What is a legal form?
- Jeanine Hoekstra
- Q and A
- Edited 4 June 2024
- 1 min
- Starting
A legal form is the legal structure of a company or organisation. The legal form determines what responsibilities you have as a business owner, what rules you must follow, and what risks you are exposed to. You choose the legal form that best suits your situation.
Which legal form you depends on, among other things:
- whether you start the company alone or together with others;
- how much money you need to get started;
- how much risk you want to run privately; and
- how you want to pay taxes.
#5 Choose a legal structure
Different legal forms
Most starting entrepreneurs choose the legal form of eenmanszaak (sole proprietorship). Are you going to work as a freelancer or self-employed professional without staff (zzp’er)? Then this legal form is often the best fit. The private limited company (bv) and general partnership (vof) are also popular legal forms.
Sole proprietorship
An eenmanszaak, sole proprietorship, has an owner. With a sole proprietorship, you are personally responsible for the company's debts. Can you no longer pay off those debts? Then you go bankrupt and may lose your private assets as well.
Private limited company (bv)
A besloten vennootschap (private limited company, bv) can have one or more owners. A bv is a legal form with legal personality. This means that as an owner, you are not privately liable for the company's debts, unless you mismanage the company. You can only lose the money you invested in the bv.
General partnership (vof)
You can choose the legal form vennootschap onder firma (general partnership, vof) if you start a business together with one or more other entrepreneurs. The owners are called partners and are personally liable for the company's debts. Does the company have payment problems? Then creditors can claim the partners' private assets.
Find out more about legal structures.
Do you need advice on choosing the right legal form? The KVK Advice Team will be happy to help.
