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.
Six Ways to Come up With Your Ultimate Business Idea
What is better: to copy a ready-made idea or come up with something on your own, completely unique and original? Both options are appropriate. In any case, it is crucial to understand who your target consumer in Nigeria will be, what your competitive strategy is, and how you will promote the product.
Well, remember that if you copy an idea, you still cannot copy absolutely everything. All the same, you will have to bring something original to someone else’s idea. There are cases when an entrepreneur works for some time under a franchise, and then leaves the franchisor and creates one’s own project according to the same patterns. But even in these cases, it is necessary to change and build some things on one’s own.
On the other hand, if you come up with a completely original idea, it will be too hard for you to work out absolutely every element in the price chain yourself. Look at other businesses, think about what projects have a similar audience, a similar market to you, and, if possible, peep the best ideas and practices from them.
Is a Business Idea Really That Essential?
A business idea in the case of a small business is just a specific tool at work, like sales, marketing or manufacturing. It is not the business idea that comes first. Primarily your desire to do your own thing, and not at all where to find an idea for a business. So, if you want to run a business, do not wait for a “perfect” idea, do not hold on to an unrealizable one and polish your ideas to shine.
Coming up with Something Original: Creativity Stimulation Techniques
Well, no matter what stage you are at, whether you choose one idea from several promising ones, or you have no idea what you want to do at all, maybe forex or CFD trading, several techniques will help you make the right decision.
De Bono’s “six hats” method: Pick a business idea from a list
The Six Hats Method is an advanced way to organize a brainstorming session. You alternately try on hats in different colours:
- Yellow, and
- Green, including different modes of thinking.
According to the Forextime blog, the six hats method is used in a group, when one of the participants always remains in a blue hat: it is responsible for managing the process. The participant in the blue hat assesses the thought process itself, leads the meeting and discussion, and decides when other participants wear hats of certain colours.
In case you are thinking alone, you wear a blue hat at the beginning and end of the session. With the blue hat on, you set the order of your brainstorming session, the order in which the hats are worn, and the timing. At the end of a brainstorming session in a blue hat, you sum up, see what you have achieved, what you can use next. The order of hats may be as follows:
- White hat — information and facts. What business models are currently being used in the market? What laws affect the market, are there any objective requirements for entering the market (licenses, authorized capital, etc.)? You are trying to understand what information you have, what is missing, and where you can find additional one.
- Red hat — emotions and intuition. How do you feel about this business idea? Would you like to tackle it? Do you believe that you can realize your ambitions with this business idea?
- The black hat is a critical judgement. What are the weak points of this idea? What are your limitations, what are you missing for implementing this idea and being successful in this business? What difficulties will you face? What are the disadvantages of this market? What if things do not go the way you intend?
- The yellow hat is positive thinking. What are your competitive advantages? Why is this idea right for you? How can you use your strengths in it? What opportunities are open to you? Why is this market good?
- Green hat — creative thinking and search for unusual thoughts and creative solutions. How can you implement this idea faster? What can you do to achieve payback in half the time? Can you adapt this business model to a different market?
The most important rule is not to mix modes of thinking. As long as you are wearing the green hat, you are not filtering out or evaluating your ideas. Using the six hats method, you can either choose a business idea from a list or work deeply on one specific idea. If you work with a list of ideas, the red hat will help you understand what idea you have more heart for, and the green hat will help to think about how to combine good practices from several business models.
How to Convert Itunes, Amazon and Steam Cards to Naira
As gift cards keep gaining popularity grounds in Nigeria, Amazon, iTunes, and stream cards continue to lead the race as the most popular gift cards. In this article, a detailed but concise study on these gift card types will be given including the platform on which they can all be converted to naira.
iTunes gift cards
An iTunes gift card is a prepaid money-value card that is used to purchase software Apple products like music, movies, apps, and lots more. It can be purchased easily on Astro Africa.
Amazon gift cards
Amazon gift cards continue to gain popularity because they are not restricted to only Amazon website but can also be redeemed in stores permitted by Amazon. Amazon is the world’s largest e-commerce company, where consumers are can buy/sell a wide variety of products both online and offline. Its gift card can be used to purchase anything on the Amazon website or traded for cash on Astro Africa.
Steam gift cards
Steam is a platform through which video games can be distributed digitally and it was created by Valve. Steam gift cards are usually converted into Steam credit so that players can use those credits to purchase game content. Buy/sell Steam gift cards for cash on Astro Africa at the best rate.
Trade your iTunes, Amazon and steam gift cards on Astro Africa
The best decision you can make with your gift cards now is to convert them to cash on Astro Africa. Astro Africa is not one of those gift cards platforms that offers low exchange rates to its customer.
