Your objective in becoming a company is to clearly separate your private life from your professional life. Thanks to this "new person", you're opening up new possibilities and that's having a positive impact on you 😊
Check no. 1: are my results good enough?
This is the main criterion! The company must end the year with taxable profits. This enables it to take advantage of the advantageous corporationtax(ISOC).
⚠️ So it's not enough to have annual income of €60,000 for a company to make sense.
Calculating taxable income
Here's a simulation to help you understand taxable income.
👉🏻 Taxable income = Income - Expenses - Management remuneration. In other words: €90,000 - €12,000 - €30,000 = €48,000.
Defining the right remuneration
In the example above, let's imagine that you take a salary of €78,000. Your taxable income would then be €0.
👉🏻 In this case, you are not liable for corporation tax. Your remuneration is taxed as personalincometax(IPP), exactly as if you were self-employed.
You therefore need to define a remuneration package that achieves the following balance: meeting your net private needs while generating sufficient taxable income to benefit from ISOC.
Check No. 2: Is my income sustainable?
Launching a company is not something to be taken lightly! It's a decision that involves more commitment than starting up as a self-employed individual.
Administrative consequences
Setting up as a company entails additional administrative obligations compared with operating as an individual:
Incorporation costs: the services of a notary are required to draw up the articles of association and register the company, with costs varying according to the structure chosen.
More complex (and therefore more expensive)accounting :
A company must :
Keep double-entry accounts. This means that each financial transaction must be supported by a document. This type of accounting is more complex than that of a self-employed individual.
Draw up an annual balance sheet and file annual accounts with the National Bank. There are publication costs each year.
Complete a corporation tax return separate from your personal tax return.
Annual contribution: companies must pay a specific NISSE company contribution each year.
The longer it lasts, the more profitable it is
Starting up a company involves costs. But there are also costs when you stop! In this case, it's called winding up the company. You need to call in an accountant, an auditor and a notary.
💡 Before launching a company, make sure that the business is stable with assured income over the medium term. Otherwise, the start-up and shutdown costs won't cover the gain from becoming a company.
I'm going to incorporate!
Incorporating gives you tax advantages. The company tax rate is lower than the personal tax rate 👌🏻 As a paid executive, you can, for example, benefit from rent for a home office, meal vouchers or a flat-rate expense allowance, just like an employee.
You will also be safeguarding your assets. Your company acts as a buffer between you and your business. For example, the bankruptcy of your company does not involve your private assets (barring a few exceptions). Holding shares in your company is exactly the same type of property as holding a bank account or an investment. It is a movable asset. This means you can more easily sell or pass it on.
💡 If you want to develop a business with several people, a company is the ideal way of organising your working life alongside your partners. It gives you extra credibility, particularly when negotiating with a customer or bank.
🚀 Going into partnership is a strategic step that can be highly advantageous if it is well prepared. This transition needs to be thought through, taking into account your financial objectives, your business, and the tax and administrative implications. BILLY will work with you, together with a specialist expert, to help you anticipate this change as effectively as possible and move forward with complete peace of mind.
👉🏻 If you decide to convert to a company, go one step further and prepare for the changeover.
If you have any further questions, don't hesitate to get in touch with us via chat 😊
See you soon 👋