Choosing a legal form for your business
When you start a business, you need to choose a legal form. For example, a sole proprietorship, limited liability company (bv), or general partnership (vof). Choose a legal form that best suits your situation. Consider, for example, how you want to arrange liability, what the future looks like, and what is fiscally advantageous for you.
This information was posted by Central Bureau of Statistics | KVK
What is a legal form?
A legal form is the legal form you choose for your business. When you register with KVK, you must specify this form of business. Among other things, it determines (private) liability for debts and tax obligations.
Look at the makeup of your business
If you are alone, then a sole proprietorship or limited liability company (bv) is often the best option. Take stock of what risks you face, and think about them. Many risks can be reduced with insurance and good contracts. If you are doing business with several people, you can choose several legal forms.
Determine how you want to be liable
In a sole proprietorship and general partnership (vof), you are liable with your private assets for any debts of your business. Creditors can then seize your private property, for example. Also on that of your partner, if you have nothing arranged for this. In the case of a legal entity, such as a PLC, you are privately liable for the debts of your company only in exceptional cases.
Determine what is most fiscally beneficial
As the owner of a sole proprietorship or general partnership, you pay income tax on profits. As an owner of a sole proprietorship or partner in a general partnership, you are often entitled to additional tax benefits, such as the self-employed deduction. Especially in the start-up phase, when your business makes relatively little profit, you are usually better off fiscally with a sole proprietorship or vof.
A PLC pays corporate income tax and possibly dividend tax. The director-major shareholder (dga) also pays income tax on his salary and on dividends paid . With a bv, the tax is on average lower than with a sole proprietorship or vof, but the costs are higher. These include annual accounting obligations and accounting fees. A director-major shareholder has no self-employment deduction.
Legal form for startups
Most startups choose a sole proprietorship. Are there multiple owners? Then they often choose a general partnership (vof) or bv.
Formation requirements by legal form
For a sole proprietorship and vof there are no incorporation requirements or capital. A bv (legal entity) must be established at the notary and a capital contribution of at least 1 euro cent applies.
Freelancer and freelancer
Zzp'er (self-employed without staff) and freelancer are not legal forms. Even as a zzp'er or freelancer you must choose a legal form. For example, a sole proprietorship.
What legal forms are there?
There are legal forms with legal personality and legal forms without legal personality. With an unincorporated legal form, you are liable for your company's debts with your private assets. This is usually not the case with a legal form with legal personality.
Unincorporated legal forms
Sole proprietorship
Most entrepreneurs start a sole proprietorship. You simply set it up. With a sole proprietorship, you usually have more tax advantages in the beginning than, say, a limited liability company.
General partnership (vof)
Are you going to start a business together with others? Then you can set up a partnership (vof). Each person who joins then becomes a partner and contributes something. It is advisable to draw up a partnership contract.
Partnership
In a partnership 2 or more persons carry on their profession under a common name. Each participant contributes something, such as labor, money or goods. The benefit is divided.
Limited partnership
A limited partnership (CV) is interesting if you are short of money to start. A limited partnership has general partners and limited partners. The general partner has day-to-day management in the business. Silent partners are only lenders.
Legal forms with legal personality
Limited liability company (bv)
A limited liability company (bv) is a legal entity, an independent entity. This means that in most cases the bv is liable for any debts. The capital of a bv is divided into shares, which are held by shareholders. Supreme power lies with these shareholders.
Limited liability company (nv)
A limited liability company (nv) also has shareholders. An nv also has shares that are freely tradable on the stock market. There is a mandatory starting capital of at least 45,000 euros. Both the bv and nv must prepare and submit annual accounts to the KVK.
Cooperative association
A cooperative and mutual society (in full: cooperative society) is a special association aimed at cooperation that enters into agreements with and for its members.
Foundation
Do you want to realize a certain social, societal or idealistic goal, such as nature conservation, helping other people or spreading culture? And do you have money available for this purpose? Then you can choose the foundation as your legal form.
Association
Do you have a desire or goal and want to cooperate with others to achieve it, such as a sports club or interest group? Then you can choose the association as your legal form.
Overview of all legal forms
Want to know what exactly are the characteristics of each legal form? Check out a handy overview of all legal forms. Including the capital requirement, taxes and social security for each legal form.
Video Choosing legal form for your business
https://youtu.be/bQBRtO819gUMost common legal forms in the Netherlands
The graph shows the number of businesses of the three most common legal forms in the Netherlands. The number of sole proprietorships is increasing almost continuously.