What is the first thing I need to do?
You have some great business ideas, but you don’t know where or how to get started. One of the main issues you need to understand first is so-called. legal status of your company. There are a few options for this, but the main ones, as we said, are the most massive and most appropriate in the general case are the three – ET, EOOD (Ltd.) or COD.
Features of ET Let us first focus on the Freelancer /E.U./. Let us first look at the Sole Trader /ET/. In general, this is an outdated and not very efficient form of managing your business, benefiting from some tax benefits in the past, but at the moment – not a very suitable option. It would be difficult to point out the positive aspects of ET, so I will mainly focus on the disadvantages of this form.
First of all, the EU is a company with unlimited liability! What does that mean? In simple terms, it means that the natural person – trader – is liable to creditors and the state with all his personal property, not only the property he owns as an E.U., but also what is your personal property (this includes your apartment , car, villa, real estate, etc.) At some point, if for some reason through your business, you sink into debts that you cannot cover, apart from the fact that you may have to leave the business, you may find yourself with absolutely no personal assets (you can literally end up on the street). Generally, by its very nature, an E.E. is not considered a legal entity and is therefore fully subject to personal income tax legislation. I am not suggesting you start a new business using E,E,, but for those of you who are Freelancers, through registered old companies, I recommend you convert your status. If you are wondering how this can be done, you can always contact us and get the information you need.
E / OOD – the best choice!
The other group I mentioned is the so-called limited liability companies. As you may realize, the biggest advantage lies in their name – their owners are liable to the creditors and the state to a limited extent, only to the extent of their share of the company’s capital. Unlike ET, whatever happens to the business you started your personal property will always remain protected and intact. The applicable law allows companies to open up to a size of 2 lev, which in this case will be the amount of your personal liability as an owner. At the same time, it makes getting started and starting a business accessible even for people with little financial resources. Depending on whether the company has only one owner or more partners, both types of EOOD and OOD are now adapted. Unlike ET, E / OOD is a legal entity and is therefore fully subject to the rules set out in the Law (о Corporate Income Tax Law {ЗКПО}).
Summary on the subject
Of course, no matter what form you choose, the commercial, labor, tax and legal characteristics, obligations are not simple at all. They require extensive experience and in-depth knowledge of the subject and this is of particular importance. I would also say that your first priority when starting a business is to find the right people to outsource your accounting services to. This way you can save many future problems and make the most of all legal tax relief and privileges at the same time. In conclusion, if you are still wondering which format to choose, I suggest betting on limited liability companies. The most appropriate and safe way to succeed.
In conclusion, if you are still wondering which format to choose, I suggest betting on Limited Liability Companies – the most appropriate and safest way to succeed.
Source: Boncho Yanchev Assistant Controller
