Setting up a sole proprietorship: the complete 10-step plan.

A roadmap to start your business

You have made the decision to take the plunge into self-employment, congratulations! Now you are ready for the next step: setting up your own sole proprietorship. There’s a lot involved here, which can sometimes be confusing. Fortunately, you don’t need to worry, because we have prepared a simple and practical ten-step plan for you.

This checklist is a step-by-step guide to start your self-employment adventure on the right foot. It provides a detailed summary of the main steps you need to take when setting up a sole proprietorship.

Step 1: Determine your activities and sector 🔎

The first step to starting out as self-employed is determining what exactly you want to do. This sounds logical, because usually you just want to become self-employed because you want to do a certain activity. Even then, it’s best to keep thinking about it, as it can save you 100 euros!

You have to pass on the activities you want to be self-employed to an enterprise office. This is a party that takes care of business start-ups.

When starting up your business, the accredited enterprise office will question you about the activities you want to carry out as a self-employed person. In fact, those activities have to go into a public database called the CBE. They are bundled there via nacebel codes.

 Whether you add one activity or 10 activities, the cost price remains €105.5.

Still want to add an activity later? Then, unfortunately, it will cost you €105.5 again.

Adding these activities is included in the fixed start-up price of €105.5 charged by the accredited one-stop business office to question your company number. So the message is to think well about all your (future) activities at the start! If you want more tips & tricks when it comes to activities, find out all about it in our article on NACE codes.

Step 2: Company form: sole proprietors or setting up a company? ⚖️

In Belgium, you have to choose a company form, which is the legal structure of a company. Two popular business forms are sole proprietors and companies. Both sole proprietors and companies have many advantages and disadvantages. Would you like to start easily, with easy-to-manage accounts, keeping the administrative cost of your business low? Then choose a sole proprietorship! Is your business growing? Then you can always switch to a partnership.

✅ Advantages:

• Cheaper: Registering with your enterprise office costs €105.5
• Simpler: You don’t have to go to the notary but you can start up via your laptop
• Little administration: You may keep single accounts, which you can perfectly do yourself through smart tools like Dexxter.
• No start-up capital: with a company, you need up to €61,500 in start-up capital
  
  

❌ Disadvantages:

• Liability: you are liable if your company gets into debt
• Personal income tax: the profit from your company is taxed as personal income tax, which can vary between 0% and 50%
  
  
  

Step 3: Social status: become self-employed in secondary occupation or self-employed in main occupation?

Did you know that as a self-employed person, there are three social statuses: Student-employed student, self-employed in secondary occupation and self-employed in main occupation.

• Are you still a student? Then become a self-employed student.
• No longer a student? Then you have to make the decision whether you want to start as self-employed in secondary occupation or in main occupation. If you choose self-employed in secondary occupation, you must work at least half-time as a wage earner.
  
  

All social statuses (step 3) can always be combined with all forms of enterprise (step 2). So you can perfectly be a self-employed student (social status) with a company (corporate form) or self-employed in main occupation with a sole proprietor.

Step 4: Research the appropriate vAT type of status

Time for the next step in our start-up process, a step that can be unjustifiably daunting. If you go to a recognised company office, they will apply for a company number for you. That company number will (usually) be activated for vAT. So a company number and a vAT number are actually identical to each other, it is the same 10-digit code.

Only, some company numbers will not be subject to VAT, others will be exempted from VAT and some will be subject to VAT.

TIP!

Do your VAT activation yourself, it will save you 72.6 euros.

1️⃣ Not subject to VAT

Here you have no choice yourself, in this case the government determines that you have nothing to do with VAT. This is the case for dentists, doctors, physiotherapists, midwives… But also certain activities in the cultural sector.

For these activities, the government has decided that they fall outside the whole vAT thing, in order to keep the cost price to the consumer as low as possible. These self-employed persons are therefore not allowed to charge VAT to their customers and cannot recover VAT on their purchases.

2️⃣ exempted from VAT

If you do not meet the conditions to not be subject to VAT, you do have a choice. then you can choose to be VAT exempted or VAT liable.

To be exempted from VAT there are two conditions:

1. Turnover less than EUR 25,000 per year: entrepreneurs can only be exempted from VAT if their turnover is below EUR 25,000 on an annual basis. So you need to make an estimate in advance for your first year.
2. Do not carry out activities related to immovable goods: These include buildings, land and everything anchored with it. Think of a gardening company, plumber, electrician, cleaner and so on. So these activities can never be exempted from VAT as they relate to a building or land.
   
   

Do you meet the conditions to be exempted from VAT? Then you can choose to be VAT-exempt, but you can also choose to be subject to VAT. This can be interesting if you mainly sell to companies. Moreover, you have the advantage of being able to recover the vAT paid on your purchases. Want to know more? You can find a numerical example here.

If you choose a VAT exemption, your company number will be activated for VAT purposes, but with an exemption for VAT declarations. So you do not have to submit these vAT declarations, you do not have to charge VAT to your customers and, of course, you cannot recover VAT on your purchases. What you do have to do is submit your yearly customer list.

3️⃣ Subject to VAT

So you do not belong to the group of entrepreneurs not subject to VAT from above, otherwise you have no choice at all. And you don’t choose the VAT exemption either because you want to enjoy vAT recuperation on your purchases.

Then your company number will be activated for vAT purposes. As an entrepreneur subject to VAT, you will of course have to submit vAT declarations. For this, you will have to charge VAT on your sales and consequently you can also recover VAT from your purchases.

Our video summarises it all. Would you rather read the information on vAT? You can do so here!

