Why change your business structure?
When you started your business, you chose the structure that was best suited to your situation and ambitions. But when circumstances change, a different legal structure may be a better fit. The main reasons to change are liability, taxes and working with partners. In business structures without a legal personality (Sole proprietor, General partnership, Professional partnership, Limited partnership), the owners are all personally liable. The tax rates and types of tax also differ per business structure. Some examples:
- You are registered as a sole proprietor. After some years the business is expanding. More money is involved and therefore more risk. As a sole proprietor, you are personally liable for the company’s finances and debts. Also, you pay income tax on your sole proprietorship's profits. Changing the legal form to a private limited company (bv) means the company is liable. And the bv corporate income tax rate is lower than the highest scale of income tax.
- You want to work together with others and be equal partners. You could change your legal form to a general partnership (vof), or if it concerns a specific profession, to a professional partnership (maatschap).
- You can change a private limited company (bv) to a public limited company (nv) if you want to be able to attract more capital.
Note: a sole proprietorship does not always have to change its legal form if circumstances change. For example, if a second person becomes more involved in the business or even when you hire staff.
1. Choose a new legal structure
Maybe you already know which one. Are you still in doubt? Use the tool to help decide which legal structure fits you best. Many entrepreneurs with a sole proprietorship choose a bv. This can be beneficial for taxes. They are also no longer personally liable. Get advice about this.
You can change some legal forms yourself. For example, a professional partnership (maatschap) or general partnership (vof). You do this by creating a contract. For legal structures with legal personality, this must be done through the civil-law notary. In this overview (pdf, in Dutch), you can see in the row ‘in formation’ if you need a notarial deed.
2. Report the new legal structure
3. Transfer permits to the new legal structure
Your business permits are often no longer valid if the legal structure of your company changes. You must convert your permits. For example, if you have a transport company (in Dutch). Or a catering company (in Dutch) with an operating permit and an alcohol license. Or if your company has approvals and permits (in Dutch) from the Dutch Food and Consumer Product Safety Authority. You must apply for some permits again. In that case, there may be a reassessment if you will get the permit again.
4. Convert contracts to the new legal structure
Contracts of your company must be in the name of the new legal structure. To do this, contact the party you have the contract with. For example, insurances and permits, internet and telephone subscription. And rental and supply contracts (water, energy). You need permission from the landlord to change the rental contract of your business premises.
5. Re-register as an employer
If you have employees, you must close your payroll administration. Then register again as an employer with the Tax Administration. You will then receive a new payroll tax number.
Also inform your employees, the salary administrator, the Employee Insurance Agency (UWV), the health and safety service (arbodienst), and the pension fund that you have a new legal structure.
6. Check if you need to include other data in the business records
Perhaps there are different rules for your administration if you get a new legal structure. For example, it is mandatory for a bv to keep payroll records and to draw up financial statements. A sole proprietorship does not need to prepare financial statements. Also consider adjusting your website, stationery and invoices. Read more about keeping business records.
If you change the business structure to one with a legal personality, such as bv or nv, you must draw up articles of association. You bring them with you to the notary who will draw up the statutes in a notarial deed and handles the registration at KVK and the Tax Administration.
7. Decide if you transfer business assets
You can transfer the business assets of your company to your new legal structure. For example your stocks. And assets such as computers, tools and machines.
You can also choose to keep these in private possession. Then you buy them from your company and process this in your administration.
- You pay a one-time KVK registration fee for the new legal structure;
- If you change to a business structure with a legal personality, you pay notary fees. This varies per civil-law notary and could be anything between €500 and €1,000;
- Your company is legally obliged to keep business records. You can outsource this to a bookkeeper or accountant. The prices range from €600 and €1,800 per year per year.
If you need personal advice, contact KVK. They can guide you through the options.
Statistics: businesses by legal form
Number of business structures with and without corporate (legal) personality.