If you work as a small entrepreneur, freelancer or self-employed person, you have probably chosen a sole proprietorship as the legal form when registering with the Chamber of Commerce. A sole proprietorship is the simplest form of business structure and is relatively easy and inexpensive to set up. As a sole proprietor, you are legally responsible for all aspects of the business. You generally make all the decisions about starting and running your business and you can hire people. But if your company continues to grow, you plan to hire employees or if you are looking for investments for your company, you can consider switching to a BV.
The advantages of a BV
One of the main reasons why entrepreneurs choose to set up a BV is limited liability. The law treats a BV as a separate legal entity. This means that you will not be held personally responsible for the actions of your company. So in the event of any debts, creditors cannot access your private assets. If you own a sole proprietorship, you are personally liable for the company's debts. If you go bankrupt, you will also be privately bankrupt, and all your assets will be used to pay your debts. For example, you have to sell your house and can end up in debt restructuring. If your company is a BV, only your company will go bankrupt and this will not affect your financial situation. With a BV you also have more tax benefits and it is easier to sell the company. For example, if something happens to you as the owner of the BV or if you want to retire, the company can continue to exist – but with a new director.
Setting up a BV
Setting up a BV is very easy, and there are almost no costs involved. The minimum contribution of 18,000 euros is no longer required. However, you must deposit at least 1 euro cent in the company as starting capital. This can be done with money, but also in kind. You have to go to the notary to set up a BV. You do have to pay notary fees for this. Think of at least a few hundred euros. The notary draws up the notarial deed containing the articles of association (the provisions and rules of the company), and then usually takes care of the registration of your BV in the Trade Register of the Chamber of Commerce and with the Tax Authorities. In addition, there are costs for keeping an administration. Your administration must always be up-to-date and you must file annual accounts with the Chamber of Commerce. Which data you have to submit depends on the size of your company. You need an accountant for this if you are not very handy with it yourself.
Setting up a Holding
A holding company is a company just like a BV. 90% of all entrepreneurs are recommended to set up a personal holding company. In short, this provides a tax advantage and the possibility to spread the risks. The holding company is then the parent company, which may include several private limited companies. A holding company can be useful to separate important assets such as money, shares or real estate. It is therefore wise to set up a holding company when setting up a BV if you want to keep your assets in the event of bankruptcy. You only lose that one BV. The other BVs that fall under the holding can continue as usual.
