Small Business Status looks open to almost anyone until you check the fine print. A defined list of activities cannot hold the 1% regime at all, no matter how low your turnover is, and the category everyone gets wrong is consulting. Here is the complete list, why several categories are excluded outright, and what actually happens if you register while doing one of them anyway.
Where the prohibited activities list actually comes from
Small Business Status is a tax regime, and the list of activities that cannot hold it is not written into the Tax Code itself. It comes from a separate piece of secondary legislation: Government of Georgia Resolution No. 415 of 29 December 2010, which defines which activities do not qualify for micro or small business status. The underlying registration is covered in general terms by reference sources such as PwC's Georgia tax summary, but the specific exclusions are the resolution's job, not the Tax Code's.
That separation is exactly why so much English-language guidance on this topic is wrong or incomplete. Writers researching the 1% regime read the Tax Code's description of the rate and the turnover cap, and stop there. The exclusions live in a different document entirely, amended more than once since 2010, and a summary written against the Tax Code alone will miss most of what actually disqualifies an activity.
The full list of prohibited activities
An activity on this list cannot hold Small Business Status, regardless of how small your turnover is or how the rest of your business operates. The excluded categories are:
- Medical, architectural, legal and notarial services
- Auditing services
- Consulting activities of any kind, including tax consulting
- Currency exchange operations
- Banking, insurance and financial intermediation
- Gambling and gaming
- Production of excisable goods
- Any activity that requires a licence or permit
- Any activity that requires significant investment
Each of these sits on the list for a different reason, and knowing which reason applies to your activity matters more than the list itself, because it tells you whether there is any route around it.
Consulting is the one that catches people out
Consulting is prohibited outright, and the decree names tax consulting specifically. This is not a grey area and it is not a matter of degree. Plenty of English-language guides published about Georgia's 1% tax state that consulting qualifies. They are wrong, and the Revenue Service reads your registered activity codes and your invoice wording, not a blog post.
The practical difficulty is that "consulting" describes how a lot of independent work gets invoiced, rather than what the work actually is. A developer who writes code for a client is not consulting. The same developer who bills the same work as "technical consulting services" under a retainer has created a problem with a word choice, not with the work itself.
This is not really about honesty. It is about what gets read. The Revenue Service does not sit in on your calls or read your project messages. It reads your registered activity codes and the language in your contracts and invoices. If those describe advisory or consulting work, that is what your registration says you do, whatever the actual content of the work turns out to be.
Genuinely advisory businesses, such as strategy, tax planning or management consulting, do not have a workaround here. The activity itself is excluded, not the label. For work that is advisory in substance, an LLC is the structure that works, not a rewritten invoice.
Legal, medical and the other licensed professions
A second group of exclusions covers regulated professions directly: medical practice, architecture, legal and notarial services, and auditing. These are excluded as named categories, separately from the general "requires a licence" catch-all, which suggests the intent was to rule them out specifically rather than leave it to interpretation.
The logic is consistent across the group. Georgia treats these as professions with their own regulatory framework, including licensing bodies, professional liability rules and sector-specific taxation questions, and Small Business Status was built for straightforward independent trade, not for regulated practice. A lawyer, doctor, architect or auditor operating in Georgia needs a different structure regardless of turnover, and that has nothing to do with how much they earn.
Licensed activities and the "significant investment" catch-all
Beyond the named categories, two broader exclusions catch activities the list does not name individually. Any activity requiring a licence or permit is excluded, which reaches sectors like pharmaceuticals, certain transport operations, and specific financial services. Any activity requiring significant investment is also excluded, and it is the vaguer of the two tests, the one most likely to need a direct answer for an unusual business model rather than a confident answer from a general guide.
Currency exchange, banking, insurance and financial intermediation sit in their own category again, distinct from ordinary "financial consulting." A business that actually holds client funds, exchanges currency, or provides insurance is excluded on the nature of the activity, not on how it invoices.
Where the line is genuinely unclear
Some activities sit close enough to the boundary that they need checking case by case rather than assuming either way.
- Marketing and creative work described as "strategy." A marketer who builds and runs a campaign is doing marketing. The same person billing a project as "brand strategy consulting" has drifted the wording toward the excluded category, even though the underlying work has not changed.
