Manicure Studio

Manicure Studio

Question:
Hello!
What would be the most suitable/beneficial option for starting work as a manicurist - registration as a self-employed freelancer, ET or EOOD? I am turning to you for help, and for this purpose I will describe a specific example to see if I am correctly calculating taxes and insurance for all options.
Monthly turnover: 2000 BGN. Monthly expenses (rent + work supplies): 500 BGN.
In the case of freelance work: From the monthly turnover (2000) we subtract 25% of legally recognized expenses (500) and it becomes 1500 BGN. From them we subtract the insurance contributions of 31.3% (including general illness and maternity) or 469.50 BGN, to obtain the tax base 2000-500-469.50 = 1030.50 BGN. 10% of it is 103.05 BGN. To them we add 469.50 BGN and we obtain 572.55 BGN in total for taxes and insurance contributions. To them we add the expenses of 500 and we obtain 1072.55 or the net profit is 927.45 BGN
For EOOD: From the monthly turnover (2000) we subtract the monthly expenses of 500 (in this case they coincide with the example above) and we obtain 1500, which is our tax base. It is taxed with a corporate tax of 10% (150). 1500 - 150=1350 x 5% = 67.5, to get dividend tax. Separately, we have insurance for a self-employed person in the amount of 292.03 (MRP of 933x31.3%), which means that the total amount of taxes and insurance is 150+67.5+292.03=509.53 BGN. To them we add the expenses of 500 and we get 1009.53 or the net profit is 990.47 BGN?
Questions:
1. How correct are the calculations?
2. Are there potential expenses that are omitted in the above examples?
3. Are the calculations for ET close to those of the liberal profession or EOOD?
4. How is the calculation with patent tax?
Thanks in advance!

Answer:
Hello,
Directly to your questions:

1. Your calculations are absolutely correct
2. If the rent is paid to an individual, an additional expense may arise if you opt for the option of working through a company. When a company pays income to an individual, it is obliged to withhold the tax due from the individual. That is, on the one hand, you will owe another additional tax, but on the other hand, you withhold it from what you pay to the tenant and actually pay him a lower rent and, accordingly, your expense remains unchanged. You may find yourself in a situation where you negotiate a certain rent, but subsequently (due to the fact that the landlord is not aware that you have to withhold the tax and will actually receive less than the agreed rent) a renegotiation of the rent may follow at the landlord's initiative (because he wants to see 500 leva clean in his hands), which would actually increase your expenses.
3. With the monthly income you indicated of 2000 thousand BGN, the calculation for ET will exceed both the freelance profession and the EOOD, since on the one hand the tax is 15% (for freelance profession it is 10%, and for a company it is 14.5% with the dividend tax included) and is calculated by deducting the real expenses and the due social security contributions from the income, on the other hand social security contributions are due on the actually realized income (as in the freelance profession). Or we will have social security expenses of 626.00 BGN, by deducting them together with the monthly expenses in the amount of 500 BGN from the entire income, the tax base remains - 874 BGN, which when taxed with 15% tax (131.1 BGN) actually leaves you with a profit in the amount of 742.90 BGN.
4. How is the calculation with patent tax done? - the patent tax is determined by municipality - i.e. you need to check how much the patent tax is in the municipality where you will work. It is paid once a year and is a fixed amount. In addition to it, you will also owe social security contributions on the real income - 2000 BGN, which means 626.00 social security contributions. To find out whether this will be more profitable than the other options, you will need to find out how much the patent tax is in the respective municipality.
We hope that we have been useful to you!
Greetings!