Student Entrepreneurship: What You Need to Know
Thinking of taking the risk and starting your own company? You are in luck, because Holland is one of the world’s number 1 hubs for student entrepreneurship. Starting your own company doesn’t just involve having the idea; there are specifics you need to know for your company to get on its feet. Whether it’s registering, getting a permit, or deciding on a legal structure, we have information for all the budding student entrepreneurs.
What would you like to know about student entrepreneurship?
Whether you are a student or a graduate, student entrepreneurship is a very large part of the Dutch working environment, since there are countless programmes and support systems in place to help start-ups grow to their full potential. After you have decided that you’re going to go for it – you’re starting your own business – there are things you need to do to start your own business.
Residence and working permits
Registering your business
First things first: a name. Your business should have a name that reflects what you do and who you are. Just remember that you must register your company name! You can check out existing names here.
Where will you be working, or where will your headquarters be? Think about convenience for you and your employees, your target audience or clients, and what kind of atmosphere you want to work in.
When you have decided on your business idea, permits and so forth, you need to make sure to register your business with the Kamer van Koophandel (KvK). This is the Dutch Chamber of Commerce; when you register, your business is entered in the Dutch Trade Register. Especially important is that you register your business in the week before or week after you start working. Another important thing to remember is that you need to be registered at a Dutch municipality and have your BSN number to register. Also, you’ll need to register the name of your company and a brief description of it. Here’s a break down of how the process works:
- You download and fill out this application form.
- Then, you need to make an appointment with the KvK, which you can book here.
- Once you’ve made it t your appointment, there are a few documents you’ll need to bring. They include your form, ID, the payment (around 50 euros), and your contact details as well as your business address.
Create a business plan
A good idea when starting your own business is to create a business plan. This might outline all your ideas and strategies. This could include, but is not limited to, a sort of to-do-list. A website it also a great way to promote yourself and let future clients or customers know what your own business is and why they should choose to work with you. Furthermore, financial and marketing plans are also good to outline. Another good idea might be to learn some basic Dutch, since you will be working in Holland, after all.
Administration and Legal Structure
Owning your own business means you have to keep administrative records for seven years, both as electronic and paper copies. Notably, you’ll have to keep record of invoices, bank statements, contracts, and expenses.
Your company needs the best legal structure to make it successful. With this in mind, you’re the structure you choose needs to be the right fit. For example, there are incorporated and unincorporated structures. Furthermore, think about terms and conditions, because they can help protect you against things like conflicts or claims of liability. You can read more about this below.
Another important factor to take into consideration is insurance. There are different types of insurances that might be relevant for your business. Some of these include liability insurance, legal expenses insurance, property insurance, and computer insurance. There are a lot of other insurances that you might need; read more about company insurances here.
And don’t forget about your own personal insurance. You’ll need health insurance, for example. Visit our deals section to explore insurance options. You should also find out whether you need accident insurance, retirement, and maternity leave (think about your future as well as the present).
Pay your taxes
Most importantly, your new business has to be registered with the Belstingsdienst (the Dutch tax office), and you could do this during your KvK appointment, for example. Next, you need to know what sort of taxes you need to pay. You might need to pay all, or just some, taxes like VAT (BTW), income tax, payroll tax for employees, and corporation tax.
In terms of the VAT tax, you usually need to add another 21% tax on top of your regular fee in your client invoices. You are in charge of calculating your BTW you have earned and spent through the quarterly sales tax declaration. Thereafter, you are responsible for paying this to the Belastingdienst (the Dutch tax office).
Also, you will need to complete an annual tax return for your income. To do this, you declare your income in your annual tax return, either online or even with a tax advisor.
In the case of student entrepreneurship, there are a few tax benefits that are available for your first few business years. These are also known as ondernembersaftrek in Dutch. Additionally, you can get general tax credit or labour tax credit that act as tax breaks.
Have you already decided student entrepreneurship is something for you? Then you’ll need to follow a few steps that include registering your company and applying for a work permit. Nonetheless, one of the most important aspects of your new business is deciding on its company structure.
Different types of company structure
There are a few different ways you can organise your business in the Netherlands. Some examples are individual, partnership, general partnership, limited partnership, and a lot more. Most student entrepreneurs choose the one-man business or general partnership structure. Here, we will outline some types of company structure that you might choose to base your new business on. The company structure of your business could determine how much tax you pay, as well as the amount of paper work you might have to do and liabilities you face.
1. One-man business, a.k.a individual business owner
A a one-man (or woman) business, also known as an individual business owner (or, in Dutch, an eenmanszaak), you may have employees, but you are the only owner of the business. Additionally, you might be referred to as a ZZP, a zelfstandig zonder personeel (self-employed without staff). This means that the income tax you pay is paid on the profits that are made. As a one-man business, you are liable for everything relating to your business. So, if you go bankrupt, you yourself go bankrupt. There is no distinction between private and business property. As an entrepreneur, you can be eligible for entrepreneur's allowance, investment allowance and more. However, you cannot claim benefits for sickness, as well as from the Work and Income Act and Unemployment Insurance Act.
2. General partnership
In contrast to the structure mentioned above, a general partnership is a business that is run by more than one person. In Dutch, this is called a vennootschap onder firma (VOF). Each partner is an associate or member of the general partnership. In terms of liability, you are all liable if the general partnership doesn't meet its obligations. A general partnership usually has a separate capital (so not private, like the one-man business). Furthermore, income tax is payable by each partner with profits made and shared.
4. Limited partnership
Again, this is a business run by more than one individual, called a commanditaire vennootshap (CV) in Dutch terms. Here, you have two partners; the general and the limited. The financial backer is usually the limited partner, and might enter into this partnership with a sole trader who is in need of financial support. The limited partner also allows the active partner to make the day-to-day choices regarding the company. So, they are only financially involved. Nevertheless, if they aren’t involved in the running of the company whatsoever, they can risk losing their financial investment. Limited partners don’t need to register at the Trade register.
Going back to talk of the active partner, they are fully liable if the partnership does not meet the obligations. Bankruptcy of the limited partnership automatically leads to the bankruptcy of the general partner. When becoming partners, it’s a good idea to state the partnership durations and expectations, as well as profit splits.
General partners pay income tax from their part of the profit.
5. Private limited liability company
This legal structure, a besloten vennootshap (BV), means the company is a legal entity, limiting risks to the owner or owners. Basically, the private limited company is like a legal person. This means the BV, as a legal person, cannot be held liable for any company debt. Likewise, shareholders are liable for their own capital contributions, and these shares are given out based on capital. The BV is the entrepreneur, and the director acts on the behalf of the BV.
Finally, the name of your company needs to have a ‘BV’ after it. For example, your company may be called Pizza BV (in real life, obviously not).
6. Foundation or Association
If you are a non-profit organisation, this is the company structure you might consider implementing. Money made is usually used to cover costs, but they are also subject to corporate tax. A foundation has no members, and is a legal entity.
In the case of an association, money made goes only to the goal of the association rather than to members.
Student entrepreneurship requires a lot of drive and most importantly, a good idea. Once you have these things, it's all about doing the best you can and applying for the right things. You'll need to take good care to follow all the steps to starting your own business, since it can take a lot of planning and organising.
There are also a number of structures that you can choose from when starting your own company. Student entrepreneurship means knowing your company inside-out; that includes what you are liable for and any partners you have. Your company structure should reflect what your business does and how it works