Business with herbs and herbal ointments

Business with herbs and herbal ointments

Question:
Hello!
I want to open an online store and a page on social networks on the topic of herbs and herbal ointments that I will prepare. What conditions do I need to meet and what documents do I need to have in order to carry out this type of trade? Should I have a company and what should it be: ET or EOOD? I want to sell herbs and herbal salves. I plan to buy in bulk, repackage by weight and use some of the herbs to make potions and salves.
Thanks in advance!

Answer:
Hello,
The activity you describe is commercial, which implies registration as a merchant. When it comes to the activity of trading goods, your only option is to register a company - EOOD or to register as a sole trader (ET).
 
From a tax point of view, things look like this:
- with ET you declare the amount of income for the year. From the amount received in this way, you deduct the insurances paid during the year and on the amount received in this way, you owe 15% tax.
- with an EOOD, you declare the amount of income and expenses related to your activity. If the income is more than the expenses, then you make a profit and this profit is taxed at 10%.
 
From an insurance point of view, the situation is as follows:
- with ET, you are insured monthly, and accordingly you must declare and pay insurance every month, with the minimum insurance income currently being BGN 710.00, which means minimum insurance in the amount of BGN 200.00 per month. At the end of the year when an annual tax return is submitted, an adjustment is made. In this equalization, the realized profit during the year is looked at, and if the amount exceeds the amount on which you were insured, you must add insurance on the difference. The amount on which insurance is paid on an annual basis cannot be higher than BGN 40,800.00.
 
- with EOOD, the insurance contributions are again paid on the minimum insurance income for the year - BGN 710.00, the difference being that there is no annual equalization of the insurance contributions.
 
I.e. purely from a tax and insurance point of view, you will need to assess and make some kind of plan as to what income you expect to receive and what expenses you would have. Only in this way could you determine which form of activity is economically more profitable (ie you would pay less tax and insurance).
 
Apart from the differences from a tax and insurance point of view, there are also several purely functional differences:
- the money you earn as an ET is really your money and you can "spend" it whenever and on whatever you want. With an EOOD, the money the company earns stays with the company. If you, as the owner, want to have this money available, there are several options - to give yourself a salary, to give yourself a loan, or after the financial year is over and the company, if it has made a profit, you can distribute the profit as dividend (but you will have to pay an additional 5% dividend tax on this amount).
- as an EOOD, the company is responsible for its obligations to the extent of its own assets and capital. As an ET – you are the company, which means that you are personally responsible with all your assets for any liabilities arising from your activity as an ET.
 
In principle, there is also the option in which you do not register as a trader. Then the law equates you to an ET and taxes you as an ET would – with taxes and insurance.
We hope we have been helpful!
Greetings!