Why start a private LLC (Dutch: B.V.) and what do you need to do when starting?
You want to start a business and you are thinking about doing this in the form of a BV, or you have a sole proprietorship and want to convert this to a BV This article will explain what you need to do when starting a BV.
Starting a (flex) B.V.
You want to start a business and you are thinking about doing this in the form of a BV or you have a sole proprietorship and want to convert this to a BV This article will explain what you need to do when starting a BV.
Why a B.V.
There are different reason for starting a BV, for instance:
- Less risks concerning your liability
- Lowering the taxes.
Decreasing your liability concerns various affairs such as; loans, staff, contracts etc. A BV (currently) has the possibility to manage profits within the own (B.V.) control with lower tax rates and consequently postponing tax payments. This gives an increase in cash flow of 27% up to 32% of the profit in regard to the sole proprietorships.
Converting a sole proprietorship to a B.V.
Suppose you own a sole proprietorship and your company grows. To allow the company form to grow as well, you can convert the sole proprietorship to a BV in this manner you avoid risks and you have the possibility to postpone taxes. There are two possibilities: You can convert the sole proprietorship through a transfer of assets subject to tax or convert the assets tax-free. The difference is that in the first case, you pay taxes for book profits the moment you convert to the BV.
A conversion is complicated and it is therefore advisable to consult a tax specialist. Since the introduction of the Flex B.V. of the 1st of October 2012, you no longer need an accountant for the so-called contribution-declaration. In need of a tax specialist? Feel free to contact us.
Starting a B.V. What you need to do
We can help you when starting a BV, if you wish you can contact us and we will take care of the entire process and finalisation with the notary.
Before you start a BV with a notary and you have registered with the Dutch Chamber of Commerce, you may want to think about the following matters:
- Name of business;
- Address of registration;
- Description of the business activities;
- Who is/are the owner(s)?’
- The BV structure (with or without holding etc.)
The structure of the B.V.
If you start a BV it is also relevant to think about the structure of the B.V. The question that you will need to answer for yourself is: Do I want a BV or a Holding structure?
This is relevant when determining the structure of the BV The structure can be a unitary BV, but it can also be a BV with a holding structure. A holding structure can help to separate the liability and the financial assets.
Establishing a B.V.
If you have been able to answer the above mentioned questions, the time has come to establish the legal entity. You can register the legal entity at the Dutch Chamber of Commerce, if you wish, but not yet submit it to a notary. In Dutch this is called a BV i.o. status (in oprichting; currently being established).
Starting as an i.o. or not?
It used to take some time before the BV was established. The Justice ministry inspected the foundation and first had to give permission before the BV could be founded. To still be allowed to perform legal acts the i.o. pre-phase was created. With the introduction of the flex BV, starting a BV has become a matter of days or even hours. However, as long as the deed has not been approved by the notary, the status of the BV remains i.o. that means that the liability of the BV is similar to that of the sole proprietorship.
A BV must be established by the notary by approving the deed of incorporation. Therefore a notary always plays a part when starting a BV it also worth mentioning that some notaries do take care of the registration and some do not. We at Lupacompany work together with two offices with their own approach: Startflex and Schut en van Os notaries. Startflex works together with a national network of notaries for the founding of a BV Schut and van Os notarissen is established in Amsterdam Zuid.
Forms KvK (Dutch Chamber of Commerce)
On the website of the KvK you will need to fill in the forms 7 and 12 for the i.o. registration
For registration after founding you will need to fill in the forms 3 and 11
The B.V. has been established, what’s next?
After the BV has been founded, some administrative affairs will need to be arranged. Affairs such as:
- Opening a bank account
- Arranging the necessary insurances
Different than with sole proprietorship the payments of a company to the owner are relevant for the taxation. In a BV structure there are various types of transaction purposes:
- Payment of wage;
- Current account transactions
- Payment of a declaration
- Dividend distribution
It is of great importance that properly organize your administration. To decrease the liability as management, the director who has legal responsibility will need to ensure that the administration is properly arranged and legal obligations (tax and deposit Chamber of Commerce) are met in time.
Vat and corporation tax
With the registration in the Chamber of Commerce you are also registered with the Tax Authorities as an entrepreneur. You receive a letter fairly soon after registration in which your obligation in regard to the sales tax and corporation tax will be determined. The Tax Authorities determines whether or not there is a matter of obligation to pay taxes on the basis of the information of the Chamber of Commerce. It is not always the case that the correct tax obligation or obligation to declare results from this. It is therefore to properly check this letter.
Requesting a number for withholding taxes
What is necessary, but not an automatic process, is to request a number for withholding taxes for, at the very least, the director-majority shareholder. This is so the withholding taxes can be reported to the Tax Authorities.
We can help you with converting and establishing your BV We regularly work together with notary offices to properly and quickly found BV's. Feel free to contact us at firstname.lastname@example.org