FAQ

Dear clients and readers, these are the most common questions, which people ask us.

1. What is your working time?

Our office is open from Monday to/through Friday, as our working time with clients is between 9 o’clock in the morning and 17 o’clock in the afternoon Bulgarian time (GMT+3).

 

2. Where is your office located? I do not see your contact details!

Our registered office address is in Bulgaria, Sofia City, Krasno selo living quarter, 8 Hubcha street. This location is near the fruit and vegetable market at the crossing between Debar street and Hubcha street. It is an entrance to an office-residential building, as we are on the first floor above the ground floor. You can find our contact data here

3. Why does the average number of employee related to your verification does not coincide with the number of an appointed staff?

Because the average number of employees is not a list of the persons appointed under employment contract, but it includes the number of persons appointed under labor contract, the number of terminated employment contracts, the persons working under freelance(r) contracts and under management contracts. One takes into account not only appointments, but also terminations of contracts and the average number of employees represents an averaged number. On the basis of it, we calculate the fee for work the work salary for a “payroll” package.

 

4. Can I appoint employees under freelance contract?

We do not recommend it. In case of an inspection carried out by labor inspectorate officials, they will establish that it is a concealed labor contract and may impose sanctions against you. In all cases, when you have a job-place, fix working time and pay a monthly salary, you must conclude employment contracts and not freelance contracts.

 

5. If I am a company manager, must I pay in health insurance and social insurance contributions for myself? Must I provide health and social insurance for myself, if I am a foreigner?

Health and social insurance in Bulgaria is compulsory. As a company owner, you can be a self-insured person or may pay in health insurance and social security contributions as a manager of your company. An exception is the case, when the amount of your remuneration, which serve as a basis for health and social insurance, exceed the maximal health and social insurance threshold in Bulgaria. Then, health insurance and social security contributions must be paid in up to the amount of the maximal health insurance and social security threshold. In this case, nationality is not important. Whereas, you are engaged in some line of business in Bulgaria, which is a basis for these health insurance and social security contributions, these liabilities must be paid up into Bulgarian national budget.

 

6. Why does it become necessary from time to time to certify powers of attorney? I have already certified one!

A power of an attorney is an official document. As a rule, the manager of a company has the full authority to represent it everywhere and for everything and to manage it. That’s why, he can delegate some of the powers to another person, but not all of them. Authorization represents precisely such delegation of rights. There is no way in practice to envisage absolutely every possible case, absolutely every possible element of your business and your future necessities, for which you will confide in us at a certain moment and we shall include them in the letter of attorney.

Besides that, warrants of attorney are based on dialogues with public institutions, whose activity notably is strictly subordinated to laws. Laws every year are amended many times. Organizational units, agencies, departments and other public bodies and institutions are set up and changed. All of them have adopted rules, that also must be observed. Representation before such an organizational unit also requires an explicit letter of attorney from the company manager or a special power of attorney from the relevant person. In most cases, a power of attorney is certified before a notary public.

Due to this dynamics in a situation, it may turn out that only after one year the power of attorney, which one has, is no longer up-to-date and should be supplemented or amended completely. We would like to make an acceptable excuse for caused inconvenience! Regrettably, it does not depend on us.

 

7. Why must we certify a power of attorney? But we have signed a contract!

The contract for accounting services is a mandatory legal relationship. This contract guarantees our obligation to do some work, but in order its performance to be efficient and to be accepted by the public institutions with which the accounting house usually works, we need explicit permission from the company manager. The letter of attorney is namely this explicit permission. Whereas, every activity, which is performed before an official state institution, needs explicit authorization, powers of attorneys stipulate in the greatest possible detail the actions, which an accountant is entitled to take. They cannot be construed extensively and we have no right to re-authorize another person to do this work, except if you expressly demand it.

 

8. What is the difference between a general and an explicit power of attorney?

A general letter of attorney gives general common rights, but the explicit, specific cases of authorization remain outside its scope. Precisely for this reason, there are too many cases, when one adds many clauses of explicit authorization to general authorization, as such clauses seem to be a private case of a general warrant of attorney.

 

9. How much will accounting cost me?

It depends on what work we must do. In order to get a precise idea under such circumstances, it is best to give us additional information, like for example – what is the number of partners and managers, of how many persons your staff is comprised, what is the number of bank accounts, how many commercial sites the company has (warehouses and stores, online shops), how many cash registers and how many POS(point of sale) terminals it has, the approximate number of purchases and sales. We should know whether it has VAT registration. If the company in question already has a line of business, it is easiest to get orientated by means of the following accounting documents, which you may bring with you: A trial balance of the last 3 months and an inventory book. We should get data whether the company trades in commodities and what is the approximate number of articles. After we review these indicators, we negotiate with you a subscription, which must comply with the scope of work.

 

10. Why are audits of past periods not included in our accounting fee?

If you are a young client and the audit of a past period of time concerns the work of other colleagues, it quite often necessitates the following things:

a. To review your documents of this past period of time,
b. If one establishes inaccuracies in accounting work (before the same are ascertained by the inspecting public body), work must be done anew, which means to be re-accounted the whole period.
c. If there are unclear cash flows or a flow of commodities into a material reserve, then financial means or available quantities must be equalized perfectly and last but not least, the financial results of the months and at the end of the year must coincide with what has been done by the previous accounting team. It is compulsory! All these extraordinary efforts and specifications mean a great deal of work and a lot of technological time. In parallel with this additional work, one conducts a constant dialogue with the auditing team, as we submit to them all kinds of documents and one writes explanations about all issued certificates.
d. It often happens to become necessary for us to get into contact with your suppliers and clients, who will probably be subject to cross checks, in order to confirm already revised issues. We do this, in order to be sure, that everything will proceed smoothly and well and you contractors will confirm the same economic information.