Step 5: Your bookkeeping as a sole proprietor🧾

Now you already know a lot: your activities, your company form, your social status and your vAT type. Good job! The fifth thing you need to decide on is how you want to handle the administration of your company, or in other words: how will you do the bookkeeping?

There are 2 options:

• You let an accountant do it: a certified accountant knows how to do it, can give good advice and takes over a lot of administrative burden. The big disadvantage? Bookkeepers can be incredibly expensive, so can easily cost 2,000 euros a year. Moreover, they often refuse sole proprietors.
• You do it yourself: using tools such as Dexxter, sole proprietors can easily do their own bookkeeping. Step by step, the programme will help you on your way to efficiently keeping your accounts. This option is a lot cheaper, costing you only 180 euros per year . Don’t know anything from bookkeeping? No problem! Through this free course, you will learn the tricks of the box. The course takes a few hours to complete, after which you will receive your certificate on.
  
  

The golden combo: do your own bookkeeping but get advice from an accountant once a year

Going for an accountant anyway? Read here what to look out for. Or do you take care of your sole proprietors’ administration yourself? This is perfectly possible via smart applications such as Dexxter.

Some examples from people who completed the first 5 steps:

• Self-employed student
• secondary occupation
• main occupation

John

Step 1: activities	Freelance IT-professional
Step 2: form of enterprise	Sole proprietors
Step 3: social status	Self-employed student
Step 4: VAT type	exempted from VAT
Step 5: accounting	Dexxter + advice from accountant

Margareth

Step 1: activities	Photographer and videographer
Step 2: form of enterprise	Sole proprietors
Step 3: social status	Self-employed in secondary occupation
Step 4: VAT type	Subject to VAT
Step 5: accounting	All by yourself via Dexxter

Valery

Step 1: activities	Lawyer
Step 2: form of enterprise	Sole proprietors
Step 3: social status	Self-employed in main occupation
Step 4: VAT type	Subject to VAT
Step 5: accounting	Bookkeeper working with Dexxter

Step 6: open an account for your business 💳

To get right to the point: it is absolutely not required to open a separate bank account for your sole proprietors.

Although it is not a legal obligation, it is useful to open a separate account anyway, as it will help you keep a better summary of your income and expenses. Want more information? Read the pros and cons of a separate bank account here.

Step 7: Choose your company name

First, clear up a misunderstanding: you don’t have to have a company name as a sole proprietor!

A sole proprietorship is always automatically given the entrepreneur’s first and last name, you can’t deviate from that. Of course, you can add a commercial company name as an addition.

A company, on the other hand, does have the legal obligation to choose a company name, so you have to give a company a name.

By the way, did you know that the commercial name of your sole proprietors is one of the few things you can have edited completely free of charge? Just contact the accredited enterprise office that took care of your start-up and make the change.
Do pay attention when choosing your trade name: you cannot fall into a competitor’s trap by selecting a trade name that already exists.

Step 8: Consider these taxes and costs 💶

As a self-employed person, you are likely to have additional income, on which you will therefore be taxed. So almost all self-employed people have to pay social security contributions and personal income tax.

Social security contributions

• Student: Net profit under €8204.60 on an annual basis: you do not pay social security contributions
• Secondary occupation: net profit below €1,815.41 on an annual basis: you don’t pay any social security contributions
• Main occupation: you pay social security contributions between €866.62 and €4,819.64 every quarter.
  

If you earn more as a student or secondary occupation, you are paid 20.5% social security contributions on the amount above the limit.

If you have an exemption, you must explicitly request it from your social insurance fund.

Personal income tax

• Total income under €10,160: you pay no taxes because this amount is the tax-free basic amount.
• Total income above €10,160: you pay taxes progressively, meaning in tranches. On the amount between €10,160 and €15,200 you pay 25% tax. This rises to 50% on the amount above €46,440
  

Also calculate the taxes for your sole proprietorship as a secondary occupation here.

Important!

• Social security contributions: only take the profits from your business into account
• Personal income tax: add up all your income. So the profit and your salary from your (student) work

If you are a self-employed student, you also have to take into account child allowance and the maximum amount to dependants of your parents.

Fortunately, Dexxter gives you a clear summary, so you certainly won’t accidentally cross the line. Plus, the accounting software automatically calculates everything so you’re 100% okay on your tax return.

Step 9: View whether you need insurance

This depends very much on the activities you will be carrying out, and also on your social status (student-entrepreneur, secondary occupation or main occupation).

It goes without saying that someone who runs a restaurant as his main occupation will need other types of insurance than, say, a student-entrepreneur working on graphic designs from home.

Here you will find all information on the sense and nonsense of insurance as an entrepreneur in secondary occupation.

Our tip? Pop into an insurance office, thoroughly explain your situation and future plans and listen to the expertise of your insurance broker.

Step 10: Choose a business office and register. ✍️

Time to really fly into it now, and this can be done through an accredited enterprise counter. This is the contact point for (start-up) entrepreneurs. This body has been specially created by the government. They take care of certain tasks, such as applying for a company number and activating your vAT type statute. There are 8 recognised enterprise counters, including Acerta, Liantis or Xerius. For the legally required services, they all charge the same rates, only for additional services they may differ somewhat.

Tip!

Sometimes your registration at the CBE is paid back by your city, for example in De Panne, Melle, Stekene… Contact your city for more information.

Do you still have some questions about your start-up? The advisers from the enterprise counter are perfect to help you. Give them a call or send them an e-mail. Or follow a free webinar, here you can get a lot of information and ask all your questions.

All ready to question your company number? This can be done quickly and, what’s more, completely digitally. You will probably receive a company number in your mailbox the same day.

You can also apply for a company number via an accountant, but he or she will have to apply to a recognised enterprise office. These are the only parties in Belgium that can apply for a company number.