Sole Proprietorship or Dutch BV: Which Legal Structure Fits Your Business?

An eenmanszaak, or sole proprietorship, is the most common way to start a business in the Netherlands — and the structure most freelancers and self-employed professionals begin with. Legally, there's no separation between you and the business: you register the eenmanszaak with the Dutch Chamber of Commerce (KVK) under your own name, and it isn't a separate legal entity in its own right.

That has two direct consequences:

• You're personally liable for any business debts, with your private assets as well as your business assets. If a client doesn't pay or a supplier sues, creditors can in principle reach your savings, your car, and — depending on your matrimonial property regime — even shared assets with a partner.
• Profit is taxed as personal income, reported in box 1 of your income tax return, alongside any other income you have. As a sole proprietor you can typically make use of entrepreneur-specific deductions, such as the self-employed deduction and the SME profit exemption, which lower your taxable profit.

For a full walkthrough of registering an eenmanszaak and getting your admin in order from day one, see our step-by-step guide to becoming self-employed in the Netherlands. The Dutch government's official business.gov.nl portal is also a solid reference for the legal requirements of each structure.

A besloten vennootschap, or BV, is a private limited company — a separate legal entity distinct from you as a private individual. You incorporate a BV through a notary, and once it exists, the BV itself owns the business assets, signs contracts, and is the party that owes and is owed money.

That separation is the main reason people choose a BV:

• Liability is limited to the BV's assets. If the business runs into debt or is sued, creditors generally can't reach your personal savings or home — only what belongs to the company.
• The BV pays corporate tax (vennootschapsbelasting) on its profit, not you personally.
• When you pay yourself a dividend from the BV's profit, that payout is taxed separately as dividend tax (box 2), on top of the corporate tax the BV already paid.

As director and (usually) sole shareholder, you also typically need to pay yourself a market-rate salary from the BV, which is taxed as regular employment income. In short: a BV introduces more moving parts, but it also creates a legal buffer between your business and your personal finances.

Tax is usually the second question people ask, right after liability. The honest answer is: it depends on how much profit you make, and there's no fixed number that applies to everyone.

As a sole proprietor, your profit is taxed in box 1 against progressive income tax rates, but you can reduce your taxable profit with the self-employed deduction and the SME profit exemption — deductions that don't exist in a BV. Our article on tax benefits and deductions for the self-employed covers these in detail.

With a BV, profit is first taxed at the corporate tax rate, and then taxed again as dividend tax whenever you actually take money out for yourself. At lower profit levels, that combination of corporate tax plus dividend tax, together with the loss of sole-proprietor deductions, often works out less favourably than staying a sole proprietor. As profit climbs, the calculation can flip, because corporate tax rates don't rise the way box 1 income tax does.

As a rule of thumb: a BV tends to only become tax-advantageous once your profit clears a certain threshold, and that threshold moves depending on your personal situation, how much you need to withdraw for living expenses, and current tax rates. Rather than relying on a rule of thumb alone, ask an accountant or tax advisor to run the actual break-even calculation for your numbers before you switch structures.

If protecting your personal assets is your main concern, a BV is the stronger option — but it isn't an absolute shield. A few situations still expose you personally, even with a BV:

• Personal guarantees. Banks and some suppliers often ask a director-shareholder to personally guarantee a loan or credit line, which puts your private assets back on the line for that specific debt.
• Mismanagement (bestuurdersaansprakelijkheid). If you clearly mismanage the company — for example, continuing to take on debt while knowing the BV can't pay it — directors can be held personally liable.
• Certain tax and pension obligations. Directors must notify the tax authorities promptly if the BV can't pay its taxes or pension contributions; failing to do so in time can also create personal liability.

As a sole proprietor, there's no such buffer at all: business debts are simply your debts, in full, from day one. If you work in a field with real financial risk — large contracts, physical products, staff, significant supplier commitments — that difference in exposure is often the deciding factor, independent of the tax comparison.

A BV comes with meaningfully more admin than a sole proprietorship, and it's worth weighing that against the liability benefits before you commit.

Setting up a BV requires a notarial deed of incorporation — you can't simply register it at KVK the way you register an eenmanszaak. Once it exists, a BV must:

• keep double-entry bookkeeping, rather than the simpler records that can suffice for a sole proprietorship
• file annual accounts with KVK every year, which for most small BVs still means putting together a balance sheet and profit-and-loss statement
• file a separate corporate tax return for the BV, in addition to your personal income tax return as director
• handle payroll administration for your own director's salary, since as a director-shareholder you're formally an employee of your own company

A sole proprietorship, by comparison, mainly means keeping your invoices and expenses in order and filing your regular VAT and income tax returns — no notary, no separate annual filing, no payroll for yourself. That simplicity is a big part of why most people starting out choose an eenmanszaak first and only incorporate later, once the business — and the reasons to protect it — have grown.

Whichever structure you land on, your day-to-day admin looks remarkably similar: you still send invoices, track expenses, and file VAT returns. slimzaak is built to support both a sole proprietorship and a BV — invoicing and expense tracking don't change with your legal form, so switching structures later doesn't mean switching tools.

If you do incorporate a BV, the added reporting requirements — annual accounts, a clean profit-and-loss overview, VAT summaries — become more important, not less. Our reporting features give you an up-to-date view of your numbers year-round, so putting together annual accounts or briefing your accountant doesn't turn into a scramble.

Getting started costs nothing either way: the free ZZP plan covers up to 250 invoices a month at €0, so you can get your invoicing and admin in order now and revisit your legal structure once your accountant has confirmed the numbers make sense for a switch.