Trade in a municipal market
Trade in a municipal market
Question:
Hello!
I currently work on an 8-hour contract (sometimes we have overtime, which is also reflected). I have the opportunity to sell fruits and vegetables at a municipal market. Can I, as an individual, carry out this activity or must a company be created (what type - ET or EOOD). When it is with a company, if necessary, can the activity be frozen, but the company not be closed? Approximately how much will the insurances be?
Thanks in advance!
Answer:
Hello,
The activity you describe is commercial, which implies registration as a merchant. When it comes to trading in goods, your only option is to register a company - EOOD or to register as a sole trader (ET).
From a tax point of view, things look like this:
- with ET you declare the amount of income for the year. From this amount you deduct the insurances paid during the year and you owe 15% 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:
- with ET, you are insured monthly, and accordingly you must declare and pay insurance every month, with the minimum insurance income currently being BGN 710.00, which means minimum insurance in the amount of BGN 200.00 per month. At the end of the year when the annual tax return is submitted, an adjustment is made. In this equalization, the realized profit during the year is looked at, and if the amount exceeds the amount on which you were insured, you must add insurance on the difference. The amount on which insurance is paid on an annual basis cannot be higher than BGN 40,800.00.
- with EOOD, the insurance contributions are again paid on the minimum insurance income for the year - BGN 710.00, the difference being that there is no annual equalization of the insurance contributions.
I.e. from a tax and insurance point of view, you will need to assess and make some kind of plan according to what income you expect to receive and what expenses you would have. Only in this way could you determine which form of activity is economically more profitable (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 an ET is really your money and you can "spend" it whenever and on whatever you want. With an EOOD, the money the company makes stays with the company. If you, as the owner, want to have this money at your disposal, there are several options - to give yourself a salary, to give yourself a loan, or after the financial year is over and if the company has made a profit, to distribute the profit as a dividend ( but you will have to pay an additional 5% dividend tax on this amount).
- as an EOOD, the company is responsible for its obligations to the extent of its own assets and capital. As an ET - you are the company, which means that you are personally responsible with all your property for any liabilities arising from your activity as an ET.
- both with ET and with EOOD, you can freeze the activity of the company for an indefinite period and subsequently launch activity again. No insurance contributions will be due for the time without activity.
We hope we have been helpful!
Greetings!
