Starting your own company during the current coronavirus pandemic might seem like a daunting task. There is a lot to take into account: what type of company best suits your business, filing taxes, bookkeeping, the list goes on and on. So, Orange Tax has put together a brief introduction to starting your own business.
What type of company?
We are straight forward tax consultants and like to keep things simple. So, we are going to run you through two common types of business structure in the Netherlands, eenmanszaak, or sole trader, and besloten vennootschap (BV), a private limited company.
Eenmanszaak
An Eenmanszaak is a so-called one-man company or sole proprietor company, which is sometimes known as a ZZP company due to its popularity with freelancers (zelfstandige zonder personeel). Despite its name, it is not limited to one person and any number of employees can be hired.
A one-man company is a simple company to operate from a tax point of view; you and the company are the same. You should also be aware that your full assets are subject to liability. The administrative formalities are much less than that of a BV company and annual costs are generally lower.
It might be a good idea to start a sole proprietorship and, once your business has grown, if you later want to turn your company into a BV company, you can do so.
A BV company
A BV company is a very formal company. Incorporated by a Dutch notary, you need to publish an annual report, file a corporate income tax return and hold meetings with shareholders. It is important to keep in mind that for every obligation you neglect there is a special penalty, an enormous penalty to be frank.
There are certain formal matters that you will need to consider when setting up and running a BV company, for instance, the minimum salary requirements for the director, dividend rules and loan agreement with the shareholder.
What's next?
We like the Nike slogan: Just do it. Make that appointment with the Chamber of Commerce, have your company registered. You will need to sort out the bookkeeping for your company, apply for Value Added Tax and file income tax returns.
Our advice would be to not spend time on a business plan, if you can predict the future you would already know what to do. Do not expect a business plan to raise money from a bank or anyone else, first you need to prove you are indeed able to run your own business.
Don't worry about tax
We are often asked about tax on profits and presented with numerous scenarios of what companies are expected to make, even before they are registered. The bottom line is that paying larger amounts in tax implies that your company is earning larger profit margins and with larger profit margins, so many things are possible. Expand your company, upgrade your offices and do not forget to treat yourself from time to time!
Orange Tax feels tax is exciting. It is their mission to make company administration as simple and streamlined as possible and they are already looking forward to assisting you with your bookkeeping, tax returns and any questions you have about starting your new company.