SME – IB Company Services
With a sole proprietorship (IB), the entrepreneur pays annual income tax (IB) on their profits. The most common types of IB companies are a sole proprietorship and a general partnership (VOF). A self-employed person (ZZP’er) usually has a sole proprietorship.
The disadvantage of a sole proprietorship is that you must immediately pay income tax on your profits. Another disadvantage is that creditors, such as banks or suppliers, can seize your personal assets if you cannot meet your obligations. If you become ill or disabled as an entrepreneur, you will not receive any wages or benefits (as you would if you were employed). It is best to insure yourself against this risk. As an entrepreneur, you do not automatically accrue a pension; you must arrange this yourself.
A self-employed person is eligible for several tax deductions that reduce your income tax liability. These include the self-employed, start-up, co-op, and investment deductions, as well as the SME profit exemption.
Another advantage is the option to use the FOR, the tax-deductible retirement reserve. This is a type of self-managed pension.
If you have to pay less than €1,883 in VAT per year, you will receive a discount. This is the KOR: the small business scheme for VAT.
