When starting a business, choosing the right legal form is a crucial decision. For many entrepreneurs, the choice between a Sole Proprietorship with Economic Ownership Rights (EOR) and a Private Limited Company (BV) is a significant consideration. In this blog post, we will discuss the characteristics and considerations of both legal forms, allowing you to make an informed decision for your business.

Sole Proprietorship with Economic Ownership Rights (EOR)

An EOR is a legal form where the entrepreneur owns the economic ownership of the business but control can be divided. Here are some considerations:

Personal Liability

As the owner of a Sole Proprietorship, you are personally liable for any debts of the business. This means your personal assets could be at risk.

Tax Benefits

An EER offers tax advantages, such as the ability to benefit from entrepreneurial deductions and SME exemptions. This can result in lower tax burdens compared to a BV.

Decision-Making Flexibility

As the owner of a Sole Proprietorship, you have complete control and decision-making authority over the business.

Private Limited Company (BV)

A BV is a legal entity where the capital is divided into shares. Some considerations when establishing a BV include:

Limited Liability

In a BV, the liability of the owner(s) is limited to the invested capital. The personal assets of the owner(s) are not directly exposed to business debts.

Tax Aspects

A BV has its own corporate tax rate. There are also rules regarding dividend tax, which may affect the overall tax burden.

Legal Structure

A BV has a clear legal structure with shareholders, a management board, and a Supervisory Board (if applicable). This can contribute to a clear corporate governance.

Capital Requirements

When establishing a BV, a minimum capital is required. This can be a factor in the choice of legal form.

The choice between a Sole Proprietorship with Economic Ownership Rights (EER) and a Private Limited Company (BV) depends on various factors, including your personal preferences, the nature of your business, and the desired level of liability and flexibility.

Conclusion

Share Council can assist you in determining the legal form that best suits your needs and structuring aspects such as control and profit distribution. Schedule a brief call with Share Council's CEO to explore what fits your company. Both legal forms have their own benefits and considerations, and making the right choice will contribute to the success and growth of your business.