Upwork and sole proprietorship in Georgia: How to legally receive payments, save 1% tax, and minimize commissions

If you’re a freelancer on Upwork and live (or plan to live) in Georgia, the optimal path is usually this: register as an Individual Entrepreneur, apply for Small Business Status (1 % of turnover), and set up withdrawals from Upwork through the most profitable channel for you (Direct-to-Local-Bank / Payoneer / PayPal / Wise / Deel partners). Upwork supports several withdrawal methods, including direct local transfers with a low fixed fee — you should test this with a small amount to understand the actual losses.

1) Why it makes sense to register as an individual entrepreneur and apply for a small business (1 %) tax rate

• Low tax rate subject to certain conditions. Small Business status in Georgia provides a simplified tax rate of 1 % of turnover subject to certain limits and conditions (for details and thresholds, see current legal and tax clarifications). This makes legalizing freelance income significantly cheaper than under the general regime.
• Transparency for banks and payment providers. Official individual entrepreneur status simplifies opening a business account, accepting payments, and reporting to the tax authorities.

Before applying for the 1 % tax rate, check whether your business qualifies for exceptions and whether your expected turnover does not exceed the limits (the rules have changed — stay tuned for updates).

2) How to start the process: basic steps

• Register as an Individual Entrepreneur (IE) at the Public Service Hall — usually quickly and with minimal documentation.
• Open an Upwork profile (if you don’t already have one) and set up Get Paid → Withdrawal methods. Upwork offers several withdrawal methods: Direct‐to‐Local‐Bank (often $0.99 per withdrawal), Payoneer, PayPal, wire transfer, and others.
• Apply for Small Business Status (SBS) at the Georgian Revenue Service (through their portal or in person).
• Make a test withdrawal of a small amount using your chosen method to understand the actual fees and processing time. (Note: sometimes the receiving bank charges an additional fee.)

3) What withdrawal methods does Upwork support and what to expect?

Upwork officially supports: Direct‐to‐Local‐Bank (local bank transfers), Payoneer, PayPal, wire transfers, etc. (available methods vary by country). Key points:

• Direct‐to‐Local‐Bank — fast transfer to local currency/account, typically $0.99 per withdrawal and ~4 business days; often the cheapest and most convenient option in countries where it’s available.
• Payoneer — a popular method among freelancers: integrated with Upwork, you can get a USD‐receiving account and withdraw to a card/account; fees and rates depend on Payoneer’s rates.
• PayPal — convenient, but often has higher fees and an unfavorable rate when converting to local currency; useful if clients/platforms pay via PayPal. Wire/SWIFT is an expensive option (the fixed fee can be $30—$50 or more) and slow; it makes sense for large one‐time payments if there are no alternatives.

The main recommendation: test two or three methods (for example, Direct‐to‐Local‐Bank and Payoneer) on real, small amounts and create a simple table — the actual amount in the account/card is the main selection criterion.

4) How to account for income and pay 1 % — A practical explanation

• Currency: Upwork pays in USD; for taxes in Georgia, income should be reported in GEL at the exchange rate used in accounting/tax practice (usually the bank rate/official exchange rate on the date of receipt). Keep payment confirmations, screenshots, and statements.
• Deadlines and reporting: Small Business (1 %) typically has simplified payment rules (check the current deadlines and mechanism in Revenue Service).
• Social contributions: In some cases, individual entrepreneurs pay social contributions — check with your accountant to determine how this affects your situation.

5) Example of calculating "how much you’ll receive on your card" (what to consider)

1. Amount on Upwork (USD)
2. − Upwork fee (if any)
3. − withdrawal fee (e.g., $0.99 for Direct-to-Local-Bank) Upwork Support
4. − conversion at the provider’s rate (Payoneer/Wise/bank) — take into account the spread (margin)
5. − possible fees of the recipient bank (fixed fee)
6. Result → the amount in GEL, from which you calculate the 1% tax.

Experience shows that the difference between the "Upwork balance" and "what’s on your card" is made up of fixed fees + percentage spreads during conversion. Therefore, it’s wise to have a reserve of 2—5 % to cover these losses.

6) Common mistakes and how to avoid them

• Failing to test conclusions: choosing a method based on reviews rather than actual testing.
• Ignoring Small Business requirements (risk losing the 1 % discount).
• Not saving payment confirmations and transfer rates — this complicates reporting.
• Ignoring additional fees from your local bank (especially for SWIFT).

7) A short checklist: "From registration to the first regular payment"

• Register as a sole proprietor (Public Service Hall).
• Apply for Small Business Status (1 %) in the Revenue Service.
• Create/verify an Upwork account and select a withdrawal method.
• Link Payoneer/PayPal/bank account (depending on the test results).
• Make a test withdrawal ($50—$200) and track actual fees and time.
• Set up accounting: payout table (date, USD amount, fees, exchange rate, GEL total).
• Consult an accountant for your first declaration/withdrawal of a large amount.

Conclusion

For most Upwork freelancers working from Georgia, the combination of sole proprietorship status + Small Business (1 %) and a conscious choice of withdrawal method (based on the results of a real test) is the path to income legalization with minimal losses. The main thing is to test your withdrawals, maintain transparent records, and submit your status application on time.