Don't worry, that's possible! Once your company grows, you may need a different form of business.

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Switching from a sole trader to a company:

The company number of the sole proprietorship will be stopped and a company number will be started for the company. Make sure you have first arranged all the conditions for the start-up of the company.

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Switching from one form of company to another:

This can be changed via a publication, but keep in mind that the terms of the new form of company must be complied with. For this, it is best to contact an accountant.

In any case, the self-employed student status may be combined with a student job. What you should take into account:

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Child Benefit (Growth Package)

From 18 to 25 years old, you can: undergraduate work and yet you Maintain the growth package if you:

• at most 600 hours a year works with a student agreement (with reduced social contributions);
• at most 80 hours per month works with a 'normal' contract. This concerns an interim, a flexi-job, a permanent or indefinite contract, a student contract without reduced social contributions, or a doctoral scholarship. Exception: if you work as a monitor or as a childminder under the 'sui generis'-statute, these hours do not count.

This is independent of your possible activities as a self-employed person.

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Social contributions

For social contributions, only the net taxable income as a self-employed person is considered.

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Tax-chargeable

The income as a student is added to the income as a self-employed person to see whether you can remain a tax dependent on your parents. The limit amount depends on the family situation and whether or not your parents are taxed jointly (more info).

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Taxes

Whether or not you have to pay taxes as a student also depends on your income from both your student job and your independent activity. Here are also limit amounts applies.

Some student entrepreneurs are getting down to the administrative hurdle of an independent life. Or are afraid to take the step to own your own business yet. Fortunately, even then, there are opportunities to do business.

Amateur arts allowance (AVK) - for artistic performance

If you are active in the creative sector, the Amatuerskunstenvergoeding (formerly KVR) may be an option for reimbursing assignments. There are conditions and restrictions attached to this, so inform yourself well.

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Working with a payroll office

What do you do if a client is waving an attractive assignment but you don't have a VAT number to issue an invoice? Go to a payroll company such as Tentoo or Amplo. They can do the billing for you and at the same time ensure that you are legally compliant. Via the payrolling system, you can work perfectly as a freelancer without an independent status and on behalf of any company or organization. Legally, working through a payroll office falls under the legislation for interim work. There is a relationship between the client and the payroll office. The payroll office creates the invoices based on the agreements you have concluded with the client. The client then pays to the payroll office. An interim relationship develops between you and the payroll office. The payroll office pays you a net salary.

Please note that the payroll offices will skim part of your invoice to pay for their service. This varies from office to office, so be sure to inquire before you start with an office.

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Joining a cooperative

You can also choose to join a cooperative and roll out your business through a guided process. You then buy a share and thus become a partner within the cooperative company. This ensures that you can roll out your activities under the cooperative's VAT number and that you can enjoy administrative support and coaching at the same time. Within Gentrepreneur, we have our own student cooperative, The Company. If you do not meet the conditions of The Company, youth cooperation can PORT might be a solution for you.

Your company doesn't make a business idea. You still have a few crucial decisions ahead of you. One of the first is whether you are setting up a sole trader or a company. Many start-ups choose a sole trader because it has low incorporation costs and conditions, but in some cases, a company is more suitable. The choice of your business form has a number of consequences (financial and practical). That is exactly why this is not a decision to be made hastily. In practice, you and your accountant look at the options together and take the plunge after careful consideration.

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Liability

The biggest difference between the two is the “liable person”: who does the profit go to and who pays the bills? In a sole proprietorship, this is you personally. So all profits are yours. However, if you run into financial problems, creditors can seize your personal property. Otherwise, it is your company (as a “legal person”) that makes commitments, receives profits and is liable in case of debts. In case of problems, you therefore remain out of harm's way, unless it concerns a form of company where the (working) partners are liable for the debts.

Incorporation: easier in the sole proprietorship

To set up a sole trader, open an account and register at a business counter. Setting up a company takes a little more effort and money. For example, you need initial capital and a financial plan. In addition, some forms of company still require you to go to the notary.

Taxes: optimization for companies

In a sole trader, you pay personal income tax on all your profits. Your tax is calculated in instalments between 25 and 50%. The rate for (small) companies is 29.58% (and 20% as of 2020). As a business manager, you also pay personal income tax, but there are still many means for “tax optimization”. Read: financially advantageous ways to give yourself a little more net worth as a business manager. A company usually becomes financially more attractive from a certain net profit — i.e. as soon as you pay too much tax as a sole trader. Your accountant will take stock for you.

Administration: less complex in a sole proprietorship

A company involves more obligations than a sole trader. Each decision must be made at a meeting, for example. In a sole proprietorship, you have every right to decide. In addition, in a sole trader, 'single' accounts below the limit of 500,000 euros in turnover are sufficient, while companies — or their accountant — must keep 'double' accounts.

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Summarized: are you only setting up a company with few risks? Then a sole trader is often the best choice. When you grow, you can always switch. Are you setting up a business with several people where you immediately plan large investments? Then a company is usually appropriate.

As a self-employed person, you may or may not have to keep VAT accounts and submit VAT returns periodically, depending on your activity. In addition, on the one hand, you pay the VAT due on the goods or services provided and, on the other hand, you can deduct the VAT that you paid yourself on purchases.

Do you have an annual turnover of less than 25,000 euros? Then you can opt for the VAT exemption rule for small businesses. This already leaves you with one less 'to do' on your list, but is there also a downside?

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Do not charge VAT = do not deduct VAT

If you opt for the exemption scheme, you can under no circumstances deduct the VAT paid yourself on purchases. Do you have to make large investments to start your business or do you often incur costs with VAT? Then the exemption scheme is probably not the best choice.

Why opt for the exemption scheme anyway?

On the other hand, if the costs you incur with VAT are rather limited or if the administrative burden does not outweigh the VAT cost, you can opt for the exemption scheme. But what does this mean exactly? Essentially, it means that the entrepreneur does not have to pay VAT on the goods or services provided and therefore does not have to submit a periodic VAT return.

Limited liabilities

Please note that you still need to keep a minimum of VAT accounts and should not lose sight of the annual customer list. This is an overview of each customer with a Belgian VAT number to whom goods or services were supplied for at least 250 EUR. If you do not have any customers to report that year, you do not have to submit a declaration. Are you buying goods from abroad? Even then, there are still a number of obligations that you must comply with as an entrepreneur.

A golden tip

Think about the future when pricing! Suppose your company grows and you exceed the 25,000 euro mark, you suddenly have to ask for VAT. If your customer base consists mostly of private individuals and if you want to maintain your margin, this may mean a substantial price increase for your customers. That's why it's best to set your prices in line with the market from the start.

Conclusion: not always an asset

The administrative advantages do not always outweigh the disadvantages: your bookkeeping must still be in perfect order, you have to keep an eye on your turnover and you cannot recover the VAT on your purchases. However, the exemption is ideal for student entrepreneurs or self-employed workers in a secondary occupation with private customers. So you can earn a penny with your hobby or get a taste of doing business. Does it seem like something for you? Ask an accountant or accountant for advice before making a choice.

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