Accounting of a Restaurant in Bulgaria

In the dynamic world of restaurant business, every detail matters. Managing the accounting of a fast food establishment or restaurant requires specialized knowledge and careful planning. In this article, Elan Consulting will introduce you to all aspects of accounting for catering establishments in Bulgaria, including VAT, insurance, calculation of meals and other important elements.

Many of our customers often ask questions like “How is a small restaurant accounted for?” or “How do you make a calculation of a dish?”. These questions are not only relevant, but also critical for the successful management of the financial aspects of the restaurant business. In our article, we will look at examples and samples of accounting that will help you understand and apply best practices in your establishment.

Apart from basic accounting records, one of the most important duties of any restaurant is compliance with tax requirements. VAT and insurance are essential components that must be properly managed. “How is VAT calculated for a restaurant?” and “What insurance do I have to pay for my employees?” are questions that we will give answers to in order to facilitate your accounting and help you avoid sanctions.

Proper merchandise management is essential to minimize costs and maximize profits. In our article, we will consider various methods of writing out goods in a restaurant, including at the end of the year, and how to maintain the reporting value of goods. “What is the carrying amount of goods sold?” and “How is a protocol for the write-off of goods made?” are questions that we will consider in detail.

Calculation of dishes is a key part of running any restaurant. It is important to know how to determine the price of each dish to ensure competitiveness and profitability. In our article, we will provide guidelines and recipe calculation programs that will help you optimize your prices. “How do you do a dish calculation?” and “What recipe calculation program can I use?” are topics that we will look at in detail.

At Elan Consulting we are aware of the challenges you face in running your restaurant or fast food establishment. Our mission is to provide you with the knowledge and tools you need to succeed in your business. In the following sections of this article, we will take a detailed look at all the aspects of accounting that are important for your success. Stay with us to learn everything you need for the successful management of your restaurant business in Bulgaria.

How is the accounting of a restaurant or fast food restaurant kept?

Keeping accounting of a restaurant or fast food establishment requires attention to numerous details and compliance with specific legal requirements. The first step in this process is the creation of an accounting system that reflects all financial transactions of the establishment. According to the Accounting Act (Art. 4, para. 1), every commercial company must keep accounting books and prepare financial statements in accordance with national accounting standards or International Accounting Standards, if applicable.

The restaurant must monitor its income and expenses daily. Revenue includes the sales of meals and beverages, and expenses include the cost of purchasing raw materials, rent, staff salaries, insurance and other operating expenses. It is important to keep detailed accounting of each sale and expense. According to Art. 6, para. 1 of the Accounting Act, enterprises must issue primary accounting documents for each operation performed.

Raw materials and goods must be properly accounted for when they are purchased and subsequently written off. Purchased raw materials are placed in a warehouse card, indicating their quantity and value. When using them for the preparation of dishes, these goods must be written out of the warehouse. This is done according to protocols for the write-off of goods, which reflect the decrease in warehouse stocks. The write-off is recorded at the book value of the goods, as specified in Article 9, paragraph 1 of the Accounting Act.

Staff salaries and related insurances are an important part of the restaurant's expenses. They must be accurately calculated and paid in a timely manner. According to Art. 25, para. 1 of the Accounting Act, employers are obliged to charge and pay social and health insurance for their employees. All payments must be documented and accounted for in accordance with applicable accounting standards.

Calculation of dishes is an essential aspect of restaurant management. Every restaurant must have a program or method for calculating the cost of preparing each dish. This calculation includes the value of raw materials, labor, energy costs and other direct costs. The final cost of dishes is determined on the basis of these calculations, adding the desired profit. According to Art. 32, para. 1 of the Accounting Act, enterprises must consistently apply the selected methods of valuation of assets and liabilities.

Also, taxation plays an important role in the accounting of a restaurant. Restaurants are required to charge and remit VAT on their sales. According to the Law on Value Added Tax (Art. 12, para. 1), all commercial transactions related to the sale of goods and services are subject to VAT. Restaurants must file monthly VAT returns and pay the amounts due in accordance with the deadlines set.

Finally, it is important to note that accounting records must be maintained regularly and correctly to ensure transparency and accuracy of the restaurant's financial reporting. In case of verification by the tax authorities, the availability of complete and accurate accounting documents will facilitate the process and protect the restaurant from potential penalties. According to Art. 38, para. 1 of the Accounting Act, enterprises must keep accounting documents for a certain period in order to be able to certify the accuracy of their financial statements.