- Bookkeeping versus advisory accounting. Straightforward bookkeeping is not auditing or accounting advisory. An accountant who signs off on financial statements or gives structuring advice sits closer to the excluded category.
- Coaching and training. Delivering a course or a training session is generally distinct from consulting, but the line gets thinner the more the engagement looks like ongoing advisory work billed by the hour.
- Agencies that also advise. An agency that executes work such as design, development or content, and also bills separately for "consulting hours" on the side, has two different activities under one registration, only one of which qualifies.
None of these have a universal answer, which is exactly why checking your specific activity codes before registering is worth doing rather than assuming your case is obviously fine or obviously excluded. A free consultation is the fastest way to get a straight answer on a specific case rather than guessing from a general list.
What this looks like in practice
The clearest way to see where the line actually sits is side by side, comparing genuinely similar work described two different ways.
| What you actually do | How it is described | Verdict |
|---|---|---|
| Writing and shipping code for a client | Software development services | Qualifies |
| The same work, billed as advisory hours | Technical consulting services | Excluded |
| Running paid ad campaigns for clients | Digital marketing services | Qualifies |
| Advising which campaigns to run, without executing them | Marketing strategy consulting | Excluded |
| Recording transactions and preparing basic accounts | Bookkeeping services | Qualifies |
| Reviewing financial statements and signing off on them | Accounting and audit services | Excluded |
| Designing a client's product or brand | Design services | Qualifies |
| Advising on business strategy with no deliverable | Business consulting | Excluded |
The pattern across every row is the same. Work that produces a deliverable, such as code, a design, a campaign or a set of books, tends to sit outside the prohibited list. Work billed as advice, judgement or opinion, with no deliverable beyond the advice itself, tends to sit inside it. That is a useful heuristic, not a legal test on its own, and it will not resolve every genuinely mixed engagement, which is exactly why the specific wording in your own contracts is what actually decides your case.
Micro Business Status uses the same resolution, with a narrower list
The 30,000 GEL Micro Business Status regime, Georgia's 0% tax rate for very small operations with no employees, is governed by the same Resolution No. 415, but the eligible activities for it are narrower than for Small Business Status. Some activities that qualify for the 1% regime do not qualify for the 0% one, which matters most at the point of transition between the two.
If you are close to 30,000 GEL of annual turnover and moving up to Small Business Status, it is worth re-checking your activity against the small business list specifically rather than assuming that qualifying for Micro Business carries over automatically. The two lists overlap heavily but are not identical, and the gap between them is exactly the kind of detail a general guide will not catch for your specific case.
What happens if you carry out a prohibited activity anyway
Registering Small Business Status against an excluded activity, or drifting into one after registration, does not create a discount you keep until someone notices. The status does not apply to that activity's income in the first place, whatever the registration says.
Once the mismatch is identified, the practical consequences are:
- The status is revoked for the activity in question, and the preferential rate stops applying going forward.
- Income is reclassified at the standard 20% personal income tax rate, the ordinary rate that applies to income without the special regime.
- Underpayment penalties and daily interest can apply to tax that was declared and paid at 1% but should have been assessed at 20%, under the general penalty provisions of the Tax Code of Georgia.
There is no structuring fix once you are already carrying out an excluded activity under Small Business Status. Rewriting an invoice or changing how you describe the work going forward does not resolve income already earned under the wrong registration. The fix that actually works is registering the correct structure, typically an LLC registration, before the work starts, not adjusting the paperwork after the fact.
What to do if you are not sure your activity qualifies
The activity codes you register under at the Public Service Hall and the Revenue Service of Georgia are what get checked against this list, not a general description of your business. Two people doing similar-sounding work can land on opposite sides of the exclusion depending on which codes they picked and how their contracts describe the engagement.
Before registering, it is worth having someone check your specific activity, not the general category, but your actual client agreements and invoice wording, against the current version of Resolution No. 415. The rules have been amended more than once since 2010, and a general answer from a guide like this one is a starting point, not a substitute for that check.
