Liquidating a business in Georgia
According to Gateway Commercial Finance, one in five businesses goes under in the first 12 months, with another third joining them in the next four years. Whatever the reasons for their demise, the impending liquidation may be voluntary or compulsory:
- A business may be liquidated by court order for breaking the law, not paying taxes, or failing to fulfill its obligations to counterparties (customers, creditors)
- One of the company’s founders may initiate compulsory liquidation by filing a lawsuit
- A business can be closed voluntarily as part of bankruptcy proceedings
- Liquidation is also mandatory for reorganization, when an LLC is converted into a joint-stock company or in merger or acquisition. To transfer assets to a new organization, the old must be closed
- The most popular scenario, however, remains liquidation by mutual consent of the founders. Because the business isn’t making a profit, the market is fraught with uncertainty, or the founders have simply had enough
The legal basis for all methods of liquidation is the Law of Georgia On Entrepreneurs, with some regulations set out in the rules On Insolvency Proceedings and other government decrees. This article focuses on closing a business by decision of the founders (without bankruptcy).
Closing your individual entrepreneurship
If you have decided to cease your commercial activities and close your individual entrepreneur status, you must first check for any outstanding debt on taxes, fines, and penalties and pay them online or go to the tax office yourself. What comes next can vary.
Let’s look at a few options:
- Individuals with microbusiness status (not registered as an individual entrepreneur) apply to close shop in their personal account on the Revenue Service website, fill out a closing annual tax return, and set their account status to inactive
- To make the leap from microbusiness to individual entrepreneur, you must first register as a new individual entrepreneur. Next, the same rules apply, except that after applying to close your microbusiness, you submit another application to register your small business in the same tax account, submit the annual microbusiness tax return, pay what need to, and continue life as a small business
- To close an individual entrepreneurship with small business status, you must first apply to the House of Justice in writing (don’t forget your passport), submit your final monthly declaration, and then apply online. Your personal account should also be set to inactive
- Individual entrepreneurs subject to general taxation will need to contact the House of Justice again, but the closing declaration will be annual and must be prepared within 30 days of submitting the application for liquidation. It is not necessary to submit a declaration if you have nothing to declare
- Finally, individual entrepreneurs with a fixed rate must also submit an application to the House of Justice and cancel their status in their personal account. As the tax rate is fixed, however, there is no need to submit a declaration. Just make sure you’ve paid your taxes within the time frame established by law
These procedures apply to most individual entrepreneurs, foreign national and Georgian citizen alike, though the procedure can be more complicated in certain circumstances. For example, if you are a VAT payer, you must deregister as part of the liquidation process. If you hired staff, worked with a large number of clients and contractors, rented an office, or took out loans, you’ll have to notify your contractors that you’re closing up shop, terminate current contracts, check invoices, and fulfill existing obligations to partners and staff before applying to the House of Justice.
If you have listed property as an asset of your individual entrepreneurship, you’ll want to pay special attention to that. Although not required by law to re-register your property, additional tax liabilities may arise when it is sold. It may be worth consulting an accountant to mitigate possible risk and avoid unexpected claims later. Sign up for a free consultation with PB Services here.
If you’re only planning to suspend business temporarily, you don’t need to close your sole proprietorship. Pay any taxes you may owe and simply set your sole proprietorship to inactive in your account on the revenue service website (no need to submit an application to the House of Justice).
Doing so will automatically exempt you from the need to file tax returns: According to the state, you have ceased economic activity. Your individual entrepreneur status will continue to exist, and you can set your status back to active in your personal account when you’re ready to go again (do it before receiving any income, though).
The same applies to companies. According to GeoStat, of the over one million businesses registered in Georgia in 2025, only 271,000 are active.
Liquidating an LLC or JSC
Step one: deciding to liquidate
The decision to liquidate a company in Georgia is made at a founders or shareholders meeting, requires a three-quarters majority, and is recorded in writing in the minutes, where the reason for closing the business is specified along with a liquidator — the person responsible for preparing reports and interacting with the Revenue Service and counterparties. The liquidator may be a natural or legal person or a group of persons (commission). It is a role the managers generally assume by default, though companies can choose to engage external specialists with the requisite experience.
Important: The minutes of the founders/shareholders meeting must be drawn up in Georgian or translated into Georgian and notarized (for international companies). Failure to comply with this requirement may result in the regulators refusing to liquidate the company.
