Sole proprietorship in Bulgaria: Tips, Pros & Cons

All the tips, pros, and cons of opening a sole proprietorship in Bulgaria. A detailed look into sole proprietorship in Bulgaria.

If moving to Bulgaria was already an option being considered, as no doubt the landscape is enchanting, as well as the vibrant cities, long history, rich culture, and beautiful towns, it’s worth mentioning that Bulgaria has also earned a very established reputation as a tax haven with a very positive business environment and attractive financial laws. This concerns all types of business and is particularly convenient for anyone who wants to start a sole proprietorship in Bulgaria.

In fact, more and more Bulgaria seems to appear when the conversation takes the path of how to help companies and professionals to best take advantage of their business, maximize profits, and reduce costs. Bulgaria has consolidated as a destination for foreign companies and professionals to settle and expand the limits of their businesses.

This is mainly due to the positive financial laws, the economic and political stability, the possibility of reducing company costs thanks to an educated and cheaper workforce, a more affordable lifestyle and the lower personal and company income tax, a flat rate of 10%. Of course, other relevant factors may be important in deciding if Bulgaria is the right fit for a company or a professional to relocate. 

A sole proprietorship in Bulgaria may be the right fit for you and your business. The best way to understand if this is the case is to engage the services of a reputable accounting firm, like Accountancy Bulgaria. 

With the advice based on their many years of experience, you can be sure to best take advantage of your Sole proprietorship in Bulgaria. Not only can they help understand if a sole proprietorship is the right way for your business, but their knowledge and flexibility, with a tailored service, Accountancy Bulgaria can assure your way to success. 

What is a sole proprietorship in Bulgaria?

A sole proprietorship in Bulgaria is a business that has just one owner who pays personal income tax on the profits made of that business. Usually, sole traders will use their own name, as it’s not necessary to have a different name, and after all, this type of business pretty much links the person with the business.

A sole proprietorship is usually the easiest business to set up, and this is true for Bulgaria as well. 

While there is no doubt that a one-owner business, or said sole proprietorship, is the simplest and fastest way to get started in business, there are a few notes to consider. The main one is the fact that, unlike other companies, like, for example, a limited liability company, in the case of the sole proprietorship, the owner of the business is liable for the company’s debts and losses. 

At the same time, the owner of a sole proprietorship is entitled to the profits their business generates. And, in fact, will pay personal income tax on such, which in Bulgaria is a flat rate of 10%.

Read also: Bulgaria Flat Tax: how does it work?

Tips to open a Sole proprietorship in Bulgaria

There are a few requirements to open a sole proprietorship in Bulgaria. The main being that the person registering the business needs to have a residency in Bulgaria. How to obtain a residence permit in Bulgaria varies depending on the country of origin and status of the applicant.

The best advice or tip to those interested in opening a sole proprietorship in Bulgaria is to get your accountant involved and discuss your business’s particular needs. Your accounting services will be your best ally in achieving the success you are seeking in registering a sole proprietorship in Bulgaria. 

Pros of a Sole proprietorship in Bulgaria

There is an array of advantages that those interested in opening a sole proprietorship in Bulgaria will be able to enjoy. From easier setting up, registering, and starting operations, to quite straightforward taxes and overall lesser paperwork and legal steps.

These are the most common pros of a Sole proprietorship in Bulgaria:

• Easier company establishment
• 10% personal tax applicable
• Lower fees and costs compared to registering a company in Bulgaria
• Simpler legal work involved in setting up a sole proprietorship
• No specifications on capital requirements

Cons of opening a Sole proprietorship in Bulgaria

There is one main con to opening a Sole proprietorship in Bulgaria.

·       The owner of the business, being the sole proprietor, has unlimited liability. This means their personal assets are liable for their business losses, and it also means the profits are considered personal income too. This could represent a risk for some.

Read also: All you need to know about Bulgaria company Tax

Conclusion

Opening a sole proprietorship in Bulgaria may be the first step on the road to success. With interesting pros, it may be the perfect choice for you. There seem to be few cons, however, they need to be kept in consideration as they refer to the extent of liabilities the owner of this kind of business has.

Overall, the best advice is to engage the services of an accounting firm like Accountancy Bulgaria. Their years of experience will translate into your own sole proprietorship business success.