Sole trader: starting and running your business in Belgium

What a sole proprietorship is

A sole proprietorship is you. There is no separate legal person: your business and yourself are the same entity, legally and fiscally. Your profit is your income, taxed under personal income tax.

It is the form chosen by the vast majority of Belgian self-employed people starting on their own: consultants, craftspeople, retailers, liberal professions, food trades.

• No start-up capital to pay in, no financial plan to file.
• No notarial deed, so very low setup costs.
• No annual accounts to publish with the National Bank.
• A single tax return: yours.

The steps to set it up

The path has five steps and is often completed within a few days.

• Open a bank account dedicated to the business, separate from your private account.
• Register with the Crossroads Bank for Enterprises through a business counter, which assigns your company number and records your activities.
• Have your VAT number activated at the same counter or with the FPS Finance, unless you apply for the exemption.
• Join a social insurance fund for the self-employed, no later than the day you start.
• Inform your health insurance fund and take out the insurance your trade requires, including professional liability.

Liability and protecting your assets

This is the real trade-off for the simplicity: your private and business assets are one and the same. A business creditor can therefore, in principle, go after your own property.

Two protections exist and are worth knowing about before the problem arrives.

• The declaration of unseizability of the family home, made before a notary. It puts your main residence out of reach of business creditors for debts arising after the declaration.
• A professional liability insurance suited to your activity, covering damage caused to clients or third parties.

Simplified bookkeeping

A sole proprietorship whose annual turnover excluding VAT does not exceed 500,000 € may keep simplified accounts. Above that, double entry bookkeeping becomes mandatory.

Simplified bookkeeping rests on three books and an inventory, kept continuously and without blanks.

• The purchase book, listing every invoice received along with its supporting documents.
• The sales book, listing every invoice issued, paid or not.
• The financial book, listing the movements on your bank accounts and in your cash register.
• The annual inventory of your stock, receivables and debts, drawn up at least once a year.

The calendar of obligations

Four appointments set the rhythm of a sole trader's year. Keeping them avoids most fines and unpleasant surprises.

Sole trader or company?

The question comes up when profit rises. As a natural person you are taxed at the progressive rates of personal income tax, reaching 50 % in the top bracket, plus municipal surcharges. A company falls under corporate tax, with a reduced rate on the first profit bracket under certain conditions.

The calculation is not only about the rate though. A company means a financial plan, annual accounts to file, setup costs and a higher yearly accounting bill.

The rule of thumb often used is a stable annual profit clearly above what you need to live on. As long as you consume all your profit, a company mainly adds complexity.

Novadesko for a sole trader

The three books to keep, the VAT to prepare and the documents to store for seven years: that is precisely what Novadesko automates.

• Your purchase, sales and financial books fill up as your invoices and bank movements come in.
• Your purchase invoices are photographed, read automatically and sorted by expense category.
• VAT is calculated line by line at the right rate, with the mandatory legal mentions.
• Peppol electronic invoicing is built in and operational.
• The quarter's VAT balance stays visible, well before the deadline.
• The accounting export your accountant expects is ready in one click, which often brings their bill down.

Frequently asked questions