You are starting a freelance business and are wondering how to structure it — like freelance (freelancer) or as company (Ltd.)? The choice has real consequences for taxes, insurance and your access to your own money.
In this manual, an accounting firm Rodi Consult (Varna) compares the two forms clearly and with examples, updated for 2026.
In short: There is no universal answer. The freelance profession uses fixed 25% statutory costs and is profitable when real costs are low. The company (LLC) deducts real costs and profits when costs are high, hiring employees and expanding — but withdrawing the money requires 5% dividend tax.
Freelance activity
The simplest form in terms of organization. You register in the BULSTAT register and as a self-insured person in the National Revenue Agency. You pay your insurance yourself on a selected insurance income (not lower than the determined annual minimum).
- 25% statutory expenses — you pay 10% tax on only 75% of income, without proving expenses.
- Advance tax every quarter (declaration under Art. 55 of the Personal Income Tax Act).
- Annual tax return until April 30, with equalization of social security income.
- Free access to money — the money you spend is yours, without additional tax.
Activity through a company (Ltd./Ltd.)
The most preferred form is limited liability company — with a symbolic minimum capital (only a few leva) and limited liability: you only risk the invested capital.
- 10% corporate tax on profit (revenue minus documented expenses).
- Documentary justification — any expense against a document.
- Mandatory accounting and an annual financial report from an accountant.
- 5% dividend tax when withdrawing profits.
If you are also about to register for VAT, see When is VAT registration mandatory?.
Which is more profitable - comparison
The key is in the real costs. At high costs the company wins; at low (below 25% of income) — the liberal profession.
Example: annual income 10,000 euros, real expenses 6,000 euros.
- Freelance: taxable income 7,500 euros (minus 25% NPR) → tax 750 euros.
- Company: profit 4,000 euros → corporate tax 400 euros (plus 5% when withdrawing a dividend).
At hiring employees and growth the company is more suitable; for free access to money — the liberal profession.
FAQ
Which is more tax-efficient — a freelance profession or a company?
It depends on your actual expenses. Freelance work uses fixed 25% statutory expenses, so it is profitable with low actual expenses (below 25% of income). The company deducts actual expenses, so it is profitable with high expenses and expansion plans.
How much tax does a freelancer pay?
A self-employed person pays 10% income tax, but only on 75% of the income — because he uses 25% of legally recognized expenses without proving them with documents. He also pays insurance as a self-insured person. He can freely use the money earned for personal needs.
How much tax does an LLC pay?
The company pays 10% corporate tax on profit (income minus documented expenses). When the owner wants to withdraw the money for personal needs, a dividend is distributed, on which an additional tax of 5% is due.
Can I freely use the money from my company?
Not directly. The company is a separate legal entity and its money is not personal. To use it legally, you distribute a dividend (5% tax) or charge yourself a salary. With a freelance profession, there is no such restriction — the money is yours personally.
When is it better to register a company?
When real costs are high, you plan to hire employees, want limited liability (risk only up to the invested capital), or want to grow the business. With low costs and self-employment, freelance work is usually simpler and more profitable.
The conclusion
A freelancer wins with simplicity and free access to money. A company wins with real expense deductions, limited liability, and growth potential. The choice depends on your expenses and plans.
Are you hesitating which is more profitable for you? Explore Rodi Consult accounting services or is contact us for a specific account. Phone: +359 893 474 576.
This article is for informational purposes only and does not constitute tax advice. Please consult an accountant for your specific situation.
