For the start of any business, regardless of its type, it is necessary to register a company. This is perhaps one of the most important choices you should make when setting up your business and for which a certain amount of knowledge is required.
To register a company in Bulgaria the most popular legal forms are Sole Proprietorship., SP. Ltd. or Ltd. Here’s a look at what you need to know about them in order to be able to choose the most appropriate legal form for your business.
Register a company in Bulgaria – Sole Proprietorship?
When carrying out an independent commercial activity, the choice is between Sole Proprietorship and SP.Ltd. Any working individual domiciled in the country (Art. 56 of the Commercial Act) can be registered as a sole trader/ Sole Proprietorship. Here it is important to know that according to Art. 58 of the Commercial Act, an individual has the right to register only one Sole Proprietorship. When it comes to Sole Proprietorship, the owner is materially responsible for the business activity with all their property.
We do not recommend this legal type when registering a company in Bulgaria
Register a company in Bulgaria – SP.Ltd:
The sole limited liability company SP.Ltd: is a commercial company where the owner of the capital bears material liability up to the amount of the capital of the company. This means that when registering a company SP.Ltd, from a legal point of view, creditors cannot encroach the personal property of the owner, but only the ownership of the company. The minimum capital is BGN 2 and the shares cannot be less than BGN 1. With SP.Ltd, the sole owner of the company manages and represents the company personally or through a manager employed by him/her.
Register a company in Bulgaria – Ltd:
The limited liability company (LTD) is a commercial company, most common among investors because of the minimum capital requirements and the simplicity of its management structure. Unlike SP. Ltd, two or more partners are required for the registration of a company Ltd. Each partner owns number of shares each share cannot be less than BGN 1.
Sole Proprietorship are subject to patent tax in case they perform activities and services listed in the Local Taxes and Fees Act. Such are, for example, restaurants, carpentry services, tailoring services, barber and hairdressing services, auto repair and auto paint services, etc. If they do not carry out a patent activity, Sole Proprietorship are subject to a profit tax of 15%.
Unlike Sole Proprietorship, when registering a company of the type SP. Ltd. and Ltd., traders are not subject to patent tax. The amount of income tax for them is 10%. However, they have a dividend tax of 5%. It is due after a decision has been taken by the owner(s) of the capital to distribute profits in the form of dividends.
The Sole Proprietorship is insured as a self-insured person. At the end of each calendar year, the Sole Proprietorship equals and provides social insurance contributions on the basis of gross profit.The situation is different when it comes to the owner of SP. Ltd/partners in Ltd. Social insurance is done on one of the following grounds – as self-insured persons or as persons working on a management contract. They don’t equalize here, and they don’t get insurance.
It`s just a glimpse over the different forms of company registration and far from the complete and detailed information. Each individual form of commercial company has its specifics, advantages and disadvantages.
In case you have any specific questions and queries or have decided to entrust the company registration task and its service to specialists with years of experience in the field, do not hesitate: CONTACT US. With us you will find a reliable partner in your business.