How to Register a Business in the US from Bulgaria

Step 1: Benefits of starting your US business from Bulgaria

Starting a US business from Bulgaria offers a myriad of benefits, making it an attractive option for entrepreneurs and business owners. One of the significant advantages is the cost efficiency. Bulgaria has a lower cost of living and operational expenses compared to the United States, allowing businesses to minimize their startup and ongoing expenses. This includes everything from office space rental to employee salaries, effectively granting you the ability to allocate more resources towards growth and expansion.

Another benefit is the time zone advantage. Bulgaria's strategic geographical position allows businesses to effectively manage operations across Europe and the United States. This can lead to improved customer service and response times, as well as the possibility of almost continuous business operations. Additionally, Bulgaria is renowned for its skilled workforce, particularly in the fields of information technology and engineering. Leveraging this pool of talented professionals can drive innovation and give your US business a competitive edge.

Step 2: How to start your US business from Bulgaria

Starting a US business from Bulgaria involves several steps to ensure compliance with both US and Bulgarian regulations. First, you will need to choose a business structure, such as a Limited Liability Company (LLC) or a Corporation. LLCs are generally simpler and offer flexibility, while Corporations are better suited for businesses looking to attract investors. You can register your business in any US state, but popular choices include Delaware, Wyoming, and Nevada due to their business-friendly laws. To register, you'll need to file the necessary documents with the state’s Secretary of State and pay the associated fees. Consider hiring a registered agent who can receive legal documents on behalf of your business in the US.

Once registered, you will need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS), which is essential for tax purposes, opening a US bank account, and hiring employees. You can apply for an EIN online through the IRS website. Additionally, you'll want to open a US bank account to manage your business finances effectively. Many banks allow foreign entrepreneurs to open accounts remotely, but it may require some additional documentation such as your EIN, passport, and proof of address. Finally, ensure compliance with US tax obligations by consulting with a tax professional familiar with international business operations. This will help you navigate the complexities of US tax laws and avoid any potential pitfalls.

Step 3: Opening a Business Bank Account

A business bank account is a separate account that is used exclusively for business transactions. But why is it important to open a business bank account?

Keeping your personal and business finances separate is crucial. A dedicated business bank account allows you to do just that, making it much easier to track your business’s income and expenses. This clear separation translates to simpler tax reporting come tax season.

But the benefits go beyond bookkeeping. Having a separate account can provide legal protection. It establishes your business as a distinct entity from yourself. In the unfortunate event of a lawsuit or bankruptcy, this separation can help shield your personal assets from business liabilities.

Furthermore, a business bank account can boost your credibility and project professionalism.

It demonstrates to clients and vendors that you take your business seriously and are committed to maintaining accurate financial records. This can be especially important in establishing trust with potential partners.

Finally, a business bank account is essential for accepting payments, even if you utilize a merchant account. Whether you use doola or another service, funneling those customer funds into a dedicated business account is necessary.

doola partners with banks that allow you to open a bank account remotely from anywhere in the world, like Mercury. Shop around and compare different banks’ fees and services.

Look for a bank that offers the features you need, such as online banking, mobile banking, or overdraft protection.

You may also want to consider working with a bank that specializes in small business banking.

Step 4: Understanding Your Compliance Requirements in Bulgaria

Understanding Compliance Requirements for Running a US Business in Bulgaria

Expanding your US-based business into Bulgaria requires a solid understanding of various compliance requirements that govern business operations in the country. Here are several key considerations to take into account to ensure your business stays compliant with Bulgarian laws and regulations.

1. Business Registration

One of the first steps in establishing a business in Bulgaria is to register the company with the Bulgarian Commercial Register. This involves choosing the appropriate legal structure, such as a limited liability company (LLC), and filing the necessary documentation.

• Choose a unique company name
• Prepare the articles of association
• Obtain a Bulgarian company registration number

2. Taxation

Understanding the Bulgarian tax system is crucial for any foreign business. Key tax considerations include:

• Corporate Tax: The corporate tax rate in Bulgaria is one of the lowest in the European Union at 10%
• Value Added Tax (VAT): The standard VAT rate is 20%, with certain goods and services subject to reduced rates
• Payroll Taxes: Employers are required to withhold income tax and social security contributions from employees’ wages

3. Employment Laws

Bulgaria has specific labor laws that US businesses must adhere to when hiring employees:

• Employment contracts must be in writing and comply with the Bulgarian Labor Code
• Understand the minimum wage requirements and working hours regulations
• Ensure compliance with health and safety regulations

4. Data Protection

Like other EU countries, Bulgaria is subject to the General Data Protection Regulation (GDPR). US businesses must ensure that any personal data collected from Bulgarian residents is processed in compliance with GDPR requirements:

• Obtain explicit consent for data collection
• Implement strong data security measures
• Provide data subjects with access to their data upon request

5. Local Expertise

Engaging with local experts, such as legal advisors or consultants, can help navigate the complexities of Bulgarian compliance requirements:

• Consider hiring a local attorney specializing in business law
• Engage with local tax advisors and accountants
• Utilize business consulting services familiar with the Bulgarian market

With a thorough understanding of these key compliance requirements, US businesses can successfully establish and operate in Bulgaria, taking advantage of the country's favorable business environment.

doola offers a Total Compliance package, including bookkeeping services, to help you stay on top of your compliance requirements. This ensures your business operates smoothly and adheres to all legal and regulatory standards.

