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You are going to publish your own book(s) and with the criteria of the Chamber of Commerce you found out that you have to register yourself as an entrepreneur. You need a legal form for this, but which one? So I ran into that too, so let's go through it.
Note this information is based on the law and regulations in the Netherlands.
If you only publish your own books and do not collaborate with others, there are two options; sole proprietorship (eenmanszaak in the Netherlands) and private limited company (bv in the Netherlands).
If you are going to work together with others who also want to publish their own, then a partnership (V.O.F. in the Netherlands) is an option, there is a big but attached to this.
With partnership you share the costs but also the revenues. Does your book sell well and you sell a lot, but the book of one of the partnership members does not, then you are still obliged to share this profit with this person on the basis of your share. If you have a 50% share, you only get 50% of the profit.
Note that this is information for the Netherlands. In the USA an LLC or LLP are similar to the legal forms to the ones mentioned above. Please check the available legal forms in your country.
| Sole proprietorship | Private limited company |
|---|---|
| You are personally responsible for the debts. | You are not personally responsible for the debts. |
| You can hire staff. | You can hire staff. |
| You cannot invoke employee insurance under the WW, WAO or WIA | If you have more than 50% of the shares, you are not insured for the WW, WIA and ZW |
| Registration fees at the Chamber of Commerce | Registration costs at Chamber of Commerce + costs notary |
| Tax up to €69,399 is 37.07%, above that it is 49.5%* | Tax up to €395,000 is 15%, above that it is 25.8%* |
| You can use the self-employed deduction | - |
| You can use the starter's deduction | - |
| You can use the SME profit exemption | - |
* This applies to 2022.
Both a sole proprietorship and a private limited company can be used as legal form when you register yourself with the Chamber of Commerce. The thing is, if you already have a sole proprietorship, you can't add another one.
Then you might think, okay then I will do it, for example, but unfortunately this is not so simple either. You must receive at least the usual wage on an annual basis. In 2022 this will be € 48,000. Try to do that in one year with your book publishing. Okay, it's not impossible, but a lot harder to achieve. This would require me to sell 13,371 paperbacks based on the cost and profit per book that I have currently calculated. Or 22,642 ebooks!
Do you already have a sole proprietorship, see if you can convert it into a private limited company (it can only have 1 shareholder) or else call the Chamber of Commerce. It is possible to have multiple trade names and activities as a sole proprietorship.
So the best place to start is with a sole proprietorship. This is also the cheapest option. You can convert your sole proprietorship to a private limited company later on. You do need a notary for this.
I have opted for a sole proprietorship and who knows, I may convert it in the future. And now that I know that I need a Chamber of Commerce registration with legal form sole proprietorship, I come to the following question. Do I need a business account for my business?
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