Business expansion may prompt investors to consider changing the types of their companies. There are many reasons to make such a decision: better recognition on the market, less liability and increased access to funds.
The initial choice of company type is largely dependent on the amount of available capital and the business opportunities at the time. The first step often is to set up a small business. In time the investors will decide whether to upgrade to another type of business form allowing them to broaden their horizons and develop further.
Converting a sole trader into a company with limited liability
Service providers can initially register as sole traders. This is a simple form of business allowing entrepreneurs to provide services to customers at low administration and incorporation costs. Sole proprietorship is a business owned by a single person. However, after some time the owner may decide to change the structure of the business and establish a company with limited liability (called a BV in Dutch).
The major reason for switching from a one-man business to a BV is limiting the liability. Sole proprietors are liable for all obligations and debts of their businesses, while the assets of BVs are considered separately from the personal assets of their owners. Read more on the difference between a Dutch BV and a Sole Proprietorship.
Investors converting to companies with limited liability have to incorporate their BVs following the normal procedure and register them at the Commercial Chamber. They also need to obtain an available company name and a registered address.
Our Dutch experts in company formation can assist you in incorporating your new company. Once the BV is established, the one-man business ceases all of its operations and its assets are transferred.
If you plan to switch to another form of business in Holland, you must remember that all contracts of the business will have to be signed again after the incorporation of the new entity.
Dutch company types
The available forms of business in Holland include partnership, private or public company with limited liability and sole proprietorship. International investors are free to incorporate any of these entities and pick the one corresponding to their business requirements.
Partnerships can be transformed into BVs through a procedure similar to the one described for one-man businesses. The partners have to establish a new entity, dissolving the partnership. The procedure for conversion from private to public limited liability companies and vice versa requires more steps including amendments to the Association Articles of the company.
If you need further information on incorporation in Holland, please, do not hesitate to contact our agents in company registration.