On November 10, 1494, a Franciscan friar named Luca Pacioli published his treatise called “All about Arithmetic, Geometry, Proportions and Proportionality”. This work was then a manual on how Venetian merchants kept their accounts. Today, we need much more than a handbook to run our company successfully.
Accounting is the system by which businesses document, organize and analyze their financial operations. Its role is not limited to keeping accounts – it provides the basis for proper tax reporting, cost management and strategic decision making. Without a reliable accounting system, companies struggle to track their actual financial position, plan spending or meet legal requirements. With the increasing demands for accountability and control in the business environment, adequate accounting services are becoming an increasingly necessary element of the sound development of any organization.
Although there are no up-to-date summary statistics on the accounting difficulties of Bulgarian companies as of April 2025, professional practice shows that accounting inaccuracies are among the common causes of financial penalties and management problems in small and medium-sized companies. In the following lines, we will look at exactly what accounting is and why it is a key factor in successful business development.
Nature and importance of accounting
Accounting is the systematic process of recording, classifying, analysing and interpreting financial information. It tracks all the financial operations of your business and provides the basis for an objective assessment of its condition and development. Through accounting you can clearly see:
- The company’s current financial position – through accurate information on assets, liabilities and equity, which is critical for making strategic decisions and planning future investments
- Sources of revenue and lines of expenditure – so you can analyse the efficiency of different business activities and optimise cost structures.
- Which areas of the business are the most profitable – identifying the most successful products or services allows you to focus your efforts and resources on the most profitable units.
- What tax liabilities do you have – proper calculation and planning of tax liabilities is essential to avoid penalties and effectively manage liquidity.
Case in point: If you run an online clothing store, through well-organized accounting you will find that in the last two quarters, sales of winter jackets generate 40% of your total profit, while summer items bring in less than 10%. Cost analysis shows that social media marketing campaigns are twice as effective compared to traditional advertising. Additionally, after a careful review of staffing data, you see that optimizing the courier delivery schedule would save 8% on monthly costs. Based on this information, you decide to increase your marketing budget for the winter season and negotiate more favorable terms with logistics partners. In this way, you are not just tracking numbers, you are using accounting data as a tool for strategic business development.
In Bulgaria, accounting is regulated by the Accounting Act and the National Accounting Standards, which define the rules for accounting.
Main types of accounting
1. Financial Accounting
Financial accounting focuses on creating financial statements for external stakeholders such as investors, banks, regulators and other institutions. It provides transparency and clarity about the company’s financial position. Key reports include:
- Balance sheet
- Statement of revenue and expenditure
- Statement of cash flows
- Statement of equity
- Explanatory annexes to the accounts
All companies in Bulgaria, regardless of their size, are required to prepare annual financial statements (AFR). The publication of these accounts in the Commercial Register must be made by 30 September of the year following the accounting period, in accordance with the current provisions of the Accounting Act. Failure to meet this deadline may result in administrative penalties.
2. Management and accounting
Management accounting is oriented to the internal needs of the company and assists owners and managers in making operational and strategic decisions. It includes:
- Cost analysis by activity, product and unit
- Budgeting and financial forecasting
- Performance evaluation of different business lines
- Investment opportunity analysis and risk assessment
Unlike financial accounting, which is strictly regulated by legal standards, management accounting is flexible and adapted to the specific needs of each organisation. It answers practical questions such as “How much does it really cost us to produce this product?” or “Which of the two projects will be more profitable for the company in the long run?”
3. Tax accounting
Tax accounting is concerned with the application of tax law and the optimisation of tax costs within the limits allowed by law. Its main tasks include:
- Preparation and submission of tax returns
- Application of tax relief where possible
- VAT, corporation tax and other tax liability management
Correct tax accounting ensures compliance with all obligations to the state and minimises the risk of penalties. The key deadlines for tax obligations, such as filing an annual tax return or VAT return, are published on the official website of the National Revenue Agency (NRA) and are updated when there are changes in the legislation.
What services does professional accounting cover?
