Setting up a limited liability company: what should you pay attention to? + step-by-step plan

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Introduction
As an entrepreneur, one of the things you decide is which legal form suits your business. It may be attractive to start a private limited company (BV), or to convert your existing sole proprietorship or partnership into a BV. You will then not be personally liable for your company's debts, and with high profits you will have to pay less tax. Thinking about setting up a BV?

In this article, we discuss what you need to consider and how to set up a limited liability company.

What is a limited liability company?
A BV is a legal entity, which participates independently in legal transactions. This means that the BV carries all the rights and obligations of the company. A BV can have debts, enter into contracts and be held liable. Because a legal entity cannot act itself, it requires a representative, who sits on the board of the BV and is employed by the company.

What are the advantages of a limited liability company?
There are several reasons why you might want to set latvia mobile numbers list up a limited liability company. Starting a BV has several advantages:

Benefit 1: Limited liability
You secure your private assets. As director of your private limited company, you are not personally liable for any debts. If you have a sole proprietorship or partnership, creditors can recover from your private assets.

Benefit 2: Less tax on your profits
You pay less tax than with a sole proprietorship or partnership.

With a sole proprietorship or partnership, you pay income tax on your profits. In the first bracket this is 37.07% tax for your income up to EUR 73,031 and everything above EUR 73,031 is 49.50%.
With the limited liability company, you pay 19% corporate income tax on your profits up to 200,000 euros and for profits over 200,000 euros you pay 25.8% corporate income tax.
Benefit 3: Attractive to investors (equity)
At incorporation, you as founder determine how many shares you want to issue and at what value. If you then multiply the number of shares by the value per share, you have your share capital. If you are a company looking for a financial investor, you may choose to sell part of your company (in the form of shares) to shareholders for a certain amount.

Benefit 4: Reliable reputation
BVs have a trustworthy reputation because they require a notarized deed. With a sole proprietorship or VOF, there is no notary control: anyone can start a sole proprietorship.