BV or sole proprietorship: which suits your business?
The choice between a BV (private limited company) and a sole proprietorship (eenmanszaak) depends on three things: how much personal risk you take on, how much profit you make and how much administration you are willing to take on.
A sole proprietorship is quick and cheap to set up, while a BV separates your company's assets from your personal assets and becomes more attractive for tax purposes as your profit grows. Below you can read where the differences lie, where the tipping point is and which questions tip the balance.
What is the difference between a BV and a sole proprietorship?
The difference between a BV and a sole proprietorship lies in legal personality. By law, a BV is an independent legal entity with its own rights and obligations. A sole proprietorship is not, and legally it is one and the same as you as the entrepreneur.
That single distinction determines everything else. For a sole proprietorship you register with the Chamber of Commerce (KVK) and can start the same day. For a BV you need a notarial deed that sets out the articles of association and the distribution of shares.
The distinction also carries through to your day-to-day finances. The assets of a BV are formally separate from your personal assets, so all of the company's income and expenses run through a business account for your BV. For a sole proprietorship this is not a legal requirement, although without a separate business account for freelancers your business and personal finances quickly get mixed up.
Overview of the features of a BV and a sole proprietorship
The table below compares the features of a sole proprietorship and a BV on the points that determine the choice.
Feature | Sole proprietorship | BV |
Number of owners | One | One or more |
Formation | Registration with KVK | Notarial deed plus registration with KVK |
Start-up costs | KVK registration fee | KVK registration fee, civil-law notary fees and share capital from one euro cent |
Legal personality | No | Yes |
Liability | Personally liable | In principle only the company |
Tax on profit | Income tax in box 1 | Corporate income tax, then box 2 on distribution |
Entrepreneur deductions | Self-employed deduction, start-up deduction and SME profit exemption | None |
Your own salary | The profit is your income | Mandatory customary salary as a DGA |
Annual accounts | Not required | Prepare and file with KVK |
Raising capital | Only through financing | Also by issuing shares |
Hiring staff | Possible | Possible |
What does legal personality mean for a BV?
Legal personality for a BV means that the company itself enters into contracts, takes on obligations and owns property. You are the director and shareholder, but not the party that signs. With a sole proprietorship you are the contracting party, so everything the business commits to, you commit to personally.
Who owns a sole proprietorship or BV?
A sole proprietorship has one owner and a BV has one or more. Ownership of a BV is divided into shares, so you can bring in a business partner or an investor without having to set up your company again.
If you hold more than five percent of the shares and manage the company yourself, you are a director-major shareholder (directeur-grootaandeelhouder), DGA for short. Both legal forms allow you to hire staff.
How does liability work for a BV or sole proprietorship?
Liability is fundamentally different for a BV and a sole proprietorship. With a sole proprietorship you are personally responsible for your business's debts and for damage others suffer because of your product or service. With a BV, in principle only the company is liable and your personal assets stay out of reach.
If you are married or in a registered partnership with community of property, creditors of a sole proprietorship can also claim your partner's assets. You can reduce that risk with good general terms and conditions and liability insurance, but you cannot eliminate it.
For a new entrepreneur with limited risk, that difference carries little weight. If you work on assignments where a single mistake can cost hundreds of thousands, it carries a lot of weight.
When are you still liable as a director of a BV?
As a director of a BV you are still personally liable as soon as you perform your duties improperly. Think of taking on obligations you know the company cannot meet, failing to report an inability to pay tax debts on time, or keeping records that are not in order.
In addition, a lender or supplier will regularly ask you for a personal guarantee on a loan or a lease. If you sign it, you are still personally on the hook for that part.
Which taxes do you pay with a sole proprietorship or BV?
Which taxes you pay with a sole proprietorship or BV follows from the legal form, not from your turnover. A sole proprietorship falls under income tax, a BV under corporate income tax. You pay VAT in both cases, because VAT depends on being an entrepreneur, not on your legal form.
