What types of businesses are there in the Netherlands?

A legal form is the legal structure of your business or organisation. For example, the legal form determines who is responsible for your business. It also determines which rules apply and what risks you face. You choose which legal form best suits your business and your situation.

Legal forms can be divided into two groups:

• Legal forms without legal personality

• Legal forms with legal personality

In the case of a business without legal personality, you and your business are not entirely separate in legal terms. This means that you are often personally liable for your business's debts. This is known as personal liability. If your business is unable to pay a debt, creditors may sometimes be able to seize your personal assets.

Sole trader

A sole trader is a business with one owner. Many

A sole trader business is often easy to set up. You register with the

You may have a maximum of one sole trader business. However, your sole trader business may have different names, activities and business locations.

General partnership (vof)

A general partnership is often referred to as a 'vof'. A vof is a business comprising two or more entrepreneurs. The owners are known as partners. They work together under a single business name.

Each partner contributes something. For example, money, goods or labour. There is no minimum amount required to set up a general partnership. The partners share the profits and pay

Limited partnership (cv)

A limited partnership is often referred to as a 'cv'. A cv is a company with at least two people. These people are known as partners.

There are two types of partners:

• The 'managing partner' is responsible for the day-to-day management of the company. This person makes decisions and ensures that the company continues to operate.

• The 'silent partner' primarily provides funding to the company. A silent partner does not usually get involved in day-to-day management.

A limited partnership is similar to a general partnership. As a limited partnership is not a legal entity, the managing partners are personally liable for the company's debts.

A limited partnership can be useful if you want to set up a business together and need funding from someone who does not wish to play an active role in the business.

Partnership

A partnership is a business in which at least two people work together. The partners are co-owners and are known as 'partners'.

A partnership is common amongst people in the same profession. For example, dentists, physiotherapists or lawyers. Each 'partner' contributes something. This could be money, but also equipment or labour. No start-up capital is required.

A partnership is not a legal entity. Therefore, the partners are personally liable for the partnership's debts. Usually, each partner is liable for an equal share of the debt.

There are two types of partnerships:

• General partnership

• Silent partnership

In the case of a general partnership, it is clear to others that the partners are working together under a single name.

In a silent partnership, the partners do not operate under a single business name. They may, for example, purchase materials together or rent an office together.

In the case of a legal form with legal personality, the company or organisation is legally independent. This means that the company itself is responsible for its debts and commitments. The company's money and assets are separate from your personal finances.

If the company goes into liquidation, creditors are usually unable to seize your personal belongings. This is known as limited liability.

Directors may sometimes be held personally liable. For example, in cases of fraud, poor governance or if they fail to comply with the rules.

Private limited company (bv)

A private limited company is usually referred to as a 'bv'. A 'bv' is a company with legal personality. This means that the private limited company itself has rights and obligations.

If the private limited company has debts, it is usually the company that is liable. The owner or director is not usually personally liable.

A private limited company has shares. Shares are parts of the company. A company can raise money through shares. The owners of the shares are called shareholders. Shareholders have a say in important matters concerning the company. For example, they can appoint or dismiss the board of directors.

You can set up a private limited company on your own, or together with others. If you set up a private limited company on your own, you can also be the sole shareholder.

Shareholders may be entitled to a share of the profits. Some shareholders are also entitled to vote on important decisions taken by the private limited company. Many entrepreneurs opt for a private limited company as their business grows, or if they wish to minimise their personal liability.

Public limited company (nv)

A public limited company is usually referred to as an 'nv'. An 'nv' is a company with legal personality. Directors are generally not personally liable with their own funds.

A public limited company is particularly suitable for larger businesses that require significant funding. To set up a public limited company, you need at least €45,000 in start-up capital.

Which legal structure is best for you depends on your situation. Are you starting out on your own or with others? Do you expect to make a lot of profit? Or do you need funding from investors?

Think carefully before you decide. Your choice of legal structure will affect your liability and tax position.

Are you unsure which legal form is right for your business? Check the government website.