The forms of enterprise

In the Netherlands, a starting entrepreneur has the choice to start a business with or without legal personality. For an entrepreneur alone, it often becomes a #eenmanszaak or a #VOF (Company under Company) if there is anyone else who wants to participate. There must be a difference why an entrepreneur does not start a business with legal personality. This is discussed in this article what the differences between the two are but first of all about the legal forms themselves. First, the forms of enterprise with or without legal personality are briefly discussed.

Company with legal personality

• Private Company (BV): the assets are divided into shares listed on the stock exchange. The shares are registered and in this way are not so quick to trade or sell on the stock exchange.
• Joint-stock company (NV): the assets here are also divided into #aandelen which are listed on the stock exchange. The difference is that these shares are not by name (but to bearer who shows the share owns the share) these shares are traded on the stock exchange or through a broker.
• Cooperative association: are not so much about making profits and the owners are not called shareholders but members. The profits made are distributed to the members.
• Association: think of the football club. Profits made are not distributed to members. The association is run by the daily management.
• Foundation: has only members.

Company without legal personality

• Single proprietorship: an enterprise created with equity by a person. Himself liable for the debts incurred by the company.
• VOF: established by several persons and are all jointly and severally liable for the debts incurred. The owners are jointly and severally liable, if a debt is made by an owner, the creditor may recover the debt from that owner. The owner of the VOF must then recover his part (everyone is liable for an equal part in fact) from the other owners.
• Limited partnership (CV): works in the same way as a VOF, except that there is a silent partner in addition to the transferred assets of the owners. This partner may not interfere with the course of business in the company and is only a lender.
• Partnership: for example, you have to think of a doctor's practice or dental practice. They do not run a company but exercise their profession. The persons participating in the partnership are not jointly and severally liable but liable for equal shares. If there is a debt and there are 4 people in the partnership, the debt can only be recovered from one person for ¼ and no more.

What is the difference between both

Why a starting entrepreneur chooses a certain legal personality lies in the differences between the two. It's a consideration you need to make what suits you best. A big difference is, for example, that you have full control over your company but, on the other hand, you are jointly and severally liable for the debts incurred privately. This is not the case with a company with legal personality. The diagram below shows the main differences.