In the Netherlands, you need to choose a legal structure when you start a business. You cannot operate without choosing a business structure and be an entrepreneur. There are quite a few considerations to be taken into account when making that choice. The statements below can help you find out which bracket suits your situation best. Select and deselect statements to access information on several considerations you may have. Try to read all the information here; it will help you make a well-informed decision.
In the Netherlands, there are many options, but the business structures chosen most often are:legal structures in the Netherlands, where you can also find an overview of all existing business structures in the Netherlands.
Those are not legal structures, even though the words are widely used. Freelancers/zzp-ers need to choose a business structure when they register – usually, they opt for sole proprietorship. But private limited company is also an option. You can also opt to start a cooperative together with a group of other zzp’ers; that way, you’ll have the protection of a legal entity, with the benefits of a sole proprietorship. Be aware that the cooperative will have to pay corporate tax over profits made.
In that case, you can register as a sole proprietor or as a private limited company. Once you’ve registered as a sole proprietor, you can decide to join or found a general partnership or cooperative.
In that case, you may want to start out as a sole proprietor. Be aware though, that as a sole proprietor you are personally liable for your company debts. On the upside, you will be liable for income tax but not for dividend or corporate tax. And there are tax benefits to be had: check the entrepreneur allowance.
In that case, a private limited company may be the choice for you. To start a private limited company, you will require the services of a notary. Be aware that as a bv you will be liable for corporate tax and dividend tax. Also, you will need to file your own income tax return over your salary. On the upside, you will not be personally liable for the company’s financial obligations.
In that case, you may consider starting out as a general partnership, a private limited company or a cooperative. A quick comparison will tell you what the main differences between these three are.
|Private limited company (bv)||General partnership (vof)||Cooperative / Mutual insurance company|
|Setting up||Notarial deed||No requirements, preferably written / notarial contract||Notarial deed|
|Other bodies||Shareholders, possibly Board of Commissioners||None||Board of members, poss. Board of Commissioners|
|Liability||Directors (in case of mismanagement or unwarranted payments to shareholders)||All partners privately 100%, if partnership does not meet obligations||Members: fully (WA), partly (BA) or not at all (UA). Directors (in case of mismanagement)|
|Taxes||Corporate tax, income tax on directors’ salaries, dividend tax||Income tax, SME profit exemption, entrepreneurs allowance (if hours criterion is met)||Corporate tax, income tax on profit payments|
|Social security||No employee insurances, unless dismissal against the director’s/shareholders’ will is possible||No employee insurances||Only in certain cases|
In that case, you might consider starting a private limited company, as this will make you eligible for lower taxes.
BV’s are often viewed as more ‘real’ than sole proprietorships, especially abroad. So if you want to do business internationally, if you want to secure major clients, or if you want to be able to sell your business later on, a private limited company will help you realise those goals. On the other hand, starting a cooperative also lends you a professional image. So if you start out as a sole proprietor and then join forces with others, your business will profit from all the advantages of legal status, while preserving the benefits of being a sole proprietor. Also, you’ll profit from benefits that come from operating on a larger scale, such as tariffs for procurement and housing.
If you are looking for capital, and you involve private investors or banks, most likely they will want some security that their investment is a sound one. To provide this security, you either need to be able to prove that you can pay back the investors if the business goes bankrupt, or you need to start a private limited company, in order to establish a legal entity, which is more secure as a creditor than a sole proprietor (i.e., you personally). You may decide to offer your investors a share in the business, this is called equity. In that case you have shareholders, and need to start a BV. If you can procure government funding, you may not need to take money matters into account quite as much when deciding upon a business structure. But always be aware that loans have to be repaid somehow, and be realistic about your ability as a private person to do so.
Statistics: businesses by legal form
Number of businesses by most frequent legal form.