When you start a business, a legal form shall be chosen. In many countries, the most enticing prospects will exist of a sole proprietorship and limited liability company. To compare the two options, a more detailed look will be given into the situation in the Netherlands. A small country located in the EU and since the Brexit very popular for the set-up of trading companies.
A lot of business owners looking to establish a business in the Netherlands first start with a sole proprietorship (eenmanszaak in Dutch). It’s a very convenient and hassle-free option since all you have to do is pay a visit to the Chamber of Commerce and your company is right there, all ready for you. However, in a variety of cases, a sole proprietorship may not always be the most viable solution. This is mainly why many entrepreneurs choose to make the switch from a sole proprietorship to a private limited liability company: a BV.
Many entrepreneurs even choose to forego a sole proprietorship altogether and simply start with a BV. But what exactly is a BV? What does it entail and what factors should be considered when deciding to set one up? Most importantly, what are the costs and fees associated with establishing a BV?
What is a BV?
The abbreviation BV is used to describe a private limited liability company (Besloten Vennootschap met beperkte aansprakelijkheid in Dutch). A BV is among the most preferred legal entities among entrepreneurs in the Netherlands. Compared to other entities like foundations and association, a BV is mainly centred around business operations, making it the perfect choice for entrepreneurs.
A BV usually features one or more directors who are authorized to act on its behalf. This way, the BV can be considered a legal person which can enter into agreements and perform other actions even while it is being represented by a director and other roles.
What are the differences between a limited liability company and a sole proprietorship?
This question allows us to directly address some of the most prominent differences that come with the simple one-man business. In legal aspects, a person with a sole proprietorship is always jointly and severally liable for all actions related to it. This means that in the case of your sole proprietorship going bankrupt, you will have to bear the responsibility for privately settling all related debts. In the case of a BV, this is often different.
If your BV ends up going bankrupt, your private assets will remain unaffected. Of course, there are some ifs and buts when it comes to this. For instance, if you actually do end up going bankrupt, there will be an investigation regarding the honouring of the general principles of good administration. In simple terms, this means that they’ll see if you were involved in any recklessness regarding the BV. If found responsible for the bankruptcy, you may be held liable. Due to these reasons, it is important to ensure that you manage your BV carefully and responsibly.
There exists another general limitation regarding the advantage that a BV owner is not jointly and severally liable. Such limitations are most prominent when you are just starting out on setting up your private company and require funds for being able to make investments. In cases like these, banks and financial institutions generally only provide loans if you personally act as a guarantor. That keeps you jointly and severally liable (at least to some extent) during the initial years of establishing your BV.
Liability aside, a sole proprietorship and a private limited company have some other stark differences as well. Entrepreneurs having doubts between the 2 entities should know this: a BV generally provides a more solid stature of repute, commercial trustworthiness and authority. Private companies tend to be seen as professional companies and not hobbyists. The BV status helps ensure your clients that the company is reputable, responsible, trustworthy, and won’t vanish into thin air overnight. This can significantly boost your credibility as a company and even facilitates the expansion of your clientele by attracting new clients.
Another advantage available to BV owners is that they can issue shares and can partially or completely transfer their company to somebody else for example, from father to son. Shares can also be distributed among close friends and family members to give them a small chunk of the profits while obtaining funding as well. These perks are non-existent with a sole proprietorship.
‘The tipping point for going from a sole proprietorship to a private limited company is around 150k euro profit’
Finally, a BV brings (usually positive and favourable) tax consequences. For example, BV owners fall under the umbrella of corporate income tax instead of personal income tax. In case you’re making considerable profits of up to 150K Euro or more, you’ll be subject to a lower tax rate than that which comes with a sole proprietorship. So, if your business is doing really well and you have a sole proprietorship, then making arrangements to establish a BV would be a very sensible move.
Dutch company formation: How is it done?
One thing is clear: it takes more effort to create and register a company in the Netherlands (and eventually closing it down) than a sole proprietorship. A sole proprietorship can easily be arranged at the Chamber of Commerce in about an hour. If you feel like it, you can even use your private bank account for the whole procedure. With a BV though, things are done differently.
The first step in setting up a BV involves you informing a company formation specialist of this intention. Based on the details you provide; they will draw up a deed of incorporation for you. This document is a declaration that a BV is now being created. After the company has been established by executing a deed of incorporation, you will need to register the UBO and company with the Dutch trade register. Company formation agents usually take care of this task on their own at the Chamber of Commerce, and the whole procedure is usually completed within a day. Capital is payable either before the execution of the incorporation deed or after it has been done.
Capital contributions can become a cause for confusion sometimes. Before 2012, the rule was to deposit 18,000 euros, which could be cash or material possessions having the same value. This condition has been revised and it is now possible to simply make a deposit of 1 cent. This allows you to decide exactly how much you’d like to deposit for your BV.