Step 5: Understanding Your Tax Obligations in Bulgaria

Understanding Tax Obligations for Running a US Business in Bulgaria

Opening a US-based business in Bulgaria can be a lucrative move, but it comes with various tax obligations that must be thoroughly understood to ensure compliance. Below, we explore some of the key considerations for managing taxes when operating a US business in Bulgaria.

1. Corporate Tax Rates

Bulgaria offers a competitive corporate tax rate compared to many other EU countries. The standard corporate tax rate is 10%, which can be an attractive factor for US businesses looking to minimize tax liabilities. However, it is important to consult with a local tax advisor who can offer specifics based on the nature of your business activities.

2. Double Taxation Agreements

The United States and Bulgaria have a double taxation treaty in place to prevent the same income from being taxed in both countries. This treaty outlines various scenarios and tax rates, thereby reducing the burden of double taxation. Ensure that your business leverages this treaty by seeking guidance from tax professionals familiar with both jurisdictions.

3. Value-Added Tax (VAT)

Bulgaria imposes a Value-Added Tax (VAT) on the sale of goods and services. The standard VAT rate is 20%, with some exceptions for specific goods and services. US businesses operating in Bulgaria need to register for VAT if their taxable turnover exceeds the threshold established by Bulgarian tax law. Ongoing compliance involves regular VAT filings and accurate record-keeping.

4. Employment Taxes and Social Security

Employing staff in Bulgaria involves adhering to local employment taxes and social security contributions. Both employers and employees contribute to the state's social security system, and these rates should be factored into your overall financial planning and payroll processes.

5. Transfer Pricing

Transfer pricing regulations govern cross-border transactions between related entities. If your US business transactions with a Bulgarian subsidiary or related entity, you'll need to ensure that these are conducted at arm's length to comply with Bulgarian and international transfer pricing rules.

6. Tax Filing Deadlines

Bulgaria has specific tax filing deadlines that US businesses must adhere to. Corporate income tax returns are generally due by March 31st following the end of the fiscal year. Late filings can incur penalties, so it's essential to maintain a robust accounting schedule to meet all deadlines.

7. Professional Consultation

Given the complexities of operating across different tax jurisdictions, seeking professional advice is highly recommended. Accountants or tax advisors with experience in both US and Bulgarian tax law can offer invaluable insights and ensure your business complies with all relevant tax obligations.

Understanding and adhering to these tax considerations will help ensure that your US business operates smoothly and legally within Bulgaria.

It’s a good idea to consult with a tax professional or an accountant (or to hire these roles in-house) to make sure you’re not missing anything.

doola's Total Compliance package can handle your tax filings for you, ensuring you remain compliant with federal, state, and local tax requirements.

Step 6: How doola Can Assist

doola simplifies the incorporation and setup process for your company, ensuring you’re ready to charge customers, hire your team, and raise funds as quickly as possible.

Fill out your company details in the doola form in less than 10 minutes. Then, we’ll incorporate your company in any of the 50 US states, get your IRS tax ID (EIN) for you, and file your 83(b) tax election if needed. 

doola can also help you open a bank account and start accepting payments even before the IRS assigns your tax ID.

doola founders also gain access to exclusive discounts at leading software partners, one-click onboarding with select partners, and free CPA consultations.

The doola Application

It takes less than 10 minutes to fill out the details of your new company. You’ll choose your company structure (C corporation, limited liability company) and pick a company name.

Our instant company name checker will let you know if it’s available before you submit your application. You’ll add an address and phone number and review and sign your EIN SS4 letter in one click.

Forming the Company

doola will review your application and file your formation documents in the state within one business day. doola charges $297 for our Starter Plan and your first year of registered agent services (a state compliance requirement), and $297 each year thereafter to maintain your registered agent. 

You can also opt for our Total Compliance plan.

Getting Your IRS Tax ID (EIN)

After your formation in the state is complete, doola will file for your company’s IRS tax ID. Founders who provide a US Social Security number, US address, and US phone are eligible for expedited processing. All other users will receive standard processing. 

For standard orders, doola will fax your form SS4 to the IRS and then call the IRS to retrieve the EIN for you to expedite the process if we can, using real-time IRS data to determine when your filing is likely to be available.

Filing Your 83(b) Tax Election

Many startup founders choose to file an 83(b) tax election to potentially save on future personal taxes. doola can file and mail your 83(b) tax election in one click for both US and non-US founders — no trip to the post office required.

We’ll file it using USPS Certified Mail with tracking, and you’ll get a copy of your signed 83(b) election and proof of filing in your Dashboard.

Partner Perks and Discounts

doola partners with a range of third-party tools to offer special pricing or access to founders. We offer discounts on engineering, tax and finance, compliance, and operations tools, including Amazon Web Services.

doola also partners with Mercury to provide faster, automatic onboarding using your doola company information so you can get ready to bank and fundraise even faster.

Founders may also access discounts on other doola products, including up to one year of free credits toward payment processing.

Read our guides for startup founders, or learn more about doola and how we can help you set up your new business quickly and easily.

Turn your entrepreneurship dream into reality today!

We do our best to provide accurate and up to date information, however the information provided here are just guidelines. Please speak with a tax and compliance professional in your country