Running a business without a bank account

Running a business without a corporate bank account in Georgia (the country).

Modification date: 2023-12-11 / View count: 1138

It is not an empty phrase to say there is a discrepancy between political will and financial policy in Georgia. Indeed, almost everyone can register a company in Georgia, even remotely, but not every registered company can have a bank account in Georgia. Since September 2019, it has been hard for a foreigner, the owner of a Georgian company, to open a corporate bank account.

The laws passed after the Rose Revolution, which created a space favourable to economic expansion, social aspiration and liberal openness, are gradually being called into question by the reactionary post-2012 government, which prefers, in good Soviet fashion, to develop the financial sector and infrastructure works, areas where it is easier to organise corruption.

Banks, upon the supervision of the National Bank, started to restrict the opening of bank accounts to the only companies trading on the Georgian market. This policy can make sense when developing your local market and production, but this is not today's policy. The development of an economy starts by pushing small and medium companies, not investing in micro-finance, banks, or state works contracted to foreign companies.

Foreign Entrepreneurs are not interested in the Georgian Market. They come to Georgia to take advantage of the fiscal policy with a low tax system. That is a fact.

Many businesses owned by foreigners have been requested to justify receiving payment in the bank. After sending invoices and contracts, banks notified them that it did not fit the "internal policy of the bank" and that the payment would be back to the sender. The company has to find another bank for its financial transactions.

For many foreigners, this makes no sense, and many registered companies have been set in sleeping status. We can estimate that today 80% of companies registered by foreigners are sleeping companies.

Even if it is not pleasant there is nothing to get into a panic. Being entrepreneurs, we tried to find a way to bypass this obstacle.

There is nothing in the Georgian law, that forces a company to have a bank account. There is nothing in the Georgian law that forbids to have a bank account overseas.

The legal obligation of a business owner is to make monthly declarations and to pay taxes.

Banks, worldwide, are offering fewer and fewer services, and their added value is close to nothing. Banks focus on producing interest and not on producing added value. On liberal market, this fact gives the opportunity to new businesses to take part in the market. This is what we see today with the growing number of companies offering traditional services of banks at lower rates and higher efficiency.

Here we present three of them offering good services to Georgian registered companies. They allow you to pay and receive money from abroad, to pay your employees on a personal account even in GEL, and to pay for services and goods in Georgia. The only thing you cannot do is to pay taxes as the National Bank of Georgia is not on the IBAN network. So in order to stay legal, we insist on keeping your business safe and legal, you will have to pay by yourself in the name of your company if you are a resident in Georgia or find an attorney (or any other person you can trust) that will pay in the name of your company the due taxes.

We tested this solution with PayPal, Wise and Payoneer, and it works.

Using PayPal.

The process to register at PayPal as a legal entity is quite simple. PayPal asks for a few documents to open your professional account. Once it is done you can get payment from anywhere on the earth and be paid invoice to another business having a PayPal account. To get your money, you will need to link your account to a Visa card or a Mastercard. Be aware that a bank can refuse to link your card to a PayPal account, in this case, take another card in another bank. Once the link between your PayPal account is done you can transfer money to your card. Depending on the issuer or the card it can take up to five days to have the money available on your card. Usually, it takes one day to get money on the card. Don't forget to declare the payment as a salary and pay related taxes. PayPal is not cheap, so prepare transactions you have to do, and group them as much as possible to save on fees.

To register:

https://www.paypal.com/ge/webapps/mpp/account-selection

Using Wise

The process to register at Wise as a legal entity is a little bit more complex than with PayPal. Wise will ask you to upload your company registration document and a copy of your ID/Passport. Don't use a scan but a photo that you need with a good device, indeed to quality of the photo is important. Once the registration is done you will be able to open accounts in all currencies you need. You can also have an account in Lari. Wise is cheaper than PayPal, but it is not quicker. Sometimes while transferring money via Swift it takes more time than the bank does. From Wise, you will be able to pay salaries and invoices in Georgia. For tax, you will have to pay in the name of your company if you are a resident or use the service of a third entity.

To register:

https://wise.com/register/

Using Payoneer

Payoneer is a payment platform which allows you to work with clients in more than 180 countries and more than 70 currencies. With a Payoneer account, you can manage your business in multiple currencies, target new markets and international opportunities, and access working capital to drive your global growth. Payoneer proposes a wide range of services such as:

  • Local bank account details in the USA and Europe

  • Currency exchange

  • Payment cards

  • Working capital for bigger clients

  • Billing services

  • And many others

Payoneer is B2B oriented platform, and you can’t use it for personal payments.

To register:

http://tracking.payoneer.com/SH4kh   

Using both is a good combination, not every business has PayPal, but with PayPal you can issue invoices and send request for payment. It works we tested it. Then your customer can pay with PayPal but also with his bank card. Wise and Payoneer offer quick access to payment-in for USD, EUR and GBP, for each account you have a routing number, a sort code or an IBAN.

Article written by : Pierre Tsaguria
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