Sole proprietorship or BV: when does switching pay off?

A BV usually becomes worthwhile when your profit is consistently high, when you want to limit your liability or when you want to keep profit in the business to invest. There is no fixed tipping point: it depends on your profit, your personal situation and your plans. As a rule of thumb, a consistent profit of around €100,000 to €150,000 is often mentioned.

How you pay tax

With a sole proprietorship (eenmanszaak) you pay income tax on your profit, but you are entitled to the entrepreneur's allowance (ondernemersaftrek) and the SME profit exemption (MKB-winstvrijstelling). In a BV, the BV pays corporate income tax (VPB): 19% on the first €200,000 of profit and 25.8% above that. As director-major shareholder (DGA) you take a customary salary (gebruikelijk loon), and you pay box 2 tax on dividends.

Advantages of a BV

• In principle, you are not personally liable for the BV's debts
• Profit that stays in the BV is taxed only with corporate income tax
• With a holding company you can arrange profit and assets flexibly
• A BV is easier to transfer or sell

Disadvantages and extra costs

• You lose the self-employed deduction (zelfstandigenaftrek), the start-up deduction (startersaftrek) and the SME profit exemption
• You have to pay yourself a customary salary, with a payroll administration
• You take on notary fees, annual accounts that must be filed and a corporate income tax return
• Your bookkeeping becomes more extensive, especially with a holding company and an operating company

How to make the choice

Have a calculation made based on your own figures, including a forecast for the coming years. Besides tax, also consider risks, your pension and your plans for the business. At Boekhoudvriend we calculate the tipping point for you and guide the conversion, from the contribution balance sheet (inbrengbalans) to your BV's first annual accounts.