How is the profit of a sole proprietorship taxed?
The profit of a sole proprietorship is taxed in box 1 of income tax, in your own name. In return, you get entrepreneur benefits that a BV does not have.
In 2026 the self-employed deduction (zelfstandigenaftrek) is € 1,200 and the start-up deduction (startersaftrek) is € 2,123, both only if you meet the hours criterion of 1,225 hours per year. On what remains after those deductions, the SME profit exemption (mkb-winstvrijstelling) of 12.7% applies.
How is the profit of a BV taxed?
The profit of a BV is subject to corporate income tax: 19% on the first € 200,000 and 25.8% on the excess. If you then distribute that profit to yourself as a shareholder, a box 2 levy of 24.5% or 31% is added on top.
If you leave the profit in the company, you defer that second levy. You can use that money to invest or set it aside for later, and that is precisely the advantage a sole proprietorship does not offer.
What is the customary salary for a DGA?
The customary salary (gebruikelijk loon) is the salary you as a DGA are required to take from your own BV. In 2026 the standard amount is € 58,000 gross per year, and your salary must be at least the highest amount resulting from three statutory tests.
The BV pays payroll taxes on that salary and you pay income tax. If you are in a start-up, loss-making or part-time situation, you can agree a lower salary with the Dutch Tax Administration (Belastingdienst) in advance, provided you can substantiate it.
What is the tipping point between a sole proprietorship and a BV?
The tipping point between a sole proprietorship and a BV is not a fixed amount. It is the profit level at which corporate income tax plus the customary salary together cost less than income tax after the entrepreneur benefits are deducted. Where that point lies differs per entrepreneur.
These factors shift the tipping point, and explain why calculators give such widely varying amounts:
Your entrepreneur deductions: if you do not meet the hours criterion, part of the advantage of the sole proprietorship disappears and the tipping point is lower.
The customary salary: if your profit is around the standard amount, there is hardly any profit left in the BV to be taxed at the low rate.
What you need personally: if you withdraw everything straight away, you pay tax twice with a BV and the deferral advantage disappears.
Your investment and pension plans: profit you leave in the company is treated differently for tax purposes than profit you distribute.
The extra fixed costs: you first have to earn back the civil-law notary, the annual accounts and the higher bookkeeping costs.
The rule of thumb is simple: with a modest profit a sole proprietorship is almost always more advantageous, and as your profit rises, that reverses. What amount that comes to for you, you work out with your own figures and not with an average from an article.
How do you calculate whether a BV or sole proprietorship is more advantageous?
You calculate whether a BV or sole proprietorship is more advantageous by comparing two scenarios with the same profit side by side. In the first scenario you set the profit against income tax after the self-employed deduction, start-up deduction and SME profit exemption.
In the second scenario you calculate with the customary salary, corporate income tax on the remaining profit and the box 2 levy on what you distribute. Add the extra fixed costs of a BV to that. Then compare what ends up with you net, not what stays behind in the business. Have your accountant confirm the outcome before you make an appointment with the civil-law notary.
Which costs does a BV have that a sole proprietorship does not?
A BV has costs that a sole proprietorship does not have, and they continue for as long as the company exists. Formation requires a notarial deed, followed every year by annual accounts and a higher bill from your accountant. For a sole proprietorship you only pay the KVK registration fee when you start.
When you set up a BV, you deposit the share capital, by law at least one euro cent, into an account in the company's name. So arrange that account before the deed is executed, otherwise the formation will be delayed. This obligation does not apply to a sole proprietorship, although the Dutch Tax Administration does require records in which business and personal finances can be kept apart.
How much administration does a BV involve?
A BV involves noticeably more administration than a sole proprietorship. Every year you prepare annual accounts and file them with KVK, you run a payroll administration for your own DGA salary and you keep track of the current account relationship between you and the company.
For a sole proprietorship, balanced bookkeeping with your VAT returns and your income tax return is enough. That saves time, and with a low profit that difference weighs more heavily than the tax calculation.