Better still, Astro Africa makes sure that by the time customers are done trading, they are all smiling home because of the huge amount of profits that they’ve acquired. This is as a result of the fact that Astro Africa sells above 80% of the gift card’s original value when it’s converted to naira. To calculate the current rate of all your gift cards check out Astro Africa gift card rates calculator.
Making a huge profit from trading your gift cards is a tip of the iceberg of what you stand to gain from trading with Astro Africa.
Other features of Astro Africa are listed below.
Instant payment: Trade your iTunes, Amazon, and Steam gift cards on Astro Africa and get paid instantly. No delay in payment at all except in cases of network issues.
Referral bonuses: Immediately you open an account with Astro Africa, you’re given a unique referral code that consists of 10 alphanumeric digits. With the referral code, you can invite your friends and family to come trade with Astro Africa. When they do, you’re given a reward of 500 naira for each referral that trades. Interesting right? Just another way to make money off Astro Africa if you ask me.
To ensure that you’re paid your referral bonuses, make sure whoever you refer fills in your referral code in the referral code column when signing up.
Security: Cybersecurity is a very important feature of any digital platform and Astro Africa understands this. That is why they invested so much in ensuring the website and app is well secured and immune to the wiles of internet hackers. Even more, your card details are 100% protected from rippers.
24/7 customer service: It is through a responsive network of customer support that Astro Africa have been able to build the trust of its customers. Any issue relating to using the platform can be reported via Whatsapp, web, or the app, and a solution is provided immediately by customer service.
User-friendly: Both tech-savvy and non-tech savvy individuals can easily navigate the Astro Africa platform. It is user-friendly and intuitive in its entirety.
If you want to convert your iTunes, Amazon, and Steam gift cards to naira on Astro Africa, these are the steps to follow.
- Log on to www.astroafrica.com or download the android mobile app here.
- For existing users, click on log in and fill in your details. For new users, click on sign in and fill in all necessary information.
- Click on sell gift cards.
- Select the type of card you want to sell.
- Select card wallet to credit as NGN and preferred card category.
- Input card amount, upload the image of the card and enter image remark.
- Click on submit. Immediately your transaction is confirmed, your local currency account will be credited.
Frequently asked questions
Does Astro Africa charge for P2P transfers?
The answer is a straight NO! There are no hidden charges with Astro Africa, only seamless transactions.
What other way can I earn on Astro Africa?
Another way to earn from Astro Africa is through referral bonuses. All you have to do is refer your friends and voila! Astro Africa will pay (500 naira person) you for the number of people you refer. Just imagine referring 10 persons, that is earning 5,000 naira without any hard labor. Amazing right? Login to www.astroafrica.site to get started.
How do I add my bank account on Astro Africa?
Should You Consider Alternative Investments?
There’s no doubt that the coronavirus caused a seismic shock to the world’s financial markets, with the stock markets experiencing several peaks and troughs through 2020 and the first half of this year.
Even fixed-income bonds saw their value decline over the course of the last 18 months or so, creating a rising demand for so-called “alternative investments” across a wide range of asset classes.
But what are the most common types of alternative assets, and which options are right for you? Let’s find out!
- Private Equity
We’ll start with private equity, which is a relatively diverse and broad category that refers to a capital investment made into privately listed commercial entities.
Similarly, it may include businesses that aren’t currently listed on a public exchange like the FTSE 100 or the New York Stock Exchange, while there are several subsets included within this category.
Venture capital focuses on startup, small cap and early stage ventures, for example, while growth capital investments enables more mature companies to expand and restructure over time.
Often, the viability of this investment vehicle is determined by the relationship between the investor firm and the recipient of capital, while it’s important to select a subset that suits your risk profile and existing capital holdings.
- Real Estate
Real estate represents a long-term and tangible investment option, and one that can be leveraged in numerous ways in the current marketplace.
From a broader perspective, there are multiple assets that may be included within this investment subset, including land, farmland and even intellectual property such as artwork.
This creates a diverse range of investment options, with real estate arguably serving as one of the most lucrative and generative entities within this subset.
Not only is real estate one of the largest alternative investments by the measure of value, but it’s also similar to fixed-income products like bonds. This is because property owners can leverage their assets to secure currency cash flow in the form of rental yields, rather than simply buying homes and preparing them for resale.
Commodities remain the most popular and well-known type of alternative investment, and one that’s often leveraged by traders when they receive a free trading bonus as part of their new account.
Commodities are certainly a diverse and accessible asset class, which includes options such as natural resources (like gas, coal and oil), precious metals, iron ore and agricultural produce.
Commodities can either be held as tangible assets or as derivatives, while they’re widely utilised by experienced investors as a viable hedge against inflation. This is because they’re not that sensitive to public equity markets, making them a key component of any truly diversified portfolio.
However, commodities are slightly volatile and at the mercy of the basic principles of supply and demand, leading to higher potential profits and losses depending on how the market in question performs.
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