Sole proprietorship
A sole proprietorship is a common legal business form in the Netherlands. It is a business owner who is fully responsible for the company's operations and finances. In a sole proprietorship, there is no legal separation between the business and the owner, which means that the owner is personally liable for the debts and obligations of the business.
Advantages and disadvantages of a sole proprietorship
Setting up a sole proprietorship is relatively simple and cost-effective because it does not require complicated legal procedures or share structure. The owner has full control of the business and retains all after-tax profits.
An important feature of a sole proprietorship is that the owner also pays taxes on the profits of the business through income taxes. Although sole proprietorships offer some advantages, such as easy incorporation and direct control, they also carry risks because of personal liability. Entrepreneurs should carefully consider whether this form of business is appropriate for their particular situation and business goals.
