Registration as a personal development consultant

Registration as a personal development consultant

Question:
Hello!
I work as a personal development consultant - I conduct courses and consultations. How will it be more profitable for me to register a company - as a freelancer or EOOD?
Thanks in advance!

Answer:
Hello,
There is no clear answer to your question, but we will try to give you information on the topic of what taxes and insurance you would owe in both options.
From a tax point of view, things look like this:
- if you are self-employed, you declare the amount of income for the year. From this amount, you deduct 25% of legally recognized expenses and insurances paid during the year, and you owe 10% tax on the resulting difference.
- with an EOOD, you declare the amount of income and expenses related to the 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, and the minimum insurance income is currently BGN 933.00, which means minimum insurance in the amount of BGN 300.00 per month. At the end of the year, when the annual tax return is submitted, an adjustment is made. In this equalization, the realized income during the year is looked at, and if its amount exceeds the amount on which you were insured, you must add insurance on the difference. The amount on which insurance is calculated and paid on an annual basis cannot be higher than BGN 45,000.00 for the year 2024.
 
- with EOOD, the insurance contributions are again paid on the minimum insurance income for the year - BGN 933.00, the difference being that there is no annual equalization of the insurance contributions.
 
You should make some kind of plan regarding the income and expenses that you expect to expect. Only in this way could you determine which form of activity is economically more profitable for you (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 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 give yourself a salary, to give yourself a loan, which you will have to return to the company with interest included, or after the financial year is over and if the company has realized profit, then you can distribute that profit to yourself as a dividend (paying an additional 5% dividend tax on that amount).
- if you exercise your activity as a freelancer, it is not necessary to issue a receipt when receiving cash. This does not apply to an EOOD, and a cash register is required when receiving cash.
- in order to register as a self-employed person, you need to 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 the state fee is BGN 10.00. Registering an EOOD is a little 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 them are notarized. After that, a collection account is opened in a bank of your choice and the initial capital of the company is deposited - the minimum is BGN 2.00. The capital import note, together with the other prepared documents, is submitted to the Commercial Register, no later than 7 calendar days from the date of the founding act. Registration takes place within 7 working days. The state fee is BGN 110.00. The notary fee is BGN 8.00, and the bank fee will depend on the chosen bank, varying from BGN 10.00 - 50.00.
We hope we have been helpful!
Greetings!