Private limited company: everything you need to know
- The private nature refers to the fact that the company's shares cannot simply change hands. That way you know who you are working with at all times.
- A second aspect is the limited liability of shareholders. This liability is limited to their contribution to the company.
- Furthermore, a private limited company is a legal entity with legal personality, whereby you have a great deal of statutory freedom.
Liability in the case of a private limited company
As mentioned earlier, the shareholders' liability is limited to their contribution. This means that, in principle, creditors cannot claim your private assets. However, it’s important to note that there is such a thing as ‘founder's liability
Founder's liability
Under the new legislation, you no longer have to contribute a fixed amount as start-up capital when setting up a private limited company. However, you do have to determine, on the basis of a financial plan, how much money you will need to bridge the first two years.
And you must actually contribute that amount. If your company goes bankrupt within a period of 3 years after its incorporation and the initial capital was clearly insufficient, you can still be held personally liable, as founder, for (part of) the shortfall.
Tip: Always have your financial plan drawn up or checked by an expert. Did you know that our advisors at the Business Counter can help you with this?
Advantages and disadvantages of a private limited company
Go to the overview of the different company forms to obtain more information about the advantages and disadvantages of all company forms. They are briefly set out again here.
Advantages of a private limited company
- Shareholders are only liable to the extent of their contribution.
- In theory, the start-up capital could be €1.
- The profits of a private limited company are subject to corporation tax, which is much more advantageous than personal income tax (applicable to a sole proprietorship).
- There are more options to efficiently manage your taxation.
- You can set up a private limited company on your own, but also together with others.
- In principle, shares are not freely transferable, but it’s possible to derogate from this in your articles of association. The articles of association can also regulate other matters, such as the voting rights of shares.
Disadvantages of a private limited company
- You need a notarial deed to start up your company.
- The start-up costs are higher than for a sole proprietorship
- You must draw up a financial plan
- You are required to keep double-entry bookkeeping
- The liquidation cost of a private limited company is a lot higher than e.g. for a sole proprietorship.
Setting up a private limited company: a step-by-step plan
A bv or SRL is a limited liability company. That way, you are better protected against potential creditors, but it also means that stricter conditions apply to setting up a private limited company.
Here’s a summary of the different steps. But don’t worry: our expert at the Securex Business Counter will help you with each one.
- Drawing up a notarial deed
- Drawing up a financial plan
- Publishing your company’s articles of association in the Belgian Official Gazette
- Registering in the Crossroads Bank for Enterprises (CBE)
- Joining the Securex Social Insurance Fund
- Arranging your remuneration as a company manager
The administrative side of starting up your company has been made a lot simpler. Starting up your private limited company could easily take a few weeks at one time, but those days are over. You don’t necessarily have to visit the notary yourself: our expert from the Business Counter can take care of these steps on your behalf. As a result, it’s now possible to set up your company within four working days. This solution will also significantly reduce your costs.
Social security contributions
As a company representative, you pay social security contributions every quarter as a self-employed person and a company contribution once a year for your company.
Company contribution
You also pay your company contribution via a social insurance fund. The exact amount depends on your balance sheet total in the previous closed financial year:
- If below €858,605.72 the amount is €399.73
- If above €858,605.72 the amount is €998.47
(Almost) all companies must pay the company contribution, but there are exceptions.