When should you choose a BV?
You choose a BV when the risk, the profit or the structure of your business calls for it. None of those three is decisive on its own; it is the sum that counts.
These situations point towards a BV:
You face liability risk: you work on assignments where a mistake or a claim would affect your personal assets.
Your profit is structurally high: after the customary salary and the fixed costs, there is still profit left in the company.
You want investors or a business partner: shares make it possible to divide ownership and raise capital.
You want to reserve profit: you save within the business for an investment or for your pension.
You have multiple activities: with a holding company above your operating company, you spread risk across multiple companies.
Your clients expect it: in some sectors and for large tenders, a BV is the standard form.
If you recognise yourself in one point on this list, that is rarely enough. If you recognise yourself in three or four, the BV is probably the better form.
When is a sole proprietorship the better choice?
A sole proprietorship is the better choice as long as your profit is modest and your risk remains manageable. You are registered quickly, you do not pay a civil-law notary and you benefit from entrepreneur benefits that a BV does not have.
A sole proprietorship also makes sense if you are just starting out and your turnover has yet to materialise. You can always convert to a BV later, and that is a lot more pleasant than discovering afterwards that for years you paid a DGA salary out of a profit that could not support it.
Are the two scenarios close to each other? Then choose the form that costs you the least work, because you feel the difference in administration every month and the tax difference only once a year.
Opening a business account for your sole proprietorship or BV
You open a business account for your sole proprietorship or BV as soon as your legal form is settled, and for a BV even before the deed is executed. At GoDutch you apply for that business account in 3 minutes and have your IBAN and card within 1 day.
We accept both legal forms, including on the free starter plan with no fixed monthly fees. You keep business and personal separate in one app, connect your bookkeeping to your account and get unlimited cashback on your card spending, increasing per plan. If you grow into multiple entities, you switch between your accounts without logging in again.
Do you know which legal form it will be? Set up your business account with GoDutch before you visit KVK or the civil-law notary, so your administration is in order from day one.
FAQ
Frequently asked questions about BV or sole proprietorship
Which is more advantageous: a BV or a sole proprietorship?
A sole proprietorship is more advantageous with a modest profit and a BV with a high profit. A sole proprietorship benefits from the self-employed deduction, the start-up deduction and the SME profit exemption. A BV becomes attractive as soon as, after the customary salary of € 58,000, there is still profit left that is taxed at 19% corporate income tax.
How much turnover do you need for a BV?
Turnover is not the yardstick for a BV, profit is. In 2026 you need to be able to pay yourself at least € 58,000 in customary salary, plus the extra fixed costs of the civil-law notary, the annual accounts and your accountant. If there is structurally profit left over after that, a BV becomes interesting.
What are the disadvantages of a sole proprietorship?
The biggest disadvantage of a sole proprietorship is that you are personally liable for business debts and damage, including your partner's assets in the case of community of property. In addition, your tax burden rises with a high profit, you cannot issue shares and it is harder to build up capital within the business.
Is a freelancer (zzp'er) a sole proprietorship or a BV?
Freelancer (zzp'er) is not a legal form but a way of working, namely self-employed without staff. Most freelancers choose a sole proprietorship, but working through a BV is just as possible. Your liability and your taxes follow from the legal form you choose and not from the freelancer label.
Can you convert a sole proprietorship into a BV?
You can convert a sole proprietorship into a BV by contributing the business to it via the civil-law notary. This is done as a taxable or tax-free transfer (ruisend or geruisloos), and that choice determines whether you settle tax on the hidden reserves straight away. You can read the full route in our article on converting a sole proprietorship into a BV.
Can you have a BV alongside your sole proprietorship?
A BV alongside your sole proprietorship is possible, because they are two separate businesses, each with its own registration. Keep the records strictly separate and watch the hours criterion: hours you work in your BV do not count towards the self-employed deduction of your sole proprietorship. Discuss the set-up with your accountant in advance.
