Welcome to ASB Accounting Services Bulgaria – your trusted partner for accounting, tax, and business services in Bulgaria!
Can You Work Under a Labour Contract and Own a Company in Bulgaria?
Prefer watching instead of reading? Watch the video version: Can You Work Under a Labour Contract and Own a Company?
Yes, you can work under a labour contract and own a company in Bulgaria at the same time. You may own an EOOD as a sole shareholder or hold shares in an OOD while another company employs you.
Bulgarian law does not generally require you to choose between employment and company ownership. However, owning a company and actively working in it are two different things. Your social security and reporting obligations depend mainly on what you actually do in the business.
If you only hold shares and do not take part in the company’s activity, ownership alone does not normally require you to register as a self-insured person. The situation changes when you manage the company, provide services, communicate with clients or carry out its main business activity.
Does company ownership automatically create social security obligations?
Simply owning a company does not automatically make you self-insured. You may invest capital, make decisions as a shareholder and receive dividends without handling the company’s daily work.
This distinction often applies when:
- the company has not started trading;
- the company has temporarily stopped its activity;
- another person manages the daily operations;
- the owner does not provide services to customers;
- the owner does not carry out the company’s main activity.
The authorities consider the real activity, not only the titles and documents. A company may appear inactive on paper, while the owner still communicates with clients, prepares offers, signs contracts or organises suppliers.
These actions may show that the owner actively works in the company. For this reason, you should clearly separate passive ownership from personal work.
When do you actively work in your own company?
You actively work in your company when you personally carry out tasks that support its commercial activity.
Common examples include:
- providing consulting, design, IT, accounting or other services;
- selling products or communicating with customers;
- preparing offers, invoices or commercial documents;
- organising suppliers, employees or subcontractors;
- managing the company’s daily operations;
- signing contracts and representing the business;
- making regular operational or financial decisions.
When you carry out this type of work, you usually need to arrange the correct legal and social security basis. A labour contract with another employer does not automatically remove this obligation.
How can you structure your work in the company?
A working owner or shareholder may register as a self-insured person. This option often applies when the owner personally provides services or carries out the company’s main business activity.
The company may also appoint a manager under a management and control agreement. The correct approach depends on several factors:
- who manages and represents the company;
- what tasks the person performs;
- whether the parties have agreed on management remuneration;
- whether the owner also performs personal work outside the management role;
- what documents support the arrangement.
These options may create different payroll, tax, social security and reporting obligations. You should choose the correct structure before regular activity begins. This helps the accounting records reflect the work that the owner actually performs.
| Situation | Possible treatment | What you should check |
|---|---|---|
| You only own shares and perform no work | Ownership alone does not normally create self-insurance obligations | Confirm who manages and operates the company |
| You personally provide services or perform daily tasks | You may need to register as a self-insured person | Check the activity start date and required declarations |
| You manage and represent the company | Management and social security rules may apply | Review the management decision, agreement and remuneration |
| Another employer also employs you | You may have insurable income from more than one source | Coordinate employment income with your company obligations |
What happens when you have two social security grounds?
Your employment and your activity in your own company represent separate social security grounds. The labour contract does not automatically cancel the obligations connected with your business activity.
When you receive insurable income from more than one source, the combined amount cannot exceed the statutory maximum monthly insurable income. Employment income usually counts first when calculating this limit.
If your employment income already reaches the applicable maximum for the month, you may not owe additional contributions through your company. However, you may still need to maintain your registration and submit the relevant declarations.
If your employment income remains below the maximum, you may owe additional contributions through your company until the combined income reaches the applicable limit.
Your accountant needs accurate monthly information because employment income can change. Unpaid leave, sick leave, bonuses, salary changes or termination of employment may affect the calculation.
Provide your accountant with:
- the date when you start working in your company;
- details about your role and responsibilities;
- information about management or personal work remuneration;
- your monthly employment income;
- details about unpaid leave or other employment changes;
- the date when you interrupt or stop your company activity.
Can you receive only dividends from the company?
A dividend represents a distribution of company profit. It does not represent payment for management or personal work.
You may receive dividends as an owner when the company has distributable profit and follows the required corporate procedure. However, dividends do not replace remuneration or social security arrangements when you actively work in the business.
For example, an owner may provide services to clients, manage projects and organise the company throughout the year. Paying that person only through dividends does not change the nature of the activity.
The accounting and social security treatment should reflect the work that the owner actually performs. The company should keep its management documents, accounting records and declarations consistent. Conflicting information may lead to questions during an inspection or audit.
Should you inform your employer?
In many cases, you do not need your employer’s permission to own a company. However, you should review your labour contract, internal company policies and confidentiality obligations.
Pay particular attention to rules concerning:
- competition with your employer;
- conflicts of interest;
- confidential business information;
- trade secrets and client lists;
- the use of company equipment and working time;
- additional work in the same business sector.
You should not use your employer’s working hours, equipment, contacts or confidential information for your own business. Certain public positions and regulated professions may also follow special incompatibility rules.
What should you do before starting business activity?
Before your company starts operating, review your planned role and organise the documentation correctly. Use this checklist:
- decide whether you will remain a passive owner or work actively;
- identify who will manage and represent the company;
- choose the correct social security basis;
- record the actual start date of your personal activity;
- coordinate your employment and company income each month;
- keep contracts, accounting records and declarations consistent;
- review your labour contract for competition or confidentiality restrictions.
Yes, you can work under a labour contract and own a company in Bulgaria. The decisive question is not whether your name appears as an owner. The key issue is whether you actively work in the company and how you structure that activity.
ASB Accounting Services Bulgaria can review your employment income, role in the company, social security status and monthly reporting process.
Contact ASB Accounting Services Bulgaria for practical guidance based on your individual business activity.
This content provides general information only and does not constitute tax, accounting or legal advice. Each situation requires an individual review under the rules that apply to the relevant period.