opening process
- International income connected directly to the Georgian business, reducing tax liability abroad
- International online accounts in multiple currencies for convenient money transfers
- Easier to hold funds in different currencies, avoiding currency exchange fees
- Card issuance is either not possible or very difficult
- Acceptance of funds primarily by transfer
- Receiving funds from credit cards, cash, or online payments is not straightforward
- Not linked to Online Revenue Services, so payments and receivables almost impossible
Sole Proprietors, Small Business entities and individuals can legally accept business income in their regular personal accounts, but it can be difficult to separate business- from personal transactions.
Advantages:
- Easier to open accounts
- Income can be received in multiple currencies
- You can have separate debit card for business expenses and online purchases
- Full online banking portal available
- Higher fees charged for receiving income in USD, EUR etc., due to international wiring fees
- Debit cards are issued only in the account holder's name and cannot be assigned to employees
- Delegation of banking operations is not possible
- In case of wanting to attract external investments, mixed personal and business banking might cause issues
At GIC we are constantly exploring new, innovative and alternative options, so sign up for our newsletter here to stay in the know!
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