Step two: starting the liquidation process
Once the founders have made their decision, the authorized party submits the documents to the National Agency of Public Registry (NAPR), which is subordinate to the Ministry of Justice. The package must include:
- A statement of liquidation
- Proof of identity of the authorized individual
- The company’s decision to liquidate, the appointment of a liquidator and associated powers, and a sample of the liquidator’s signature with consent in writing to participate in the process (if the liquidator is not the head of the company)
- Confirmation of payment of the state fee
After the documents have been submitted, the Public Registry will notify the Revenue Service: This moment is considered the official start of the company’s liquidation. At the same time, the tax authority will initiate a desk audit of the company.
Step three: notifying creditors
In a step intended to ensure all interested parties have time to submit their claims, the organization is required by law to notify any creditors of its plans by posting information about the liquidation on its official website, with mention of the impending liquidation next to the company name on all business correspondence.
It is also at this stage that the company must notify contractors and employees and terminate contracts. With regard to employees, Order No. 996 of the Minister of Finance of Georgia dated December 31, 2010, obliges the employer to enter the termination of employment in the unified register of employees.
Step four: settling obligations
After taking inventory and assessing the value of assets, the business must settle its loans, taxes, payroll deductions, and social contributions. The necessary tax returns must be submitted, including those for the current reporting period. A list of returns can be found in your personal account on the Revenue Service website.
It should be noted that property cannot be disposed of during liquidation: Founders must wait five months from the date of publication of the liquidation statement before beginning distribution. The period may be reduced to three months by a court decision based on an independent auditor’s conclusion that the company has settled all its obligations.
Step five: drawing up a liquidation balance sheet
After settling its obligations, the company prepares its final accounting and financial statements to be approved at a founders or shareholders meeting. The document must also be drawn up in Georgian and notarized.
The liquidation balance sheet is submitted to the Public Register, the documents verified (and tax audit completed), and the company removed from the register of organizations in Georgia. After that, the liquidator can obtain a certificate of completion of the procedure to avoid subsequent disputes.
Errors in the documents submitted or statements by interested parties can result in the liquidation being declared invalid, restarted, and the liquidator removed. Proceed with the utmost care.
Additional aspects of closing an LLC or JSC worth considering
A business is generally closed in the way described above, but the nature of the business can result in more specific requirements, for example:
- Information about individual salaries for the reporting year. This also applies to companies registered in the Free Industrial Zone (FIZ)
- The cancellation of special and corrective tax invoices, among others
- A waiver of the right to claim a refund of excess payments to the budget
- The cancellation of a document equivalent to a check listed in the balance
- The cancellation of registration as a VAT payer if 12 months have passed since VAT registration
- The cancellation of status as a participant in the virtual zone
- The deregistration of a cash register
- The closure of a corporate bank account
- The cancellation of an authorized page
In addition, a customs risk can prevent the completion of liquidation (e.g., goods remaining in a customs warehouse, an application for temporary storage, temporary importation, customs procedures for internal and external processing, export with a return condition).
And these are only a few of the possibilities — it really depends on your business.
How long does it take to liquidate a business?
- The approval period for an application to close a regular sole proprietorship at the House of Justice is one to two business days. The rest is done online in a matter of minutes.
- For sole proprietors with loans and employees, LLCs, JSCs, and cooperatives, it takes about five months, even if you submit the documents correctly. The main thing is the timing of the tax audit. By law, the Revenue Service can audit a company for outstanding debts for 90-120 days (but no longer).
How much does it cost to liquidate a business in Georgia?
The application fee at the House of Justice for individual entrepreneurs is GEL 26 (USD 10) for next day cancellation and GEL 75 (USD 30) for same day. It costs more for companies: GEL 200 (USD 75) and GEL 400 (USD 150), respectively. Add to that the cost of preparing documents and consulting lawyers.
Is it possible to liquidate remotely?
Yes, both sole proprietors and companies can close their business remotely, but you’ll need a notarized power of attorney or an external specialist appointed liquidator of the LLC/JSC, in which case the founders won’t even need to visit the country.
If you need legal support in closing your business or are interested in a turnkey liquidation service, contact PB Services. Use the form below to leave a request, and we will contact you to clarify the details.