Why choose a company?
The various types of company offer diverse benefits, depending on what you want to do with your business.
Most companies form a separate legal entity. So, unlike a sole proprietorship, your company has a separate existence.
- Some are possible alone, but all can also be formed with partners
- Limited liability for most forms
- More complex set-up than for a sole proprietorship
Do you want the flexibility of a sole proprietorship, but are not working alone? Then it is best to choose a form of partnership.
- Easy to set up
- Flexible control
- Personal liability
So, there are various benefits and disadvantages. Before we discuss the forms of company in detail, let us take a general look at the benefits and disadvantages.
Benefits | Disadvantages |
Limited liability, except for partnerships | More complex start-up procedures than for a sole proprietorship |
| Beneficial tax status | Accounting and administrative obligations |
| Doing business together with partners and co-investors | Formal procedures for many business decisions (e.g., at shareholders' meetings) |
| Less personal financial risk |
6 types of company
In Belgium, you can now choose from six different types of company. These differ in quite a few areas, the main one being liability.
Limited liability companies:
1. Private limited company (bv/SRL): the most common form of company for small and medium-sized enterprises (SMEs).
2. Public limited company (nv/SA): this form is most common for large companies. It also gives you access to the stock market.
3. Cooperative society (cv/SC): not focused on profit, but on a common goal of the participating cooperants.
Companies with unlimited liability:
4. Partnership: cooperation between various entrepreneurs without legal personality
5. General partnership (vof/SNC): a type of partnership with legal personality
6. Limited special partnership (commV/SComm): a type of partnership with legal personality and a silent partner who only invests money
Which form you choose depends on your goals and expectations. Some key questions you could ask yourself:
- How much personal liability can or will you bear?
- What business risks may you face?
- Can you count on external investors?
- Are you thinking of having co-directors or recruiting employees?
- How about your longer-term business plans?
Private limited company (bv/SRL)
The bv/SRL - formerly bvba/SARL - is the most common company form for small and medium-sized enterprises (SMEs). Many entrepreneurs choose this form because of its transparent statutes, to which options for additional flexibility can be added.
You can also set up a limited company alone and there is no minimum capital requirement. However, you do need enough starting ability, a financial plan, and a notarial deed.
In addition, the private limited company has a free shareholder structure, which allows you, if you wish, to involve others in your business.
‘Besloten’ in the Dutch name refers to the fact that you have fewer opportunities to transfer shares. And even though it is no longer in the name, you still have limited liability, and enjoy better protection from potential creditors.
Public limited company (nv/SA)
The nv/SA or public limited company is the natural legal form for large companies. Do you see your business as having a great future? With an nv/SA, you can go to the stock market at a later stage.
The capital contribution works only slightly differently from a bv/SRL. An nv/SA is designed to raise a lot of capital from investors. Shares are freely transferable - for example by anonymous lenders. Anonymous, because the partners remain out of the picture and liability is limited to their contributions.
An nv/SA needs only one shareholder or partner. In any event, you need to be able to provide a high starting capital of at least €61,500 euros.
Do you want to set up an nv/SA? Then make sure you have the following required items:
- A financial plan
- A notarial deed upon incorporation
- A share register
- A board of directors with at least three directors (or a dual body system)
- Double-entry bookkeeping
- And more...
So, as you can see, the limited liability company is a less flexible form. The limited liability company is consequently there for those who are immediately aiming high and counting on a lot of capital.
Cooperative society (cv/SC)
As the name gives away, this form is a social enterprise. A cv/SC is not focused on profit, but on the members’ common goal. Think of a cv/SC for something like a group energy purchase.
With a cv/SC, members work together and still have liability limited to their own contributions. Entering and leaving is easy and a social enterprise gets certain benefits from the government (such as tax concessions).
In practical terms:
- There are at least three founders
- Every member makes a financial contribution, but the sum paid up may be symbolically low
- No minimum capital requirement
- As with a private limited company, a financial plan demonstrates that you have sufficient initial capital to bridge the first two years
- Shares are registered and freely transferable, a share register is mandatory
- You also need a notarial deed when setting up
If you get it right, choosing a cooperative can be a very good and instructive decision.
Partnership
At least two people or partners set up a partnership and make a contribution (financial or otherwise) to grow their assets together. The partnership is similar to the sole proprietorship, but you can set it up with one or more partners.
The partnership is the outsider among legal forms. It is the only form that lacks legal personality. This means that a partnership cannot have assets or debts and cannot appear in court.
The benefits:
- Easy to set up and dissolve
- A private agreement (partnership contract) is all you need
- The distribution of profits is up to you
Possible drawbacks:
- There is unlimited and joint and several liability, so, as a partner you are less protected
- Shares cannot just be transferred, the agreement of the other shareholders is required
General partnership (vof/SNC)
The general partnership or vof/SNC is a simple form of company that requires few administrative formalities and also does not require start-up capital.
- You need no start-up capital
- You set up a general partnership with at least two people
- Shares are relatively easy to transfer, but only when all partners approve
A crucial point to note with the vof/SNC: all partners are liable to each other with their private assets. That means mismanagement by another partner could mean the taxman comes knocking at your door.
Special limited partnership (CommV/SComm)
The special limited partnership or commV/SComm (formerly: ordinary limited partnership) is a partnership where partners can bring in start-up capital, while retaining control of your business as an entrepreneur yourself.
In this case, you are the managing partner, while the other partners are so-called silent partners or limited partners. They have no say in your operations but do contribute financially.