Business registration and structuring🔗
Professional accounting services begin with the establishment of the business. Experts can assist with:
- Selection of the appropriate legal form (LLC, EOOD, ET) according to the specifics of the activity;
- Preparation of all necessary documents for registration;
- Development of accounting policies in line with business and legislation;
- Organisation of the internal document management system.
The right choice of legal structure and adequate preparation at the outset can prevent serious administrative and financial difficulties in the future.
Current accounting service🔗
This is the core of accounting activity and covers:
- Processing of all primary documents (invoices, receipts, bank statements);
- Keeping accounting records and diaries;
- Preparation of monthly and quarterly reports, including VAT returns;
- Monitoring payment deadlines and maintaining tax records.
The retention of accounting records shall follow the requirements of the Accounting Act: accounting records and annual financial statements shall be retained for a minimum of 10 years; primary accounting records – 5 years; payrolls – 50 years in accordance with the Labour Code.
Payroll Management (Payroll)🔗
Professional management of labour and social security relations includes:
- Calculation of wages and fringe benefits;
- Determination of social security contributions and tax deductions;
- Preparation and submission of Form 1 and Form 6 returns to the NRA;
- Preparation of employment contracts, supplementary agreements and termination orders.
Outsourcing this service ensures compliance with ever-changing employment and social security legislation and significantly eases the administrative burden on businesses.
Tax planning and optimization🔗
A good accountant doesn’t just calculate taxes, but strategically manages the tax burden within the law by:
- Cost structuring for maximum allowable tax relief;
- Application of available tax reliefs for legal entities and individuals;
- Optimal asset depreciation policy planning;
- Effective use of double tax treaties for international activities.
Tax planning must be carried out in accordance with current local and international legislation to avoid future penalties.
Financial analysis and consulting 🔗
Quality accounting services include active participation in the management process through:
- Analysis of financial ratios (profitability, liquidity, efficiency);
- Assessment of liquidity, solvency and financial stability;
- Preparation of forecast budgets and estimates;
- Cash flow analysis;
- Strategic planning of future investments and resource optimization.
This advisory function allows businesses not just to monitor their performance, but to use financial information as an active tool for growth and development.
Who needs accounting?
Accounting is not just an internal administrative process – it is a key element that provides transparency, stability and growth opportunities for any business. Different actors in economic life rely on reliable accounting information for different reasons.
For owners and managers
Accounting provides critical financial information needed to:
- Making informed management decisions;
- Effective cash flow management;
- Assessing the profitability of different business lines;
- Planning for future investment and expansion.
Through timely and accurate accounting, owners can monitor the real state of their business and take timely action.
For investors and lenders
Financial statements are an essential tool for external stakeholders in:
- Assessment of the financial stability and reliability of the company;
- Calculation of risk associated with investments or lending;
- Benchmarking against other companies in the relevant industry.
Reliable accounting enhances business credibility and facilitates access to external finance.
For state institutions
Correct accounting is mandatory to comply with legal requirements, ensuring:
- Monitoring compliance with tax and social security obligations;
- Collection of statistical and economic data from bodies such as NRA, NSSI and NSI;
- Ensuring transparency and a level playing field in the business environment.
Failure to comply with accounting requirements may result in administrative and financial penalties.
For employees and business partners
Well-maintained accounting provides certainty and transparency by:
- Accurate calculation of wages and contributions;
- Timely submission of insurance declarations and data;
- Building trust in business relationships;
- Maintaining a sound financial basis for long-term cooperation.
Conclusion
Accounting is much more than a legal requirement – it is a strategic tool that builds financial transparency, ensures regulatory compliance and supports sound management decision-making. An investment in quality accounting services is in fact an investment in the stability and future of the business.
Whether you are running a small business, developing a dynamic start-up or managing an established company, professional accounting can give you a real advantage: you will optimise your time and resource management, minimise the risk of costly tax errors and plan the sustainable development of your business based on accurate and timely financial information.
Trust the experts – accurate financial management is the foundation of any successful business. Get in touch with the team at ATP Consult to discuss how we can work together to build an accounting system tailored to your organisation’s goals and specifics.