Combining two activities in one company or registering a freelance profession
Combining two activities in one company or registering a freelance profession
Question:
Hello!
I am interested in whether and how as a self-employed person with my own VAT-registered online sales company (online store) I could carry out additional activities - teaching English online, as well as freelance work, such as both are to foreign sites and the activity will not be carried out in Bulgaria.
If I decide to do the activity not through the company, but as a separate self-insured person, do I need to submit any documents and go through a certain registration process or can I start now (separately from the company)?
Thanks in advance!
Answer:
Hello,
You have two options:
1. You carry out the activity you describe through the already existing company
2. You register as a self-employed person
From an administrative point of view, it is more logical to carry out this activity through the already existing company - in this way you will save administrative costs. From a tax and insurance point of view, everything depends on the amount of expected income from the activity you described.
From a tax point of view, in the case of self-employment, you declare the amount of income for the year. From the amount received in this way, you deduct 25% of legally recognized expenses and the insurances paid during the year, and a 10% personal income tax is due on the amount received in this way.
From an insurance point of view, with a freelance profession, you are insured monthly, and accordingly you must declare and pay insurance every month, and the minimum insurance income is currently BGN 780.00, which means minimum insurance in the amount of BGN 250.00 per month. However, since you are already self-insuring through the company you own, this will not be necessary. At the end of the year when the annual tax return is submitted, an adjustment is made. In this equalization, the realized income from a freelance profession during the year is considered. Since you are already self-insured through the company as owner and manager, you will owe insurance contributions on the entire income from the freelance profession (reduced by 25% legally recognized expenses). The amount on which insurance is paid on an annual basis cannot be higher than BGN 40,800.00 for the year 2023.
From what has been described, it is clear that unless we are talking about a fairly high monthly income, it will be more profitable from a tax and insurance point of view to carry out this activity through the company, because although as a freelancer you save on tax, the insurance weight will be much higher.
However, there is nothing wrong with structuring your activities by dividing them. Higher insurance contributions at a given time can play a positive role when determining different types of benefits (sickness, pension) or when applying for credit.
If you decide to start an activity separately from the company, you will need to register as a self-employed individual. This is done in the Bulstat Register, by filling out a form application, a model declaration and providing a copy of a valid diploma, certificate or any other document that certifies your ability to perform the relevant activity. There is also a state fee of BGN 10. Registration takes place within 24 hours after submitting the documents.
If you are already self-insured through the company, no monthly self-employment insurance returns need to be filed. What you will have to do, however, is every quarter to submit a declaration under Art. 55, with which to declare advance tax payable (for each quarter except the last) and accordingly you will have the obligation to pay it. At the end of the year, when submitting the annual tax return, you will have to balance the insurances and calculate what tax there is to remit.
We hope we have been helpful!
Greetings!