In case of you have been a client of our Accounting House for a long period of time and the tax audit concerns mainly and basically our work, then our additional fee will include our dialogue with the competent tax officials, the presentation of already drawn-up documentation and the explanations, which must be given together with them and the time expended and the care which we take of getting into contact with your contractors and in order to make sure, that they will submit to the National Revenue Agency information, which coincides with one stipulated in our accounting registers.

All these activities, care and attention on our part for the needs of your business go beyond the scope of operative accounting work and that’s why, they are not included in a contract. However, it is fair to be remunerated/rewarded. Precisely for this reason, in similar cases, one negotiates a separate fee for them.

 

11. They have told me, that I must assign a market value to my car, otherwise one can reject my purchase during an audit. Is it so?

First, I shall explain in brief what a market value is. It is that value, which an insurer gives (or an appraiser of a real estate, for example, if you transfer an apartment, an office, a garage, levels and others). A market value does not mean that price at which you have made a bargain with a buyer, but the price recorded in a market assessment!!! It can be low or high. It does not matter. An assessment is an official document, which is used with evidential force before all public bodies. After one writes a concrete price into it, then it is the market price of this asset-a car, a real estate or another article!

 

12. Whereas, I have a firm now, must I register myself under Bulgaria’s VAT Law?

Our reply to this question is “It depends on what you plan to do with it”. If a line of business requires it by law – yes, you must get registered. If you exceed 50 000 Bulgarian levs in terms of a taxable turnover for the last 12 consecutive months – yes, you must register yourself. If there are no compulsory prerequisites for your registration and it will be advantageous to you, then you can register yourself. Under the last hypothesis, nothing obliges you.

13. What will happen if my business does not flourish/thrive and I want to stop my activity?

You have several alternatives.

1) You may suspend/freeze you company and thus, you will not operate with it. Here, 2 variants are possible – it is registered under the VAT Law or not. In all cases, the lack of activity does not relieve you of the obligation to submit information to competent Bulgarian state institutions. That’s why, if you have VAT registration, you must submit zero certificates of statements under the VAT Law monthly and at the end of the year, one submits zero annual reports, including also to the Registry Agency. After a certain period of time, you can de-register yourself under Bulgaria’s VAT Law. It can be done in 2 ways – at your request, as in this case NRA officials can conduct a tax audit or after the expiration of sufficient time during which the company did not operate. If it has not been registered under Bulgaria’s VAT Law, then the only commitment remains for you at the end of the year to submit zero annual reports to the National Revenue Agency (NRA), the National Statistical Institute and the Registry Agency.
2) You can sell your company. Quite often, this decision is reasonable, when there are some assets in it and the owner decides, that it will be more advantageous to him to sell assets together with a company-for example, a company owns a shop or another commercial site, a cargo truck, holds a license or permit for something. The goal of this situation is the sale of an asset under a facilitated procedure. PLEASE, PAY ATTENTION, that if you are a potential purchaser of such a company, then obligatorily consult a lawyer before such a purchase! It is possible for the accounting records of such company to be immaculate and despite it, a promissory note or an accepted bill of exchange (which are reported nowhere) of the previous manager, are a sufficiently great risk. That’s why, we advise you at the purchase of such a company not to relieve the old manager of responsibility and to agree on old manager’s notarized consent to be held responsible for all company liabilities, which he has accepted before the transfer deal.
3) Another alternative is to liquidate a company, as in this way the list of possible solutions, broadly speaking, comes to an end.

Of course, you can complicate the solution of a problem, like for example, integrate your company into another your existing such one and in parallel with this takeover delete it and you can also merge two companies, as they are deleted and third one is set up in their place, newly formed one and you can also transform a company – for example from single-member LLC into single-member JSC, as in this way you change only its legal status. All these variants depend completely on your choice and your concept of what you plan for the future.

 

14. How much time will liquidation take?

Not less than 6 months. Technologically, things happen in the following way: 1) a company is de-registered under Bulgaria’s VAT Law, if there is VAT registration. 2) one draws up liquidation balance sheets and reports. 3) One notifies NRA about the forthcoming liquidation. 4) One sends notification about liquidation to the commercial register by means of which, the company is terminated, which means that it exists, but cannot operate. After that, a period of 6 months obligatorily should pass. The goal of this compulsory statutory period is to be given a chance to all potential company creditors, including the Bulgarian state. If it has had a staff, then payroll ledgers are handed it for safe keeping at the records office of the National Social Security Institute, as a special procedure is performed in this regard. If there are no problems after the expiration of the above-mentioned time limit, then liquidation comes to an end and the company in question is deleted.

The liquidation period lasts approximately 12 – 13 and not less than 10 months. If the company before being liquidated, had an active line of business, then liquidation can be protracted even longer.

For additional details concerning this procedure, which take into consideration the specific features of companies, you must consult a lawyer!