Do you have a sole proprietorship? And is your company growing fast? Then it is probably more tax efficient to convert your sole proprietorship into a BV. This is partly due to the differences in costs and liability. Read more in this article about the advantages of a BV and the points to consider during the transition.
On this page:
We have listed the biggest advantages of a BV below for you:
Because your sole proprietorship is not a separate legal entity, you are personally liable as an entrepreneur. Your private assets can be used to settle the costs or debts of your business. This is not the case with a BV. Your private assets and business assets are then separated.
Some administrative and tax differences
Sole proprietorship | BV |
---|---|
You can start a sole proprietorship relatively easily, cheaply and quickly via a business counter. | Before you can register a BV at a business counter, you must first go to the notary. This entails a somewhat higher cost. |
There are not many accounting and administrative obligations. | The accounting and administrative obligations are more extensive than with a sole proprietorship, and therefore slightly more expensive. |
The income from your sole proprietorship is taxed through personal income tax. | The income of a BV is taxed via corporation tax or ‘vennootschapsbelasting’ (VPB). This is fiscally more advantageous than personal income tax. |
Transfering a sole proprietorship is quite difficult. | A BV is easier to transfer. |
There are a number of one-time costs involved in the establishment of a BV. For example, the registration in the Trade Register (about 50 euros) and the costs of a notary. The notary fees vary by office. In general, you can assume an amount between 300 and 1000 euro, depending on the complexity of your wishes.
There are some points to take into account when converting:
You will also need an asset-liability document. This document states which assets and debts you are selling to the limited company. You can choose to draw up this document yourself or have it drawn up by a notary. You do not need a notarial deed when converting by means of an asset-liability transaction.
Asset-liability transaction:
Tax-free transfer of assets
Then you set up the BV at the notary. The notary also draws up a deed of contribution. This contains all the assets and liabilities of your sole proprietorship that are transferred to the BV. The notary will register your BV and de-register the sole proprietorship at the KVK.
DGA (director and major shareholder)
In addition, when starting your own BV, you become the DGA of the company and pay yourself wages from the company (this is called DGA salary). The tax authorities no longer consider you an entrepreneur, and you can no longer make use of various deductions. For example, the self-employed tax deduction, starters tax deduction and SME profit exemption.
What is a BV?
BV stands for Besloten Vennootschap, which translates to a private limited company in English. A BV is a business structure in the Netherlands that offers limited liability to its shareholders. This means that the shareholders are not personally liable for the company's debts and legal issues.
Why would someone want to switch from a sole proprietorship to a BV?
There are a few reasons why someone might want to switch from a sole proprietorship to a BV. One reason is that a BV offers limited liability, which can protect the owners' personal assets in case the business incurs debts or legal issues. Additionally, a BV can be more attractive to potential investors or partners, as it is seen as a more formal and established business structure. If you're looking to expand your business, a BV can make it easier to raise capital and take on new partners or investors.
What is the process for switching from a sole proprietorship to a BV?
The process for switching from a sole proprietorship to a BV involves several steps, including drafting articles of association, registering the BV with the Chamber of Commerce, and transferring assets and liabilities from the sole proprietorship to the BV. It is recommended to seek the advice of a legal professional or accountant to ensure a smooth and proper transition.
What are the tax implications of switching from a sole proprietorship to a BV?
Switching from a sole proprietorship to a BV can have tax implications. For example, the BV will be subject to corporate income tax, while the sole proprietorship is subject to income tax. It is important to consult with a tax advisor to understand the specific tax implications of making this switch.
How does the ownership structure differ between a sole proprietorship and a BV?
In a sole proprietorship, the individual owner has full control and ownership of the business. In a BV, ownership is divided among the shareholders, and decisions are made collectively through a shareholder meeting. The BV also has a board of directors, which oversees the day-to-day operations of the business.
Is switching from a sole proprietorship to a BV right for every business owner?
No, switching from a sole proprietorship to a BV is not necessarily the right choice for every business owner. It depends on the specific needs and goals of the business. It is important to carefully consider the potential benefits and drawbacks and consult with professionals before making this decision.
Also interesting:
The experienced bookkeepers and accountants in our network will be happy to talk you through the options that are open to you on the way to a successful transition. Start your free, no-obligation inquiry via the form below, and we will put you in touch with up to three bookkeepers or accountants in your area. You can see for yourself whether to start a partnership.
Onze dienst is geheel gratis en vrijblijvend voor jou als ondernemer.