We check your actual activity codes and contract wording against the prohibited activities list before you register, so you find out in a thirty-minute call rather than after a year of income gets reclassified.
See what it costs
If your activity turns out to be excluded, that is not the end of the road. It usually means an LLC is the right structure instead, and the Individual Entrepreneur vs LLC comparison covers how the economics actually compare once the 1% option is off the table. This sits in the same cluster as exceeding the 500,000 GEL turnover cap, the other way Small Business Status ends. Once you are registered correctly, the ongoing obligation is the monthly tax declaration.
Key takeaways
- Prohibited activities are set by Government of Georgia Resolution No. 415 of 29 December 2010, separately from the Tax Code itself.
- Excluded categories include medical, architectural, legal and notarial services, auditing, consulting of any kind including tax consulting, currency exchange, banking and insurance, gambling, excisable goods production, licensed activities and activities requiring significant investment.
- Consulting is prohibited outright, and much English-language guidance states otherwise incorrectly.
- What your contracts and invoices say matters more than what the work actually involves, because that is what gets read against the list.
- Carrying out an excluded activity does not create a discount. The status does not apply to that income, whatever the registration claims.
- If your activity is excluded, an LLC is the structure that works. There is no invoice rewording that fixes it retroactively.
Frequently asked questions
Is consulting really prohibited under Small Business Status?
Yes. Resolution No. 415 names consulting activities, including tax consulting, among the excluded categories. This applies regardless of how the consulting is delivered or invoiced, and it is one of the most commonly misreported rules in English-language guides on this regime.
What is the full list of prohibited activities?
Medical, architectural, legal and notarial services, auditing, consulting of any kind including tax consulting, currency exchange operations, banking, insurance and financial intermediation, gambling and gaming, production of excisable goods, activities requiring a licence or permit, and activities requiring significant investment.
Why are legal, medical and architectural services excluded?
These are regulated professions with their own licensing frameworks, and Georgia has ruled them out of Small Business Status specifically rather than leaving it to the general "requires a licence" test. Turnover is irrelevant to the exclusion. A lawyer, doctor or architect needs a different structure regardless of how much they earn.
What happens if I register and my activity turns out to be prohibited?
The status does not apply to income from that activity, whether or not the Revenue Service has flagged it yet. Once identified, the status is revoked for that activity, income is reclassified at the standard 20% rate, and underpayment penalties and daily interest can apply to the difference.
Can I fix it by changing how I describe my work?
Only going forward, and only if the underlying activity genuinely is not excluded. Rewording an invoice does not retroactively change how income already earned under the wrong registration is taxed. If the activity itself is excluded, no wording change resolves that.
Is bookkeeping the same as accounting for this purpose?
Not necessarily. Straightforward bookkeeping is generally distinct from the excluded auditing and advisory categories, but an accountant who signs off on financial statements or gives structuring advice sits closer to the excluded side. It is worth checking your specific scope of work rather than assuming either way.
Does this list apply to Micro Business Status too?
Yes, the same resolution covers both micro and small business status, though the eligible activities for micro business are narrower again. If you are close to the 30,000 GEL micro business threshold, check both sets of restrictions rather than assuming small business status rules apply unchanged.
What should I do if my activity is on the prohibited list?
An LLC is generally the answer. It has no activity exclusions of this kind, though it is taxed differently: 15% on distributed profit rather than 1% on turnover. The comparison is worth running properly rather than assuming the LLC is automatically more expensive.
Does "requires significant investment" have a clear definition?
Not a precise one in general guidance, which is exactly why it is the exclusion most likely to need a direct answer for an unusual business model rather than a confident answer from a general article. It is worth checking your specific case rather than assuming you are clearly on one side of it.
Will the Revenue Service tell me in advance if my activity is excluded?
Not proactively. The registration process at the Public Service Hall does not automatically flag an excluded activity code before you commit to it, which is why checking beforehand rather than assuming approval means acceptance is worth doing.
How do I know which activity code to register under?
The codes are tied to what your contracts and invoices actually say you do, not a general description of your profession. Two people doing similar work can land on different codes depending on how their engagements are worded, which is why checking your specific contracts against the list matters more than checking the general category.