Choosing an appropriate business structure is one of the most vital decisions that any future entrepreneur who wants to venture into the Netherlands market has to make. The noted structure defines the legal and fiscal ramifications of the choice as well as the owners’ legal liability. The legal forms provided by the Dutch business environment are self-employment, civil law partnerships, BV, and NV.
Every structure has its advantages and drawbacks based on the business plan, amount of risk, and functions and scale of business. Understanding the distinctions with each kind will help someone to make the right decision in regard to what type will be suitable for business. Thus, in the context of this guide, you will be informed about the selection of the main legal business forms of starting a business in The Netherlands.
Sole Proprietorship (Eenmanszaak)
Sole proprietorship is one of the most common business models in Netherlands; it is popularly known as “eenmanszaak.” First, the sole trader structure requires the least formation of business formalities and is cheap.
The result of this structure is there is no legal distinction between the owner and the business, and therefore the owner is legally responsible for all the debts and business liabilities. Check out Wanneerishet for more details.
Limited Partnership (Vennootschap onder Beperkte Aansprakelijkheid – (VBA)
Another common kind of business is the general partnership, also known as Vennootschap onder Firma (VOF).
Here, the business’ contributors, ownership as well as operation are handled by more than one person. It also partly restores development needed for resources and knowledge, which is done with such structure’s assistance.
Registered / Private Limited Company (Besloten Vennootschap / BV)
The BV business structure is among the most popular forms in the Netherlands since it shields owners against responsibility and attracts capital. BV is an independent legal entity, and this implies that their exposure to the members is under the company’s share.
Applying formation means specific incorporation capital and legal processes, not the trading company or VOF, such as the articles of incorporation and registration also from the KvK.
Public Limited Company (Naamloze Vennootschap (NV)
A public limited company, also known as Naamloze Vennootschap, is ideal for large business entities who would wish to go public or even to float their share in the stock market.
An NV is, as such, a similar kind of company, which, as the name indicates, is a legal entity and has limited liability for shareholders, as does a BV.
Conclusion
In any case, it is advisable for start-ups to seek legal advice when selecting a legal structure of their organizations in the Netherlands because the right structure delineates the legal and financial responsibility of the owners and directors, as well as outlines a business’s future in the country.
A sole trader is easy to set up, but you’re personally responsible. As for a general partnership, the capital may be split as well, and the risks are also split. The above article has discussed the main business structures to consider before starting a business, and more information is available online.