You can start carrying out other important affairs regarding your BV even if the incorporation hasn’t been completed. For this, you will be acting on behalf of a BV in formation (in oprichting). You can simply inform your business contacts that you are carrying out affairs on behalf of a future BV. You will have to assume complete personal liability for any obligations, deals, or contracts you participate in, but you won’t be wasting any time by waiting around for the incorporation to complete. If you need to arrange a website or property for your company, you can easily do so.
What are the costs associated with setting up a BV?
The initial capital contribution isn’t a very serious major expense for a BV setup, but notary visits are important and can have costs. Usually, it is safe to set aside a few hundred euros for this.
Mandatory audits for legal entities (like a BV) are also something to be mindful of. These have their own costs, and if you fulfil any 2 of the 3 conditions mentioned below, you will have to hire an accountant:
- A total of more than € 6,00,000 on your balance sheet.
- A net turnover exceeding € 12,000,000
- 50 employees or more.
BV Registrations with the Chamber of Commerce generally come with a price tag of €50. Generally, there aren’t any mandatory costs. However, your business expenditures can rack up. When thinking of business costs, be sure to consider essential elements such as staff, machines, equipment, arranging business premises, transportation and other relevant costs.
Ever since the 2012 rule of depositing 18,000 Euros has been scrapped, it has become much easier and more affordable to establish a private limited company. A few hundred Euros can help you go a long way in your Dutch business journey; however, it’s always advised to be mindful of other business expenses, which there will probably be a lot of. Actively making real investments will also require you to have some capital on hand. However, that should be no surprise because every entrepreneur is well aware of the idea that: in order to make money, you first have to invest money.
Land Loans: An Incredibly Easy Method That Works For All
A land loan is a type of financing that allows you to buy a piece of property. There may be several options available to you. Borrowers get a land loan by submitting an application with a bank or a lender, who will run your credit history and evaluate the value of the land to determine if you’re a suitable buyer, just like a home mortgage.
However, it’s different from a home mortgage. Determining the value of land can be more difficult due to the lack of collateral. For a lender, this makes land loans more of a risk. As a result, down payments and interest rates may be greater than a traditional mortgage loan note.
Finding Financing for Land Loans
You know there are all types of loans. Borrowers can apply for a lot loan, a land loan, construction loan, or a home loan. For each loan, there may be a different process for approval. Mostly, they all depend on your credit score or payment history, income and ability to repay as the experts call it, a debt-to-income ratio. Applying for it is similar to a home loan, with a few exceptions. If you are ready to shop for someone to finance your land, consider these options.
Seller financing can be a great opportunity for someone just starting out. Sometimes you can find a seller who is in a hurry to get rid of some property. The seller and buyer should come to an agreement and draw up a legal contract, including what the down payment amount and interest rate should be. Hire an attorney to make sure everything is above board before signing the contract.
Local Banks and Credit Unions
Banks and credit unions are more likely to approve land loans than large financial institutions. Due to their understanding of the local property, the lender may also be able to provide better terms than the bigger banks. Regardless, the potential borrower must offer a loan package that includes land and specifications and blueprints, as well as personal financial details to demonstrate creditworthiness.
How can anyone acquire land if banks and credit unions refuse to lend them money? The buyer may be eligible for federal assistance if the property is in a rural area and is agricultural. The United States Department of Agriculture (USDA) offers a variety of low-interest subsidized loans with flexible terms.
When you compare land loans to a property that has a building on it already, land loans are riskier investments. They want a large down payment and you should expect higher interest rates. While you may be accustomed to 15- and 30-year terms with regard to a home mortgage, land loan terms are typically only two to five years long, plus there’s a balloon payment due after that period, however, longer-term loans are available.
Raw Land vs. Lot Land
Lenders will be more interested in your land if certain factors are present. For example, they consider land that looks to be easier and less expensive to develop would likely be more affordable financing than land that appears to be difficult to develop. But, before we cross that bridge, understand the difference between “raw land” and “lot land.”
Raw land is just land and it may or may not be right for development. Lot land can be used for developing houses or apartment buildings and is likely to have the following:
- Utilities on site or nearby
- A building and/or zoning permit
- Access to a public sewer
- A survey report and stakes conveying boundaries
- Access to public roads
Land Loan Conclusion
Because land loans are considered risky by lenders, interest rates are often higher than mortgage interest rates. The higher your credit score and debt-to-income ratio, the more likely you are to qualify for lower interest rates.
Buying land is more involved and complicated than buying a house, so if you’re prepared it will make the land loan approval process go more smoothly. The more precise your proposal to a lender is, the faster you may acquire your land and begin construction.
Forex Trading for Beginners – Practical and Useful Tips
Forex trading doesn’t have to be frightening if you know a good place to start and who, to begin with. The first good thing is that you are here, reading this article. The second is finding Forex broker reviews after reading this (you’ll see why). Without further ado, let’s begin!
Recognize How It Works
The importance of understanding the forex market cannot be overstated. Before you lose your own money, take the time to learn about currency pairs and how they are affected; it’s a time investment that could save you a lot of money.
