Tax calculator self-employed persons (freelancers) or LLC in 2024 in Bulgaria - which one to choose?

The Elan Consulting insurance calculator is an intuitive tool designed for people who want to find out what is more profitable - to register as a freelancer or to register an EOOD ( the Bulgarian version of LLC). It has three main fields: expected income, expected expenses and type of occupation. Based on the information entered, the calculator automatically calculates taxes and insurance, as well as net income for each of the two options.

After the user enters the necessary data, the calculator compares the net income from the two forms of business activity - as a self-employed person and as an EOOD. As a result, it offers an analysis and recommendation for the most appropriate option according to the individual financial circumstances of the client. Thus, customers can make an informed and profitable decision about their business.

Elan Consulting's insurance calculator has been developed to help individuals receiving income from various sources such as civil contracts, liberal professions, royalties and licensing fees, etc., to make an informed choice between registering as an EOOD or working as a self-employed person. It calculates the total amount of taxes and insurance for each option, but does not cover all possible cases, such as the obligation to register under VAT in some circumstances.

It is important to note that the information provided is general and does not replace the professional advice of an accountant or accounting firm. We recommend consulting with a specialist before making important decisions about your financial and business strategy.

The decision between registering as a self-employed person or an EOOD depends on several key factors. First, it is important to determine whether this will be your main activity or an additional source of income. Next, consider the logistical aspects such as the place of work, the necessary equipment and the start-up capital.

Deciding whether to work independently or hire staff is also important. Working as a freelancer is usually more suitable for individual entrepreneurs, while EOOD allows easier hiring of employees.

Expected annual revenue also plays a role. For lower incomes, working as a freelancer may be more profitable, while an EOOD is often suitable for higher incomes due to the different tax structure.

In the current material, we will consider in a little more detail what are the pros and cons in each of the possible hypotheses!

Registration as a self-employed person

Registration as a self-employed person who exercises a freelance profession includes various specialists such as accountants, lawyers, doctors, architects and others. Such persons must be registered in the Bulstat Register and self-insure themselves by determining their insurance income. In the case of self-insured persons, there are legally recognized costs that are taken into account in the calculation of the insurance contributions due, which facilitates the determination of the tax base.

The advantages of registering as a self-employed person include a simpler registration and deregistration procedure, as well as the possibility of using the legally recognized costs, which is especially advantageous in activities with little or no supporting documents.

Registration as a Sole Proprietor (ET).

‍Registration as a sole trader (ET) is suitable for persons carrying out commercial activities in Bulgaria. The registration procedure is somewhat more complicated than that for self-insured persons, being carried out in the Commercial Register. The ET independently pays its insurance contributions on the profit actually received, and the calculation of the contributions is based on the difference between income and expenses, without legally recognized expenses.

The sole trader bears full responsibility with his personal property for the obligations of the business. The advantages of ET include the simpler procedure for registration and deregistration in relation to EOOD, the absence of obligation to submit financial statements and the calculation of taxes and insurance contributions on the actually realized profit, which is convenient for activities with significant costs.

Registration of an EOOD / LLC / LTD or a company with variable capital (DPC)

The choice between an EOOD and the status of a self-employed person is key for anyone planning to start their own business, especially in the field of services. This choice depends on the individual needs, business goals and financial circumstances of each entrepreneur.

EOOD offers significant advantages, such as limited liability, which protects the owner's personal property from company obligations. This is especially important for businesses that involve greater financial risk or significant investments. Also, Ltd. provides a professional image and structure that can be preferred by clients and partners, especially when looking for business extensions and hiring opportunities.

On the other hand, the status of a self-insured person is more suitable for individual entrepreneurs with lower start-up costs. It offers a simpler administrative procedure and the possibility of using legally recognized costs, which can be convenient in certain professional activities.

Ultimately, the choice between an EOOD and a self-employed person depends on the specific needs and expectations of each business. It is advisable to consult with specialists for a more detailed analysis and individual advice.