{"id":16650,"date":"2024-11-26T17:42:24","date_gmt":"2024-11-26T16:42:24","guid":{"rendered":"https:\/\/www.accountable.eu\/?p=16650"},"modified":"2025-01-22T16:41:28","modified_gmt":"2025-01-22T15:41:28","slug":"when-to-create-private-limited-company","status":"publish","type":"post","link":"https:\/\/www.accountable.eu\/en-be\/blog\/when-to-create-private-limited-company\/","title":{"rendered":"When is it a good idea to switch to a private limited company?"},"content":{"rendered":"\n<p><strong>Most self-employed people\u00a0in Belgium start their activity<\/strong>\u00a0<strong>as a natural person sole trader. While some start out being self-employed in a secondary occupation, others go all in and become self-employed in a primary occupation straight away. Whatever the path, everyone faces the same dilemma sooner or later: remain a sole trader or switch to a private limited company?\u00a0<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What\u2019s the difference between a sole proprietorship and a private limited company?<\/strong><\/h2>\n\n\n\n<p>Although there are other&nbsp;<a href=\"https:\/\/economie.fgov.be\/en\/themes\/enterprises\/starting-business\/steps-starting-business\/forms-companies\"><strong>forms of company<\/strong><\/a><strong>,<\/strong> the&nbsp;<strong>private limited company (\u2018soci\u00e9t\u00e9 \u00e0 responsabilit\u00e9 limit\u00e9e\u2019 (SRL) in French or \u2018besloten vennootschap\u2019 (BV) in Dutch) is the most common.<\/strong>&nbsp;In this article, we look at what distinguishes the status of natural person sole trade from the SRL\/BV and the main characteristics of each.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Natural person sole trader: flexibility, but unlimited liability<\/strong><\/h3>\n\n\n\n<p>You\u2019ve decided not to create a company to start your activity?&nbsp;<strong>In the eyes of the law, you are then automatically considered a natural person sole trader.<\/strong><\/p>\n\n\n\n<p>Concretely, this means that your business does not have a&nbsp;<strong>separate legal personality.<\/strong> Or more simply: there is no separation between your personal capital (such as your home or savings) and your business assets.<\/p>\n\n\n\n<p>So, your&nbsp;<strong>private assets serve as collateral<\/strong>&nbsp;for the commitments you make with your company. If you go bankrupt as a sole trader, your personal assets will be used to repay creditors.<\/p>\n\n\n\n<p>However, the status of natural person sole trader presents many&nbsp;<strong>advantages for those starting out:<\/strong>&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The start-up procedures are simple, and the status is flexible and fiscally advantageous.\u00a0<\/li>\n\n\n\n<li>It comes with few administrative and accounting obligations and allows decisions to be made more quickly.\u00a0<\/li>\n\n\n\n<li>It does not require the submission of a financial plan.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>SRL\/BV: stricter rules, but limited liability<\/strong><\/h3>\n\n\n\n<p>Before the reform of the company code, this legal form was called an SPRL\/BVBA. Today, the name has changed, and so have the rules. Whereas in the past, you needed to have partners, it\u2019s now possible to&nbsp;<strong>create an SRL\/BV alone.<\/strong>&nbsp;<\/p>\n\n\n\n<p><strong>No<\/strong>&nbsp;<strong>start-up capital<\/strong>&nbsp;is required, although your financial plan should demonstrate that you have enough funds for your first two years of business.<\/p>\n\n\n\n<p>The creation of an SRL\/BV also requires the establishment of a<strong> deed that needs to be notarised <\/strong>and a<strong> register of shares (\u2018registre des titres\u2019 or \u2018aandeelhoudersregister\u2019).<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Natural person sole trader<\/strong><\/td><td><strong>Private limited company<\/strong><\/td><\/tr><tr><td>Easy to get started<\/td><td>More legal requirements<\/td><\/tr><tr><td>No start-up capital required<\/td><td>Starting funds must be available<\/td><\/tr><tr><td>Unlimited liability<\/td><td>Limited liability<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>When should you switch from natural person sole trader to SRL\/BV?<\/strong><\/h2>\n\n\n\n<p><strong>The&nbsp;risks<\/strong>&nbsp;you take as an entrepreneur and your taxes will increase proportionally as your business grows. Are you a self-employed sole trader and your business is doing really well? In this case, it\u2019s worth considering switching to an SRL\/BV.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Less risk<\/strong><\/h3>\n\n\n\n<p>The more profitable your business is, <strong>the more<\/strong>&nbsp;<strong>risky it is to have unlimited liability.<\/strong> When you&#8217;re starting out, the risks are negligible in the event of bankruptcy. But later, you risk having to sell personal assets like your house to pay off your debts.&nbsp;<\/p>\n\n\n\n<p>However, the owner of an SRL\/BV is&nbsp;<strong>not responsible for the company\u2019s debts.<\/strong> So if you go bankrupt despite having followed all the rules, in principle you will not lose more than what you invested in your private limited company.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Reduced taxes<\/strong><\/h3>\n\n\n\n<p>Another advantage of an SRL\/BV:&nbsp;<strong>taxation is different.<\/strong> In the case of a private limited company, you pay two kinds of tax: on the one hand, you pay corporate tax on your company\u2019s profit and on the other hand, you pay income&nbsp;tax&nbsp;on the profits paid into your private account. But what\u2019s interesting is that you can choose to&nbsp;<strong>leave part of your profits in your company and thereby avoid paying tax on it.<\/strong><\/p>\n\n\n\n<p>In reality, there\u2019s&nbsp;<strong>no golden rule<\/strong>&nbsp;to determine whether it\u2019s time to abandon the status of natural person sole trader in favour of a private limited company. But keep this&nbsp;<strong>general principle<\/strong>&nbsp;in mind: the status of natural person sole trader is fiscally advantageous for young businesses with a low profit margin. As soon as your profits increase, an SRL\/BV is more interesting because you have the possibility of leaving a part of your profits in your company.<\/p>\n\n\n\n<p><strong>Are you currently a self-employed sole trader?&nbsp;Make sure you optimise your business expenses and, as a result, your taxes. Accountable helps you do exactly that.<\/strong><\/p>\n\n\n\n<p><strong>Have you created an SRL\/BV? Accountable supports you throughout the growth of your company, giving you complete peace of mind.<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/www.accountable.eu\/fr-be\/download\/\"><strong>Try our app for free<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Most self-employed people\u00a0in Belgium start their activity\u00a0as a natural person sole trader. While some start out being self-employed in a secondary occupation, others go all in and become self-employed in a primary occupation straight away. Whatever the path, everyone faces the same dilemma sooner or later: remain a sole trader or switch to a private [&hellip;]<\/p>\n","protected":false},"author":24,"featured_media":15672,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[266,239],"tags":[255,259],"class_list":["post-16650","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-change-of-status","category-uncategorized-en-be","tag-limited-company","tag-sole-propietorship"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>When is it recommended to create a private limited company? - Accountable<\/title>\n<meta name=\"description\" content=\"When does it make sense to create a private limited company? 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