The theme of the topic is about developing economic conditions of the country without commerce, production and financial institutions, is impossible. Small business is the basis of the economy of many states, due to its obvious advantages over other structural units of business. The development of Small and medium sized enterprises in developed countries is underway at a high rate, with the government providing substantial assistance because small and medium businesses are the basis for the middle class formation of the population that constitute the stable development of the country's economy. The main topic of research is to determine the factors affecting the economic development of the country. The objective of the research is the reforms carried out by the Georgian goverment. The aim and objective of the research is to reform the tax system in Georgia and state program "Produce in Georgia" Analysis has been made to create a favorable environment for doing business, for direct foreign investment, liberalization of economy, reduction of administrative barriers and tax cargo, and improving public services. The objective necessity of small and medium business support in Georgia and development of practical proposals is presented. What is the role of entrepreneurial culture development, stimulating development of new enterprises and facilitating expansion of existing enterprises, how reform promotes the effectiveness of small and medium business functioning and how it reacts to the growth rate of GDP. The strong and well-developed small and medium enterprises sector greatly contributes to exporting, innovations, as well as the potential for employment growth and job creation, and at the same time plays a special role in raising the welfare of the country.

Key words: Small business, tax reform, state program, economic growth, regional development