Things you should know when setting up a BV


February 10, 2021

Things you should know when setting up a BV

Are you looking to set up a BV (private limited company)? Then it’s important to make sure you get everything right from the start to avoid nasty complications in the distant or near future. Below is a step-by-step plan for setting up a BV.

1. Determine which legal structure is best for your company

When setting up a company, there are several different business structures to choose from, and everyone – from your brother-in-law to your dentist – will have an opinion about what the best option is. Find out which structure suits your company best.
These are two popular options:

Option 1: single BV

Setting up a single BV is an excellent option if the success of the BV is inextricably linked to your expertise and skills, and if risk diversification is not a major factor in your company. For example, as a consultant a single BV is a great legal structure. Having a single BV saves both establishment costs and annual administration costs.

Option 2: the holding company structure

This structure consists of a holding company and an operating company. In this structure, you’re the shareholder of the holding company which in turn has shares in one or more operating companies (both of which are called BV). This has its advantages in terms of risk diversification, spreading corporate tax and possibilities for selling. Read more about the holding company structure here.

Note: Are you working as a sole trader at this moment? If you continue your activities in a BV, you may have to transfer the sole proprietorship to the new BV. 

2. Draw up agreements with the shareholders

Are you setting up a BV with others? Then this will probably be a holding company structure in which all business partners and their own BVs hold shares in an operating company. Before setting up the BV, it’s important to draw up agreements with your business partners, for example about the management fee, the annual dividend payments and signing authority.

3. Outsource your administration

Setting up proper records and administration is very important for a BV. The annual financial statements must be filed with the KvK (Dutch Chamber of Commerce) every year and the corporate income tax and turnover tax must be submitted correctly.

You can’t simply withdraw money for private expenses from a BV. Every Euro in the bank must be accounted for in the annual accounts. So don’t just set this up yourself, but make sure you let a qualified accountant take care of the books from the very beginning.

4. Make an appointment with a notary

The incorporation of the BV must be drawn up. A civil-law notary can arrange this for you. The notary will draw up the statutes in a notarial deed and will also arrange the registration of your BV(s) with the KvK. The costs for a notarial deed are between €500 and €1000 per BV, and a registration at the KvK will cost you €50.

Things you should know when setting up a BV

5. Open a bank account for the BV

This is an important step that’s often overlooked: open a bank account in name of the BV. Opening a business bank account can sometimes take several weeks, so make sure you do this on time. Tip: Online banks often work much faster than old-fashioned branches, so use this to your advantage.

6. Make the first deposit

As soon as the business bank account is active, transfer the share capital from your personal bank account to that of the BV. This is the first bank transfer that needs to be done. The exact share capital is stated in the incorporation. Even if it’s only a small deposit (for example €1,20) this is still of great importance. Should you forget to deposit the capital shares in full, you’ll remain jointly and severally liable instead of the BV.

7. Draw up all necessary contracts

For example:

- Management agreement

- Current account agreement

- Employment contract DGA (director and major shareholder)

- Shareholders' agreement (in case of multiple shareholders)

For most of these contracts you and your BV will be the only parties involved. It may seem excessive to draw up a contract ‘with yourself’, but a lack of paperwork can be a possible reason for the judge to hold you liable for any debts and problems of the BV.

8. Get a VAT number and payroll tax number

Before sending your first invoice and paying out your salary, you must register as a taxpayer for turnover tax and register yourself as an employer with the Dutch Tax and Customs Administration. This is something your accountant can arrange for you by filling in the necessary forms and sending them to the tax authorities.

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