Accounting for small business

Definition of a Micro-entity

A micro-entity is defined by reference to criteria set out in the Bulgarian Accounting Act, Article 19, Paragraph 2. In other words, a Micro-entity fulfills two of the following three: its assets are below 700k BGN, its income is below 1.4 mio BGN and it has a headcount of less than 10 employees.

Annual reports – Balance sheet

According to Article 29, Paragraph 4 of the Accounting Act, the annual financial report of a micro-entity only includes a shorter version of the balance sheet and income statement. The information included on the balance sheet comprises assets and liabilities. The assets are split into two groups current assets (for example: materials) and fixed assets (for example: building). The sum of all assets is equal to the sum of owner capital together with liabilities.

Annual reports – Income statement

The income statement (also known as the profit and loss statement) shows 8 key line items. Starting with Net income from sales, other income, material cost, personnel cost, depreciation cost, other costs, and taxes. Last but not least the sum of all of the above is the net result. It would either be a profit or a loss. This is according to National Accounting Standard #1, Paragraph 16.24 and Paragraph 20.4. Micro-entities are not subject to independent financial audits as stated in the Accounting Act Article 42 Paragraph 1. The company must present its financial statements following the Bulgarian national accounting standards. The reports are written in Bulgarian, and all amounts are in thousand Bulgarian levs.

Deadline and supporting documentation

Micro-entities publish their annual report by the 30th of September during the following year. The company submits the reports in person at the office of the Register agency or uploads a digital copy via the Register Agency website. According to Article 38, paragraph 4, micro-entities that are exempt from independent financial audits only need to publish a shorter version of a balance sheet. The published annual report consists of a balance sheet alone. The company can opt out and choose not to disclose the profit and loss (income) statement. A hard copy of the report is signed and stamped by the owner/manager of the entity and the accountant involved.

The main template for this is Г2 (G2) available on the Registry Agency website.

There are additional documents required at this stage of the submission.

  1. Declaration under Article 62, Paragraph 2, specifying the access and maintenance of records in the Register Agency database.
  2. Declaration under Article 13, Paragraph 4, signing for the fact that the report is a true and honest representation of the company accounts.
  3. Declaration under Article 13, Paragraph 5.
  4. Proof of payment (20 BGN fee for online submission).

Online submission at the Register Agency website

In an instance, when G2 application is submitted electronically and the applicant is also the preparer of the annual financial report (in other words the accountant), the declaration under Article 13, Paragraph 4 is signed by the same individual. A notarized power of attorney under Article 15, Paragraph 3 must also be attached to the online application.

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