ET or EOOD to register?

ET or EOOD to register?


Question:
Hello!

I assume that you will give me the most correct information and that is why I am turning to you. I am considering online trading and am wondering what type of company I should register. Naturally, all related issues: insurance, reporting, taxes, etc.
Thanks in advance!

online trading, ET, EOOD, taxes, financial result, accounting services, Varna, Ruse, Plovdiv, Burgas, Sofia
Answer:
Hello,
Your inquiry is formulated a bit generally, so I will answer in principle what I see as questions, and if you have additional ones, we will consider them later.
Regarding the form through which you will exercise your online trade, there are actually two options before you. Without going into details, the better option in our opinion is EOOD. Both for ET and EOOD, the tax burden can be said to be the same (15% tax for ET and 10% profit tax + 5% dividend tax for EOOD). The difference is that for the obligations of your business to partners and the state (including taxes and insurances, etc.) with an ET you are responsible with all your property as an individual (everything you own as property), while with an EOOD you are liable only to the extent of the assets and capital in the company.
Regarding insurance, in any case, as long as the company is active (it has an activity declared with a declaration) insurance is due. if there is only you in the company, then there are two options for insurance - Management and Control Contract (MCU) or self-insured person (SOL). If you are insuring yourself at the Social Insurance Institution, then this is done at the minimum thresholds for the position of Manager in the relevant type of activity, which will not be less than BGN 900-1000 for your type of activity. That is, insurances of BGN 300-350/month (it is possible that they are more, you need to see the exact minimum threshold according to the economic activity code). If you are insured as a SOL, it is done on the minimum insurance income for the country, which for 2023 is BGN 710, with the monthly insurances being between BGN 190 and 220/month (depending on whether maternity and hospital risks are covered). The choice is yours, I personally recommend for a start-up business to go for insurance such as SOL at 190 BGN, in order to minimize costs in the initial stage of the activity. Later, if you choose, this can be changed and you can go to a higher threshold.
Tax reporting, I briefly touched on it in the paragraph with the choice of the type of company. If you choose an EOOD, you pay tax on the profit based on the Law on Corporate Income Taxation (CIT). In short - all revenues are collected, all expenses are subtracted from them and the financial result is formed. If this result is a profit (it can also be a loss), a 10% tax is paid once a year in the period specified for this, and the rest of the profit with tax paid remains in the company as undistributed profit. If you decide to withdraw some of it and spend it as you see fit, then you have to pay yourself a dividend, which is subject to an additional 5% dividend tax.
Under certain conditions, a mandatory VAT registration may be required, depending on which member you are under, you may be required to pay 20% VAT on all sales, while at the same time you will be entitled to deduct 20% VAT on all company expenses. This is done monthly by the accountant, by preparing and filling in all the necessary reports to the NRA.
If you have other questions, we can organize a consultation with the manager of our convenient office in Sofia, Plovdiv, Varna, Burgas or Ruse. The consultation will be free.
We hope we have been helpful!
Greetings!




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