Your own business

In case you or your partner want to set up a business of your own, it is wise to obtain sound advice concerning the following topics:

  • The legal form of your business

The choice of a particular legal form depends for instance on the type of business you want to set up, the way you want to organise your business, the limitation of liability, the use of certain tax facilities, etc. There are various forms of legal entities, with and without legal personality. Many entrepreneurs chose either the sole proprietorship as the legal form (a legal form without legal personality) or the private company (legal form with legal personality). When you own a one-man business (sole proprietorship), you are personally responsible for the debts of your company. With a private company in principle you cannot be held liable for the debts of this company. The owner of a one-man business has to pay income tax on revenues from the business activities. A private company has to pay corporate tax and possibly dividend tax. The managing director/majority shareholder of a private company also has to pay income tax on his minimal taxable salary as well as on distributed dividend. The tax burden of a private company is slightly lower than that of a one-man business, but the private company bears higher costs than the one-man business, amongst others because of the obligation to draw up consolidated accounts and auditing costs. The owner of a one-man business can, under circumstances, be entitled to self-employed tax deduction. Start-ups can apply a starter’s deductions. Entrepreneurs who pay income tax, can apply for a profit exemption for small and medium-sized enterprises. It is therefore important to obtain sound advice regarding the pros and cons, in order to make the right decision.

  • Contracts

Ambiguities and misunderstandings often occur when concluding an international contract. This is partly because many Anglo-American concepts have a different meaning in Dutch law or are interpreted a different way. Before entering into an agreement, it is therefore important to have this agreement evaluated, to ensure that the contract regulates the intended (legal) effects.

  • General conditions

It is wise to conclude clear agreements concerning guarantees, reflection period, complaint handling etc., not least to limit liability. It is important that the general conditions you use, fit the type of business you manage. In addition, you have to bear in mind that the conditions you use cannot be regarded unreasonably onerous, because that may lead to the conditions not being valid.

  • Liabilities

Both in doing business and in personal life you may have to deal with liability. In most cases the liability relates to a shortcoming, error or unlawful conduct. For instance, an accident on the on the job (employers’ liability), a director claimed to be liable for damages resulting from improper performance of duties or mismanagement (directors’ liability), an entrepreneur claimed to be liable for a defective product (product liability) or services rendered (professional liability), but also you as a private person claimed to be liable for damaging the Ming vase in the living room of your neighbours.