Create a trading strategy
Developing a trading strategy is an essential part of being a good trader. Your benefit targets, risk tolerance level, methodology, and assessment criteria should all be included. If you’ve created a strategy, double-check each trade that you’re considering fits within the constraints of your strategy. Remember that you’re most reasonable before you make a deal and most unreasonable after you’ve made it.
With a risk-free demo practice account, you can put your trading strategy to the test in real market conditions. You’ll be able to feel out what it’s like to trade currency pairs while also putting your trading strategy to the test without risking any of your own money.
Predicting the Market’s Conditions
Fundamental traders tend to trade according to news and other financial and political data. In contrast, technical traders prefer to forecast market movements using technical analysis methods such as Fibonacci retracements and other indicators. The majority of traders employ a mixture of the two. Whatever your trading style is, you must use the resources available to identify possible trading opportunities in moving markets.
Recognize The Limits
Know your boundaries. It’s a basic concept, but it’s crucial to your potential success. Knowing how much you’re willing to gamble on each exchange, adjusting your leverage ratio to what you need, and never investing more than you can afford to lose are all examples of this.
6. Recognize that it’s time to take a break
Perhaps you don’t have time to sit and watch the markets 24 hours a day, seven days a week. Stop and limit orders, which get you out of the market at the price you set, will help you control your risk while trading and protect future income. Trailing stops are handy because they follow your position as the market swings at a set distance, helping to preserve profits if the market reverses. Placing repetitive orders may not always lessen the chance of losing your money.
Leave your feelings at the door
Let’s say you’ve opened a spot, but the market isn’t moving in your favor. Maybe you might make up for it by making a couple more trades that aren’t in line with your trading strategy. Perhaps it turns out better, right?
“Revenge trading” is seldom a good idea. The worst thing is to let your emotions get the best of you when you are trading. When you are losing, don’t go all-in to try to make it up in one go; it’s better to stick to your strategy and make up the lost money gradually rather than ending up with two crushing losses all at once.
Move Slowly and Consistently
It is consistency that is a crucial aspect of trading. Every trader loses money at some stage, but keeping a positive edge increases the odds of winning. It’s great to educate yourself and build a trading strategy, but the real test is sticking to it with patience and discipline.
Don’t Be Afraid to Take Risks
Although continuity is important, don’t be afraid to rethink your trading strategy if things aren’t going as planned. Your needs will change as your experience grows; your strategy should still represent your objectives. Your strategy should change as your priorities, or financial circumstances change.
Choose Appropriate Forex Broker
When you participate in the Forex market, it’s important to choose the right trading partner. Pricing, execution, and customer service efficiency may all affect your trading experience. That’s one of the main reasons why you should look at Forex broker reviews first – to find a licensed and certified broker who will guide you through it all.
How to Reduce the Chances of Your Business Grinding to a Halt
Throughout your time running your own business, you’re constantly looking for ways to make it as productive as possible. You may have lots of time and money investing in the most time-efficient ways to complete processes to help maximize your products.
You may have worked hard to help shave some of the time and therefore the money it costs to produce certain items or provide certain services. The only problem is there are many incidents which could make your business suddenly stop production. Every hour your workforce isn’t working could cost you a lot of money. With that in mind, here are the ways you can reduce the chances of an unexpected incident from making your business grind to a halt.
Invest in reliable equipment
One of the most common disruptions to a workplace is equipment failure. Whether you’re in a factory and a piece of equipment stops working, you’re in a shop and the till can no longer process payments, or you’re a tradesperson and your tools can’t complete the job, all of these problems can prevent you from completing an important transaction. That’s why it’s important to invest in the best equipment, no matter how simple you may believe it is. For example, many people may simply think a conveyor system is a simple bit of equipment that moves a product from one part of the production line to another.
If you invest in a cheap system and it fails, you could end up losing a large amount of money due to the time your production line is out of action. To reduce the chances of this happening, make sure you invest in companies that offer innovative solutions, like those at Fluent Conveyors, who can create bespoke solutions to any problem. By investing in the best equipment, you’re reducing the chance of losing money due to technology failing on you.
Make sure your premises are secure
Another thing that can cause disruption to any business is a break-in. If they steal equipment or stock from your premises, it can prevent you from carrying out any work until it is replaced. Even if they break in and steal only minor things, you’ll likely have to shut the premises until it can be made secure again and the police can investigate the crime. To reduce the chance of any criminals breaking into your property, invest in security equipment like CCTV and alarms to deter anyone from trying to enter your premises without permission.
Increase the skillset of your employees
Whilst it’s important to have the technology to help you reduce problems within your operation, it’s also important that you have a number of employees trained to use that equipment. For example, if only one person knows how to use a certain bit of equipment and they suddenly call in sick, it could have a big impact on your productivity. If that person either leaves the business or is away from the business for a long time with sickness, it could seriously hamper your ability to meet deadlines.
With this in mind, it’s important that you train as many of your employees as possible to use all the equipment on your site. That way, if somebody is away from the business, you can find another member of staff trained to step into their shoes at short notice.
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