Accounting of Ltd.
One of the most common types of small businesses in the Bulgaria is a single-owner business called “single owner limited liability company.” Good planning and accuracy are the most important part for successful Accountancy of Single Owner Limited Liability Ltd.
The single owner makes all the decisions related to the company’s activity and the person may also be the manager of the company themselves or may decide to appoint a different person as manager.
It is important to note that the owner of the capital is the one who has the obligation to deposit it into a specially opened bank account – escrow account, and the manager is the one who undertakes the future actions for entering the company in the Commercial Register, opening of current accounts, concluding contracts with future counterparties.
As a limited liability company, the single-member EOOD has all the advantages—and disadvantages—of other limited companies in Bulgaria.
Types of Legal Business Entity in Bulgaria
There are several options of the type of business entity to open in Bulgaria and this decision will affect the way you do business, how you can operate your business and your liability:
- Single person Limited Liability Company (EOOD) – an entity with one single owner with limited responsibility.
- Private Limited Liability Company (OOD)– owned by two or more partners with limited responsibility.
- Sole Proprietor (ET) – a simplified entity which is appropriate for small ventures (full owner’s responsibility).
- Freelance – a personalized individual registration.
- Public Limited Company (AD) – joint-stock company – a commercial company with share capital owned by its members.
- Branch in Bulgaria – Foreign legal entities registered abroad can register a branch in Bulgaria.
Advantages and accountancy of Single Owner Limited Liability Ltd - EOOD
While both the single owner company and the sole proprietorship are solo business entities, there are some advantages to having a sole proprietor business become a single owner EOOD.
- The EOOD is now a separate business entity from its owner. It is no longer attached to and identified with the owner for tax or liability purposes.
- The EOOD is recognised as a legitimate business, with the required ” ЕООД ” included in the business name.
- The EOOD is formed within a state and part of the approval process is a registration of the business name, so no other business in the state may use that name.
- You need a physically registered address to receive the legal and correspondence from the NRA from the Material Responsible Person.
- The EOOD require more paperwork than if you were running a sole proprietorship. In addition to the Articles of Organization, you need to file an annual report, and if you fail to do so your business could be shut down
- The owner of the EOOD are limited to the amount of the contribution made to the company’s capital in front of the State, banking institutions or counterparties.
- The owner of the EOOD do not equalize social security payments at the end of the year.
- The paid in capital of BGN 2 allows the registration of a company without the necessity of large initial investments.
- The flat tax at the rate of 10% of the profit realized is preferable to that of a Sole Propietor at the rate of 15%.
Difference between Single Company Owner and A Sole Proprietor in Bulgaria
A sole proprietor r (Bul.: Едноличен Търговец, short: ЕТ) is a special legal body of the Bulgarian commercial law. Contrary to other commercial entities, the sole proprietor is a natural person with commercial characteristic attributed by law.
By the registration as sole proprietor into the commercial register, no new legal entity is created but the legal personality of the natural person gets extended.
This way, the sole proprietor is responsible for the performance of the obligations deriving from commercial activities and the obligations deriving from his activities as private person. Hereby, he is liable for his obligations with all his assets.
Advantages of a sole proprietor in Bulgaria:
- There is no requirement for minimum capital upon registration in the Commercial Register.
- Cheaper registration when preparing registration documents with the Registry Agency.
- A simpler form of accounting, which in turn leads to lower monthly accounting costs.
Accountancy of Single Owner Limited Liability Ltd - EOOD
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