When opening a company in Bulgaria, every entrepreneur expects it to generate income. However, it is not enough to wait for that exciting moment — the income also has to be handled correctly. Let us look at the common mistakes made by the managers of young companies and at the right ways to handle the money.
Many novice entrepreneurs withdraw cash from the corporate card or account and use it for personal purposes. This causes tension for the specialists who keep the company’s accounting records, and often triggers inspections by the tax authorities. The withdrawn funds must be recorded in the cash register and used for their intended purpose — for example, for the company’s needs. If an inspection does not find in the cash register the exact amount that was withdrawn from the account, fines are possible.
It is also not allowed to make personal expenses with a corporate card or account, or to withdraw large amounts (over 10000 leva).
The company manager may set a salary for themselves, including a high one. It should be borne in mind that осигуровки (social and health contributions) are paid only on amounts up to 3000 leva. If the salary is higher, the entire amount above 3000 is subject only to the 10% tax (the standard profit tax). In addition, paying a high salary counts as a company expense and reduces the taxable profit. Thus, for the director of a company with sufficient income it is advantageous to set a higher salary.
There is one more way to handle income sensibly. The manager (and only the manager) has the right to borrow funds from the company; one only has to make sure that the amount does not exceed the amount of the dividends. The debt can be closed by writing off the loan amount against dividends by means of a protocol once the reporting year has passed.
Finally, dividends as such should not be forgotten either. It is advisable to withdraw them after the end of the year, but early withdrawal with payment of the dividend tax is also possible.
A competent accountant will advise on the best course of action in any given situation. Such specialists know about the various lawful opportunities to save and increase funds. They will warn against possible mistakes and advise on the best approach, taking into account the individual specifics of the business.
The staff of Bulgarian Expert provide accounting services on both an ongoing and a one-off basis. Consultations that take your individual situation into account will help you save money and avoid mistakes.
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