How difficult is it to close a business in Georgia?

According to the World Bank, Georgia ranks second in the world for ease of starting a business. But what closing it? Well, on the one hand, initiating the process to close your business isn’t hard and hundreds of companies do it every year. The type of business, the number of counterparties, employees, creditors, property, and so on, however, determine the complexity of seeing it through to the end.

In a nutshell, every case must be considered on its own merits. Closing a sole proprietorship can take a day, while LLCs, JSCs, or cooperatives can need up to 5 months or more and involve liquidation procedures. Before you start to worry, though, know this: Our specialists can close any business remotely by power of attorney. So that’s something.

highlights

What you’ll need to close your sole proprietorship

No debt

Get those unpaid taxes, fines, or penalties in order

An application to close your sole proprietorship

The entrepreneur or authorized representative will have to visit the Justice House and pay a fee of up to USD 30

Final declarations

Depending on the form of the sole proprietorship, these may be monthly and/or annual returns. The taxes assessed on them must also be paid

Status with the Revenue Service

Your status as a microbusiness, small business, VAT payer must all be closed in your personal cabinet on the Revenue Service website

Some details to consider before closing a large sole proprietorship

• Settlements with contractors and partners
If you had employees, worked with a large number of clients, rented an office, or took out loans, you’ll need to notify contractors of your intention, fulfill obligations to partners and staff, check invoices, and terminate current agreements before applying to close up shop for good

• Check the property on the balance sheet
Pay special attention to the property used for your commercial activities as unexpected taxes may arise should you attempt to sell it in the future. A visit to the accountants can help avoid risk here

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What you’ll need to close (liquidate) your LLC or JSC

Hold founder or shareholder meetings

The decision to board up your windows requires a three-fourth majority. Provisions also exist for closure initiated in a court of law by one of the participants

Appoint a liquidator

This can be a commission or a single person who will then manage the liquidation, prepare reports, and interact with the tax authorities and counterparties. If a liquidator is not specially appointed, the law will automatically consider the director to be that person

Notify the tax authorities and creditors

Within two days of the decision to liquidate, the company must notify the public register, which will trigger the countdown for the liquidation period and give creditors the opportunity to make claims

Pass a desk tax audit

Within 90 days from the start of the liquidation procedure, the Revenue Service must examine the company’s accounting records for compliance with Georgian legislation and verify tax liabilities on the basis of pre-filed declarations

Square up debt

The company must pay creditors, employees, and the state. This stage is usually accompanied by an inventory. If the assets are insufficient to cover liabilities, bankruptcy proceedings may be initiated (in which case the process will take on a whole different look)

Draw up a liquidation balance sheet

When the settlements are completed, the liquidator draws up a document (to be approved by the founders) on the financial condition of the company post-settlement

Submit the documents to the Justice House

If alles in Ordnung, the company will be removed from the register of legal entities and corporate accounts can be closed. It should be noted that the law requires you to hang on to your documents kept for six years

Distribute property

If the company still has property to speak of after the payment of all obligations, it will be transferred to the founders in accordance with the shares specified in the charter. But this will happen no sooner than five months after the repayment of liabilities, the norm prescribed in the law for the protection of creditors

Step by step

How we can help you close/liquidate your business

A free consultation

We will look closely at the situation as it applies to your company and form a plan of action that accounts for possible pitfalls

A financial audit

We will identify hidden liabilities and prepare corrective measures to reduce the likelihood of refusal to liquidate

Accounts and other documents

We will accompany you at every stage of liquidation to ensure compliance with the regulations

Protecting your interests

We will use a power of attorney to communicate with state authorities and creditors on your behalf. If necessary, we can defend your interests in court

Removal from the register

After everything is finalized, we will get the official documents from the Ministry of Justice confirming the closure of the business

Staying in touch

We will continue to provide legal support to the legal successors of an IE, LLC, or JSC

Support

Why you should contact PB Services

We understand the legislation

We stay up to date on new governmental decrees, changes in the Tax Code, Law on Entrepreneurs, and other acts. They can be hard to understand, even for locals

We work with different business types

We support sole proprietorships, LLCs, JSCs, cooperatives, branches of international companies, non-profit organizations, and enterprises with state participation. The liquidation procedure varies for each

We offer a comprehensive approach

We can boast expertise in all areas directly or indirectly related to corporate law: from HR and accounting to real estate, licensing, and banking. We can handle all your business issues

We conduct liquidation remotely

You don’t have to contact the state authorities in person; you don’t even have to come to Georgia. We will prepare documents ourselves with a power of attorney

We can speed up the process

We are in constant contact with representatives of the Revenue Service and can promptly clarify disputable issues with the regulator, in the very least preventing delays

We minimize risk

Documents submitted incorrectly lead to new inspections. If it turns out that you’ve made a mistake somewhere along the line, the whole thing can start again from the top, threatening new fines and taxes. Let the specialists protect you from unnecessary risk

Close / liquidate your business in Georgia

Close your LLC, JSC, or IE and keep tax authorities off your back.