There are several good reasons to convert your eenmanszaak (sole proprietorship, hereafter EZ) to a BV (a private limited company). Your company may have grown or you are planning to grow significantly, or liability becomes an issue, for example because you want to hire staff, make investments or start working with others. It could also be that you want to be active outside the Netherlands or that you have made a plan to sell your business in a few years.
The owner of an EZ is jointly and severally liable for all debts and as the EZ grows, the financial risk increases. The conversion to a BV is then a solution because the shareholders of a BV are not jointly and severally liable for the debts. If the BV gets into trouble, you as a major shareholder are not directly responsible, unless you have made a mess of it, then you can be charged with mismanagement.
Another important reason for entrepreneurs to start with an EZ is the tax advantage that you can get, such as the starter’s deduction and the self-employed deduction. After three years, however, the starter’s deduction will lapse and the self-employed deduction will decrease every year; from a fiscal point of view, the turning point is around €100k profit per year. So it does have a certain advantage to start with an EZ, but converting to a BV also costs money (and time and energy). The relatively small amount of the tax benefits often makes entrepreneurs with big plans decide to start a BV right away.
Whatever the reason may be, converting an EZ to a BV involves many things that you may not have thought about yet. How do you convert an EZ into a BV? What do I need for that? What do you do with all the assets of the EZ, your customers, your logo, your employees? Can you just take it over in the BV?
There are three ways to do this: with an asset-liability transaction, a rushing contribution (ruisend) or a silent contribution (geruisloos). In the coming articles I will discuss these three ways one by one.
By the way
You can keep your EZ next to a BV, but make sure that the activities remain strictly separated. The EZ and the BV should not be intertwined. In practice, most entrepreneurs cancel their EZ and everything is transferred to the BV.