Ideally, you'd want to start a bulking cycle when you're incredibly lean – single digit body fat. Working from an environment with less adipose tissue means less inflammation and usually a better hormonal profile – better nutrient partitioning due to insulin sensitivity and less estrogen (fat cells are highly estrogenic).
But most people don't want to do that in the real world. Guys get a hint of upper abs first thing in the morning, swear they're at 9% body fat, and want to start "packing on the gainz!" Well, gear down there, big rig.
The difference in being kinda lean and being truly peeled is like the difference between whizzing around the local go-kart track and being on the Nuburgring in a Viper ACR. Yeah, you're on a track in both, and technically in a "race car," but it's just not the same.
Since most guys never truly get ripped, they often end up in Skinny-Fat Land. This is where the majority of confusion about whether to bulk or cut comes from. When you're skinny-fat, the scale usually says "runt" but the mirror says "doughnuts."
If you're a total newbie (or have less than a year of really intelligent training experience) and you're more than 18-20% body fat, then you're in luck. No really, you are. Because then you're in that rare period of time where you can lose fat while building a decent amount of muscle at the same time.
Get into a minor caloric deficit and focus on banging out rep PR's on the big lifts.
If you're skinny-fat but in the 12-15% body fat range, then focus on eating a maintenance intake of calories or a very slight surplus, and then bang out the rep PR's.
The common denominator? Getting stronger in the growth-producing rep ranges (8-20), and putting on more muscle. The underlying problem with looking skinny-fat really isn't the degree of body fat. It's the lack of muscle underneath it.
A guy that's 16% body fat who has a lot of quality muscle underneath will look fairly jacked. And that's the difference between him and the guy suffering from skinny-fat disease who weighs 177 who's also 16% body fat. Muscle cures a lot of problems.