Define your legal structure
Would you like to set up a business in Belgium? Choosing the right legal status is one of the most important decisions you need to make. Each business form has different obligations and benefits. This choice impacts your liability, your expenses and your day-to-day operations.
The three main business categories
In Belgium, there are three main categories of legal status, which will have an impact on the way you run your business.
Sole proprietorship
This category is the simplest when it comes to starting your business. You operate as a sole trader, with no separate legal personality. Your assets are your business's assets.
Company
This category requires some preparation to get your business off the ground. You operate through a legal entity with its own legal personality. Your assets and those of your business are separate.
Foundation or association
This category requires some preparation to get your business off the ground. You operate through a legal entity with its own legal personality which pursues an altruistic purpose. Your assets and those of your business are separate …
Sole proprietorship
A sole proprietorship is a quick and easy way to start a business. You don't need to draw up any articles of association; you make all the decisions yourself; and you don't need any minimum capital. However, you and all your assets are liable for the commitments of your business. Your private assets are part of your business assets. This is a risky situation in the event of bankruptcy, as your private assets could be used to pay off your business debts. If you opt for a sole proprietorship, consider getting some protection for your primary residence.
- Number of founders: 1
- Minimum Capital: No
- Notary : No
- Liability: Unlimited (personal assets)
- Legal personality: No
- Distribution of profits: yes
Company
Setting up a company requires a great deal of preparation, but offers significant advantages, such as lower tax rates. Depending on the type of company, you might need a notary and a financial plan. Also take into account any start-up costs and termination fees.
Types of company
The Belgian Code of Companies and Associations (BCCA) sets out the different company forms, each with its own characteristics. Here, you can find out more about the different forms and the benefits they offer.
Limited liability company (SRL)
The SRL is the basic legal form in Belgium. The associated obligations give you a large degree of freedom in setting up your company.
- Number of founders: a single founder is sufficient
- Capital: the founders provide sufficient start-up capital, backed up by a financial plan
- Liability: limited to shareholders' contributions. Founders may be held liable if the initial assets were insufficient for the planned activity
- Incorporation: by notarial deed
- Shares: not freely transferable (transfer to another person is prohibited or subject to authorisation), unless otherwise stipulated in the articles of association
Ordinary limited partnership
An ordinary limited partnership is the simplest form of collaboration between two or more people. It has no legal personality.
- Number of founders: at least two
- Minimum capital: not required
- Liability: unlimited and joint and several
- Incorporation: by private deed (the presence of a notary is not mandatory)
- Unique characteristics: an ordinary limited partnership is not published in the Belgian Official Gazette and is therefore a discreet form of collaboration, for example in family estate planning
Public limited company (SA)
An SA is the legal form intended for larger companies, and requires capital to be raised.
- Number of founders: a single founder is sufficient
- Minimum capital: 61,500 euros
- Liability: limited to shareholders' contributions
- Incorporation: by notarial deed
- Shares: freely transferable (i.e. you can sell them without having to ask for specific authorisation), unless otherwise stipulated in the company's articles of association
- Governance: through a management body (collegial or sole director), depending on the articles of association
Cooperative company (SC)
An SC is a company whose shareholders pursue a cooperative objective. It serves to meet the needs of its shareholders or to defend their economic or social interests.
- Number of founders: at least three
- Minimum capital: the founders provide sufficient start-up capital, backed up by a financial plan
- Liability: limited to shareholders' contributions
- Incorporation: by notarial deed
- Unique characteristics: the number of shareholders may vary without any need to amend the articles of association
General partnership (SNC)
An SNC is a company formed by partners who have unlimited joint and several liability.
- Number of founders: at least two
- Minimum capital: no capital
- Liability: unlimited and joint and several. Each partner is liable for the company's debts using all of their personal assets.
- Incorporation: by private deed (the presence of a notary is not mandatory)
- Decision-making: unanimous, unless the articles of association stipulate that decisions can be taken by a simple majority
Limited partnership (SComm)
An SComm is a company with two types of partners: general partners, who run the business, and limited partners, who contribute capital only.
- Number of founders: at least two (one general partner and one limited partner)
- Minimum capital: not required
- Liability: general partners have unlimited joint and several liability. The liability of limited partners is restricted to the amount of their contribution.
- Incorporation: by private deed (the presence of a notary is not mandatory)
- Decision-making: unanimous, unless the articles of association stipulate that decisions can be taken by a simple majority. Limited partners are not involved in management.
