When a business expands, investors are faced with the decision of
changing the company type in the Netherlands. This can be a good decision for a number of reasons, including less liability, better access to funding and better market recognition.
The initially chosen
type of company can depend on the capital available at that time or the business prospects. Small businesses are often the first step and investors can later decide to upgrade their company to a more suitable business form that will allow them to expand even further.
Changing a sole proprietorship into a limited liability company
Service providers in the Netherlands can start with a
sole proprietorship. This simple business form allows entrepreneurs to offer their services to clients with very low incorporation and maintenance costs. This is essentially a one-man business but in time the entrepreneur may want to
change the business structure into a limited liability company, the
Dutch BV.
The most important reason to convert a sole proprietorship into a Dutch BV is to lower the liability. The sole proprietor is responsible for the debts and obligations of the business while in the limited liability company his assets are separate from those of the company.
In order to
convert to a company, the investor will need to set-up a different Dutch BV according to the usual company incorporation steps and
register it with the Dutch Chamber of Commerce. An available name and business registration address will also need to be obtained.
Our company formation experts in the Netherlands can help you incorporate the new company. After this step is complete, the sole proprietorship will cease all activities after the assets have been transferred to the new company.
An important aspect to keep in mind when deciding to convert a business form in the Netherlands is that all business contracts will need to be re-signed once the new company is incorporated.
It is not uncommon to hire foreign workforce when opening a business in the Netherlands. As a matter of fact, both employers and employees can benefit from various deductions. These are available when meeting certain requirements which can be explained by our company registration specialists.
Some business types are better suited to specific legal structures than others. For instance, small business owners and freelancers typically pick the sole proprietorship structure, whereas a BV is the most typical structure for larger firms. Starting a business in the Netherlands is also possible through other legal forms that can be explained by our local agents.
Types of companies in the Netherlands
The sole proprietorship, the partnership, limited liability company or public limited company are available business forms in the Netherlands.
Foreign investors can incorporate either one of them and choose the one that best suits their present business needs.
Partnerships may also be converted into limited liability companies and the process is similar to that for the sole proprietorship. The two partners will need to form a new company and dissolve the initial partnership. For conversions between private and public limited companies more steps will be needed, including changing the company’s articles of association.
