All articles · 2026-01-30 · Accounting
Choosing your legal form
The market research is done. The conversations have taken place. The outlines of an idea are beginning to sharpen. And then invariably comes the same moment of…
By Jan Hermans, CEO & founder of Lyff.
The myth of the great leap
We all know the great cliché: the entrepreneur who quits their job, leaves all certainties behind, and "goes for it" wholeheartedly. It sounds courageous. Radical. Almost heroic. But in practice, it’s often primarily unnecessarily risky. A steady job not only means a salary but also mental peace. Room to think. Time to build without every decision being under financial pressure. Anyone who gives that up before there is proven demand, exchanges stability for stress, all under the guise of "entrepreneurship".
It cannot be denied that it sometimes works. That it often fails is less readily told. For most people, entrepreneurship does not emerge from a leap, but from a transition. Something that can exist alongside the existing, before it replaces it.
Side-job as a strategic intermediate space
A side-job [bijberoep] is often seen as half-hearted. As if you only become a "real" entrepreneur when everything is at stake. This is a misconception that pushes new starters towards unnecessary risks. A side-job creates an intermediate space where ideas can fail without dragging your life down. It allows you to find customers, test prices, get feedback, without the constant question of whether the rent can still be paid next month. Many professions start as hobbies. Many businesses as sidelines. Not because of a lack of ambition, but because insight needs time. Putting maximum pressure immediately on something that still needs to grow often forces decisions that are difficult to reverse later.
Structure is not identity
The question of the correct legal form is often overly burdened. As if a sole proprietorship [eenmanszaak] is less serious than a company [vennootschap]. Or as if the structure says something about the quality of the idea.
It doesn't.
A sole proprietorship is simple, quickly set up, and just as quickly dissolved. It is forgiving for those who are still searching. For those who are exploring, trying, and adjusting. A company requires more preparation, more costs, more commitment. It becomes relevant when the risk increases, not when the ambition feels greater. Anyone who chooses a structure for status reasons confuses form with content. The structure should protect you, not impress your neighbor.
Liability: the uncomfortable reality
There is one argument that outweighs all others: liability. In a sole proprietorship, everything converges. If things go wrong, the line between professional and private is razor-thin. This is not a problem as long as the risks are limited. It does become one as soon as investments, debts, or significant contracts come into play. A company creates distance. A buffer. A new entity, the legal person [rechtspersoon], emerges, standing between you and the outside world. Not to evade risks, but to make them manageable.
The right step at the right time
Entrepreneurship is not about speed. Nor is it just about courage. It's about timing. About knowing when you can test, when you need to protect, and when you can really accelerate. The smartest first step is rarely the most visible. But often it's the one that allows you to still be there in five years. If you would like to discuss this with one of our experts, please request an appointment here.
The company as a fiscal shoebox
As soon as you outgrow the side-job phase and your income structurally increases, the logic changes. In my book "Fiscale Shortcuts voor managementvennootschappen" (Fiscal Shortcuts for management companies), I often compare a company to a shoebox with taps. In a sole proprietorship, your money goes directly into your private pot and is taxed progressively, up to 50 percent plus municipal tax and social contributions. With a Lyff. structure, the money first goes into the company.
Through these different taps, you decide how and when to withdraw the money. Think of salary, dividends, warrants, or reserves. You take control. A concrete mechanism we often apply is the optimization of remuneration. We look for the Gaussian curve: a salary that is high enough to support your standard of living and pension accrual (the 80-percent rule), but low enough to avoid fiscal overconsumption.
- Corporate tax [Vennootschapsbelasting]: You pay 20 percent on the first slice of 100,000 euros profit (under certain conditions) instead of the high rates in personal income tax.
- Liquidation reserves [Liquidatiereserves]: By leaving profit in the company, you can distribute it after a waiting period of five years against a reduced withholding tax [roerende voorheffing].
- Real estate leverage: You can use your accumulated pension reserve in an IPT (Individual Pension Commitment) as collateral or an advance for the purchase of private real estate.
Activating the pension machine
A management company [managementvennootschap] is not merely a fiscal shell; it is a pension machine. The statutory pension for self-employed individuals is often painfully low, sometimes only around 1,200 euros gross. Through an Individual Pension Commitment (IPT), you can have premiums paid by the company that are tax-deductible as professional expenses. The beauty of this shortcut is that you not only build capital for the future but also reduce your taxable profit today.
Suppose you contribute an IPT premium of 5,000 euros per year. In the company, you immediately save on corporate tax. If you wanted to pay out that same 5,000 euros as net salary to save privately, your company would have to generate almost double to cover the taxes and social contributions. This is the core of smart wage optimization.
Frequently asked questions
From what profit level is a management company attractive?
There is no magic number, but usually the tipping point is around a taxable income of 45,000 to 50,000 euros. From then on, the tax advantages and the possibility of pension accrual often outweigh the extra accounting costs. In my book, I explain that the need for asset protection can also be a decisive factor, regardless of the exact profit.
Can I also use my IPT capital for a second home?
Yes, that is one of the most powerful shortcuts. You can take an advance on your pension reserves for the purchase, construction, or renovation of real estate within the European Economic Area. This allows you to activate gross money for your private assets without waiting until your statutory retirement age. You can read more about this in my book "Fiscale Shortcuts voor managementvennootschappen".
Do you want to know more about how to apply these principles to your specific situation? Then order the book Fiscale Shortcuts voor managementvennootschappen for a complete overview of all mechanisms.