Comparison of company forms
| SRL | SA | SC | SNC | SComm | Ordinary limited partnership | |
|---|---|---|---|---|---|---|
| Number of founders | 1 | 1 | 3 | 2 | 2 | 2 |
| Minimum capital | sufficient start-up capital | €61,500 | sufficient start-up capital | No | No | No |
| Liability | Limited | Limited | Limited | Unlimited | Mixed | Unlimited |
| Notary | Yes | Yes | Yes | No | No | No |
| Legal personality | Yes | Yes | Yes | Yes | Yes | No |
*In the case of an SComm, general partners have unlimited liability, while the liability of the limited partners is restricted to their contribution.
Foundation or association
Setting up a foundation or association also requires preparation, but is distinguished by the fact that it pursues an altruistic objective. These types of companies may engage in economic activities to finance their operations, but may not distribute profits to members or founders.
The difference between the two is that an association has members, while a foundation does not. The foundation allocates its assets to an altruistic purpose and is managed by a management body.
Types of association
Non-profit association (ASBL)
An ASBL is a group of natural or legal persons pursuing an altruistic purpose.
- Number of founders: at least two
- Legal personality: yes
- Incorporation: by private deed (articles of association), filed with the business's court clerk
- Minimum capital: not required
- Distribution of profits: not permitted. An ASBL may not grant any financial benefits to founders, members or directors.
- Governance: through a management body and a general meeting, in accordance with the provisions of the articles of association.
- Unique characteristics: an ASBL is considered a business and is registered with the Crossroads Bank for Enterprises (CBE).
International non-profit association (AISBL)
An AISBL is a group of natural or legal persons pursuing a public-interest purpose of an international nature.
- Number of founders: at least two
- Legal personality: yes
- Incorporation: by notarial deed
- Distribution of profits: not permitted
- Unique characteristics: an AISBL pursues an international objective
Types of foundation
Private foundation
A private foundation is a legal entity without members, created by one or more individuals (founders). The funds contributed are allocated to a cause of general interest.
- Number of founders: a single founder is sufficient
- Members: not applicable. A foundation does not have any members
- Legal personality: yes
- Incorporation: by notarial deed
- Minimum capital: not required
- Distribution of profits: not permitted
- Governance: through a management body. There is no general meeting
- Dissolution: by court decision only.
Public utility foundation
A public utility foundation is similar to a private foundation, but pursues a philanthropic, philosophical, religious, scientific, artistic, educational or cultural purpose.
- Number of founders: a single founder is sufficient
- Members: not applicable
- Legal personality: yes
- Incorporation: by notarial deed
- Approval: required by royal decree
- Distribution of profits: not permitted
- Governance: through a management body
Comparison between foundations and associations
| ASBL | AISBL | Private foundation | Public utility foundation | |
|---|---|---|---|---|
| Number of founders | 2 | 2 | 1 | 1 |
| Members | Yes | Yes | No | No |
| Notary required | No | Yes | Yes | Yes |
| Approval by royal decree | No | Yes | No | Yes |
| Distribution of profits | No | No | No | No |
Feel free to call a notary, lawyer, chartered accountant or accredited business counter.
Frequently asked questions
What's the difference between a sole proprietorship and a limited liability company?
A sole proprietorship does not have its own legal personality: you and your business are the same person in the eyes of the law. Your private assets are treated in the same way as those of your business. In the case of a limited liability company (SRL), your business is a separate legal entity. In principle, your liability is limited to your contribution. An SRL is incorporated through a notary and requires a financial plan with sufficient initial assets.
What's the cheapest way to set up a business?
Sole proprietorships have the lowest start-up costs. You don't need a notary or any minimum capital, and the administrative procedures are limited. However, the risks to your private assets are high.
Can I set up a company on my own?
Yes, you can. For a limited liability company (SRL) and a public limited company (SA), a single founder is sufficient. For a cooperative company (SC), you need at least three founders. A general partnership (SNC), a limited partnership (SComm) and an ordinary limited partnership require at least two partners.
What liability do you have in a sole proprietorship?
With a sole proprietorship, there is no separation between your private and business assets. If you don't pay your business's debts, creditors can seize your private assets. Your spouse's assets can also be seized, unless your marriage contract protects their assets. Your principal residence can be protected by filing a declaration with your notary.
When should I opt for a non-profit association (ASBL)?
Choose an ASBL if you're pursuing an altruistic purpose and do not wish to distribute profits to members, founders or directors. An ASBL may engage in economic activities, but only to finance its operations.
What's the difference between a foundation and an association?
An association gathers members around an altruistic goal. A foundation doesn't have any members: one or more founders allocate assets to an altruistic purpose. The general meeting decides on the running of an association, whereas a foundation just has a management body.