Taxation and insurance in a catering/restaurant

Taxation and insurance in a restaurant or restaurant are key aspects that owners and managers need to know in detail to ensure legal compliance and financial health of the business. In Bulgaria, these processes are regulated by several major laws and regulations, including the Value Added Tax Act (VAT) and the Social Security Code.

To start with taxation, it is important to know that restaurants and catering establishments are subject to VAT on their supplies of goods and services. According to the VAT, Art. 66a, the tax rate is 9% for the supply of restaurant and catering services, which consist in the delivery of prepared or unprepared food, including the delivery of food for takeaway. This reduced rate applies until 31 December 2024, but does not include supplies of beer, wine and spirits. This means that when calculating the tax due, restaurants must apply different rates depending on the type of products and services offered.

In addition to VAT, establishments must also comply with the tax requirements related to corporate tax. According to the Corporate Income Tax Act (CPA), restaurants are subject to corporate income tax, which is calculated as the difference between income and expenses. Here it is important to properly keep accounting in order to account for all income and expenses related to the activities of the establishment.

Personnel insurance is another essential aspect that should not be neglected. Employers are obliged to pay social and health insurance for their employees. According to the Social Security Code, employers charge insurance contributions on the gross salary of employees, which include both personal and employer contributions. These contributions cover various social risks, including hospital, maternity, unemployment and pensions.

To ensure proper compliance with tax and insurance obligations, restaurants must file regular tax and insurance returns. This includes monthly VAT returns, quarterly and annual tax returns, as well as monthly insurance returns. The timely and accurate filing of these returns is essential to avoid penalties and fines by the tax authorities.

What are the most common violations of tax legislation in restaurants and how to avoid them?

The most common violations of tax legislation in restaurants can be divided into several main categories, each of which has specific causes and consequences. These violations often lead to financial penalties and reputational damage to the business. Here are some of the most common violations and tips to avoid them:

Incorrect calculation and declaration of VAT is among the most common violations. Restaurants often make mistakes when applying different VAT rates to different products and services. In order to avoid this violation, it is important to strictly observe the provisions of Art. 66a of the VAT, which determine the reduced rate of 9% for the supply of food and the full rate for alcoholic beverages. Regular staff training and the use of specialized accounting software can help to properly apply tax rates.

Incomplete or inaccurate keeping of accounting records is another common problem. This includes incomplete reporting of income and expenses, as well as the lack of documentation on the transactions carried out. According to the Accounting Act (art. 4, para. 1), enterprises must keep accounting books and prepare financial statements in accordance with national accounting standards. To avoid these violations, it is important to establish and maintain a strict system of keeping accounting records and regularly conduct internal audits.

Untimely filing of tax returns is also a common violation. This includes late filing of monthly VAT returns, annual tax returns and insurance returns. To avoid fines and penalties, restaurants must strictly comply with the deadlines for submitting all mandatory declarations. The use of automated systems for reminding and assigning responsibility to a specific employee can significantly reduce the risk of delays.

Failure to declare part of the income, also known as “gray income”, is a serious violation. Restaurants often underestimate their revenue to reduce VAT and corporate tax owed. This violation can be avoided by introducing strict internal control mechanisms and using fiscal devices that record each transaction. Regular checks and audits can also help prevent such practices.

Incorrect accounting of payroll and insurance costs is also a common problem. Employers are obliged to charge and pay social and health insurance for their employees under the Social Security Code. In order to avoid violations, it is important that employers use updated systems for calculating wages and benefits and keep accurate records of all amounts paid and contributions paid.

Lack of documentation of services received and performed is another violation that is often found in the restaurant business. This includes the absence of invoices and contracts for services, such as the delivery of goods, repair work and others. To avoid such problems, it is necessary to require and keep all the necessary documentation for each transaction carried out, in accordance with the requirements of the Accounting Act.

Frequently Asked Questions

What are the key aspects of restaurant accounting?

Accounting for restaurants includes goods and inventory management, cost optimization, accurate cash account management, tax accrual and optimization, as well as adaptability to seasonal fluctuations and special events. It is important to ensure accurate reporting and avoid losses or irregularities.

What is the VAT rate for catering establishments in Bulgaria?

Restaurants in Bulgaria that have a turnover of more than BGN 100,000 in the last 12 months must register for VAT. From 01.01.2025, the requirement will be for a turnover of BGN 166 000. For restaurant services, a reduced VAT rate of 9% applies. They are required to file regular returns and adhere to strict accounting standards.

What insurance and contributions are mandatory for food sector staff?

Employers in the food sector are obliged to calculate and pay compulsory insurance for their employees. This includes contributions to pension and health insurance, as well as to the Unemployment Fund. The total amount of these benefits represents a significant percentage of the employee's gross salary.