Company formation Bulgaria

Working in Bulgaria: Freelancer vs. Company Registration

Welcome to Bulgaria! If you’re considering setting up business here, you’ll need to decide whether to register as a freelancer (self-employed) or establish a company. This article will compare both options, helping you choose the best fit for your situation.

Freelancer Registration:

Freelancer registration is a simpler and faster option, ideal for solopreneurs with limited expenses. Here’s what you need to consider:

  • Benefits:
    • Easy Setup: Registration is straightforward and can be completed within a week.
    • Lower Costs: Initial registration and ongoing accounting expenses are generally lower than for companies.
    • Tax Advantages: You benefit from a flat 10% income tax rate after deducting a fixed 25% for expenses, regardless of your actual spending.
    • Flexibility: You have more control over your work schedule and business structure.
  • Drawbacks:
    • Full Liability: You hold full personal liability for your business debts and obligations.
    • Limited Access to Financing: Securing loans or investments can be challenging as a freelancer.
    • Higher Social Security Contributions: Social security payments are based on a minimum income threshold, which can be higher than your actual earnings.

Company Registration:

Company registration offers a more formal structure and may be suitable for businesses with growth potential or those planning to hire employees.

  • Benefits:
    • Limited Liability: Your liability is limited to the company’s capital, protecting your personal assets.
    • Access to Financing: Companies have better access to loans and investments.
    • Professional Image: A company registration projects a more established and professional image.
  • Drawbacks:
    • Higher Costs: Company registration and ongoing accounting fees are generally more expensive than freelancer registration.
    • More Complex Setup: The registration process involves more steps and formalities.
    • Double Taxation: Companies pay a 10% corporate tax on profits, and owners may pay additional taxes on dividends.

Choosing the Right Option:

The best registration option depends on your specific circumstances. Here are some key considerations:

  • Business Size and Growth Potential: If you’re a solopreneur with limited expenses, freelancer registration might be sufficient. However, if you plan to hire employees or experience significant growth, a company structure might be more suitable.
  • Liability Protection: If limiting your personal liability is a priority, a company offers that protection.
  • Financial Considerations: Weigh the registration and accounting costs associated with each option.
  • Tax System: While both options involve social security contributions, the minimum income threshold can lead to higher contributions for freelancers compared to their actual income. Companies have a separate tax structure with corporate tax and potential dividend tax.

We’re Here to Help!

Navigating the legalities of working in Bulgaria, including social security contributions and VAT registration, can be complex. Our team of accounting professionals at Aidos can help you determine the best registration option for your business needs. We can also assist you with the registration process, tax compliance, and ongoing accounting services.

Schedule a Free Consultation Today!

Contact us today to schedule a free consultation and discuss your business goals. We’ll be happy to answer your questions and guide you through the process of setting up your business in Bulgaria.

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