Most Dutch people who go into business start a sole proprietorship. Nice and simple, because you only have to go to the Chamber of Commerce and your company is a fact. But in many cases a sole proprietorship is not optimal at all. Many entrepreneurs therefore, over time, make the logical switch to a private company: a bv.
An important part of the Dutch entrepreneurs does not even set up a sole proprietorship at all, but starts immediately with a BV. But what does a BV actually entail, what do you have to take into account when you set up one, and not unimportantly: what is it all possible? cost?
What is a BV?
The abbreviation bv stands for private limited company. It is one of the most widely used legal forms in the Netherlands. The BV is, unlike other legal forms such as the foundation or association, primarily intended to do business and thus earn money. A BV has one or more directors, who can act on behalf of the BV. So the BV is one legal person, who - although represented by a director or authorized representative - can itself perform actions, enter into agreements, et cetera.
Eg or sole proprietorship? The main differences
This brings us directly to one of the most important differences with the simple one-man business. A sole proprietor is always, in legal terms, jointly and severally liable for all actions of that sole proprietorship. If your sole proprietorship goes bankrupt, you will therefore be privately charged for the malaise. This is different for the BV: if the BV goes bankrupt, you will in principle become not get into your private wealth. There are a few ifs and buts here. If, for example, you actually go bankrupt, it will always be investigated whether the requirements have been met, again in legal terms, the general principles of good administration. Simply put: it is investigated whether you have also acted recklessly or excessively. If you are demonstrably guilty of the bankruptcy of your BV, you can still be held jointly and severally liable. In short, you have to manage yourself properly.
There is also a second common limitation on the advantage that an owner of a BV is not jointly and severally liable. You notice this limitation especially if you are just starting to set up a private company and need money to be able to invest. In such a case, a bank will generally only want to provide you with a loan if you personal guarantor state. That way, at least in the early years of your bv, you are somewhat jointly and severally liable.
In addition to joint and several liability, there are many more differences between a private limited company and a sole proprietorship. What is important for entrepreneurs who have doubts between a BV and a sole proprietorship: the BV traditionally radiates authority and commercial trust from. BVs are professional companies and not hobbyists. The status of bv gives customers the signal that a company is serious, can be trusted and will not just leave with the north sun. In short: this can, in principle, be used for trading.
Another advantage that you have as the owner of a BV is that you shares and thus also transfer the entire company to someone else. The company can therefore easily be transferred from father to son, for example. You can also issue shares to family members, friends or associates with whom you have a close relationship to accumulate wealth and give them a slice of the company's profits. All this is impossible at the sole proprietorship.
'the tipping point for going from a sole proprietorship to a private limited company is around one and a half ton'
Finally, the status of, for example, has drastic (often positive) tax consequences. For example, with a BV you fall under corporate tax, and no longer under income tax. If you make a lot of profit - the tipping point is around one and a half tons - then you will be left with a lot more with a BV than with a one-man business. So are things going well with a sole proprietorship? Then be sensible and go one quickly eg establish.
This video from the Chamber of Commerce goes into more detail on choosing the right legal form for your company:
Eg founding: how do you do that?
Fair is fair: set up a BV (and eventually also a eg cancel) is more work than a sole proprietorship. You can arrange a one-man business at the Chamber of Commerce in an hour. You can even use your private bank account if you wish. It all works differently at a BV.
In order to set up a private limited company, you must first notify a notary of this. The notary will issue a memorandum of association making up. With this you indicate that a BV is being started. As soon as the bv has been established by the notary, you will have to deposit capital and you will have to register in the Trade Register. For this you go to the Chamber of Commerce. This must be done within a week of visiting the civil-law notary.
That capital contribution sometimes causes confusion. In the past (before 2012) it was the case that 18,000 euros had to be deposited, either in money or in possessions (such as a building). However, this threshold has been lifted since 2012, and in principle a deposit of one cent is sufficient. So you can know for yourself how much capital you deposit in your bv.
You may already want to arrange affairs on behalf of your company, while the incorporation has not yet been fully completed. In that case, you can act on behalf of a eg in formation (in formation). You let business relations know that you are acting on behalf of a future BV. In such cases you are fully personally liable for obligations entered into, but you do not have to sit still. You can already claim a website domain or rent a property, for example.
What does it cost to establish a BV?
The capital contribution is therefore not a serious, compulsory cost item for setting up your company. The visit to the notary is of course: take into account a few hundred euros in wages.
Also take into account the mandatory audit of legal entities such as the bv. Meet you two of the following three conditions, you will need to engage an accountant:
- The balance sheet total is greater than € 4,400,000
- The net turnover exceeds € 8,800,000
- There are 50 or more employees
And the registration with the Chamber of Commerce of your bv now costs €50. Furthermore, there are actually no mandatory costs, but most of the costs will be in business expenses. Think of the purchase of machines, hiring staff, arranging a business premises or car and other costs related to the actual business.
Setting up a private limited company has therefore become a lot easier and cheaper since the mandatory deposit of 18,000 euros was scrapped in 2012. With a few hundred euros you will go a long way, although in practice you will often need more, especially if you have to make real investments. Because as every entrepreneur knows: in order to make money, you first have to spend money.