Is the income of a makeup artist declared?
Is the income of a makeup artist declared?
Question:
Hello!
I want to practice the profession of "make-up artist" in my free time (mostly on weekends). Do I have to declare this income if I have a permanent employment contract elsewhere?
Thanks in advance!
Answer:
Hello,
The income from the activity you described should be declared. There are two ways to do this - to register as a self-employed person or to register a company in your name.
The differences are as follows:
From a tax point of view, things look like this:
- in the case of self-employment, you declare the amount of income for the year. From this amount, you deduct 25% of legally recognized expenses and the insurances paid during the year, and you owe 10% tax on the amount thus obtained.
- 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:
- if you are self-employed, you are insured monthly, and accordingly you must declare and pay insurance every month, as the minimum insurance income is currently BGN 933.00, which means minimum insurance in the amount of BGN 270.00 per month. At the end of the year, when submitting an annual tax return, an adjustment is made. Then the realized income during the year is looked at. If its amount exceeds the amount on which you were insured, you must add insurance on the difference. The maximum insurance income for 2024 is BGN 45,000.00.
- at the EOOD, insurance is paid again on the minimum insurance income for the year - BGN 933.00, but there is no annual equalization of the insurance contributions.
The fact that you are already insured under an employment contract does not release you from the obligation to pay insurance contributions. An exception would be if you are already insured on the maximum insurance income.
You need to estimate and make some kind of plan regarding the income and expenses you expect to have. In this way, you could determine which form of activity is economically more profitable (ie you would pay less tax and insurance).
In addition, there are several functional differences:
- the money you earn as a freelancer is actually 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 receive a salary, to give yourself a loan, or after the financial year is over and if the company has made a profit, you can distribute the profit to yourself as a dividend (then an additional 5% dividend tax is payable on this amount).
- if you exercise your activity as a freelancer, you will not have the obligation to issue a receipt when receiving cash. This restriction does not apply to EOOD.
- in order to register as a self-employed person, you must provide a diploma or some other certificate with the set of documents (application and declaration) certifying your competence to provide the services you will perform. The registration itself is carried out by the Bulstat Register within 24 hours, and there is also a state fee of BGN 10.00. To register an EOOD, the procedure is a little longer and more complicated. A set of documents is being prepared (foundational act, minutes of the founding meeting, management contract, several declarations and a sample signature). Some of the documents are notarized. A collection account is opened in a bank of your choice, into which the initial capital is deposited - the minimum is BGN 2.00. The capital deposit note, together with the other prepared documents, is submitted to the Commercial Register within 7 calendar days at the latest from the date of the founding act, and the registration also takes place within 7 working days. The state fee is BGN 110.00. The notary fee is BGN 6.00. The bank fee depends on the bank you choose and varies from BGN 10.00 to BGN 50.00.
We hope we have been helpful!
Greetings!
