The basics of financial management
Hoofdstuk 2
2 major categories: companies with a legal entity and without
- Legal entity may hire staff, conclude a sales agreement and borrow from a bank
- Not a legal entity can hire people in the name of the owner
Sole proprietorship: not a legal entity and property of one individual
- Has no disclosure requirements
Partnership: not a legal entity but owned by multiple individuals
Limited liability company (LLC)
- Separation between ownership and management
- Often a greater involvement of shareholders in the company than in a corporation
- Have to pay corporate tax on the profits
Annual general meeting of shareholders: is the highest authority in a joint-stock company
SVB = supervisory board
- Supervises the board of directors on behalf of the shareholders
If a Dutch company meets the requirements of the two-tier status, a supervisory board is
mandatory. These requirements are:
1. The issued capital together with reserves must be at least 16 million according to the
balance sheet with notes
2. The company has a works council
3. The company employs at least one hundred employees in the Netherlands
Corporate Governance Code are the rules for management of companies
3 major differences between LLC and corporation
1. LLC’s shares are always registered shares.
2. An LLC can enter a buyout agreement into the articles of association, putting
restrictions on selling shares.
3. In the Netherlands the creation of a corporation requires an initial minimum capital
of 45000. There is no required minimal capital for setting up an LLC.
Production cooperative: the members are suppliers of raw material for the production
process
Purchasing cooperative: members buy their supplies such as seeds, propagating material or
fertilizer from the cooperative
Cooperative bank: lends money from and to its members
, 3 legal forms of cooperatives:
1. Legal liability: the members are liable for the debts of the cooperative
2. Excluded liability: the members cannot be obliged to pay the cooperative’s debts
3. Limited liability: the members are responsible for the cooperative’s debt up to a
maximum amount per member
2 types of nonprofit organizations
1. Association: is a collection of people organized for a specific purpose
a. Associations with full legal capacity have their bylaws recorded in a notarial
deed
b. Associations with limited legal capacity are the other associations
2. Foundation: is an organization that aims to achieve a particular social, societal or
idealistic goal.
a. A foundation doesn’t have members
b. A foundation does have a board
c. A foundation can own a company. The profit of the company must then be
spent on the purpose of the foundation.
Three tax boxes
1. Box 1: has an increasing sliding scale and includes income tax and a contribution
amount for national insurance schemes. AOW, An wen Wlz
2. Box 2: concerns taxable income from substantial interest
3. Box 3: concerns taxable income from savings and investments
Entrepreneurial tax relief: consists of the private business ownership allowance and the new
companies tax relief
Private business ownership allowance: is an amount that entrepreneurs may deduct from
profits
In the year that someone starts a business, the new companies tax relief is added, an
amount of 2123. Of the remaining profit, 14% is exempt from tax – this is known as the SME
profit exemption
The calculation of the amount of tax payable by the entrepreneur is:
Incurred profit
- Entrepreneurial tax relief
Profit after entrepreneurial tax relief
- Profit exemption (14 % of profit after entrepreneurial tax relief)
Taxable profit
X Rate (according to table
Taxes
- Tax credits
Payable taxes
Hoofdstuk 2
2 major categories: companies with a legal entity and without
- Legal entity may hire staff, conclude a sales agreement and borrow from a bank
- Not a legal entity can hire people in the name of the owner
Sole proprietorship: not a legal entity and property of one individual
- Has no disclosure requirements
Partnership: not a legal entity but owned by multiple individuals
Limited liability company (LLC)
- Separation between ownership and management
- Often a greater involvement of shareholders in the company than in a corporation
- Have to pay corporate tax on the profits
Annual general meeting of shareholders: is the highest authority in a joint-stock company
SVB = supervisory board
- Supervises the board of directors on behalf of the shareholders
If a Dutch company meets the requirements of the two-tier status, a supervisory board is
mandatory. These requirements are:
1. The issued capital together with reserves must be at least 16 million according to the
balance sheet with notes
2. The company has a works council
3. The company employs at least one hundred employees in the Netherlands
Corporate Governance Code are the rules for management of companies
3 major differences between LLC and corporation
1. LLC’s shares are always registered shares.
2. An LLC can enter a buyout agreement into the articles of association, putting
restrictions on selling shares.
3. In the Netherlands the creation of a corporation requires an initial minimum capital
of 45000. There is no required minimal capital for setting up an LLC.
Production cooperative: the members are suppliers of raw material for the production
process
Purchasing cooperative: members buy their supplies such as seeds, propagating material or
fertilizer from the cooperative
Cooperative bank: lends money from and to its members
, 3 legal forms of cooperatives:
1. Legal liability: the members are liable for the debts of the cooperative
2. Excluded liability: the members cannot be obliged to pay the cooperative’s debts
3. Limited liability: the members are responsible for the cooperative’s debt up to a
maximum amount per member
2 types of nonprofit organizations
1. Association: is a collection of people organized for a specific purpose
a. Associations with full legal capacity have their bylaws recorded in a notarial
deed
b. Associations with limited legal capacity are the other associations
2. Foundation: is an organization that aims to achieve a particular social, societal or
idealistic goal.
a. A foundation doesn’t have members
b. A foundation does have a board
c. A foundation can own a company. The profit of the company must then be
spent on the purpose of the foundation.
Three tax boxes
1. Box 1: has an increasing sliding scale and includes income tax and a contribution
amount for national insurance schemes. AOW, An wen Wlz
2. Box 2: concerns taxable income from substantial interest
3. Box 3: concerns taxable income from savings and investments
Entrepreneurial tax relief: consists of the private business ownership allowance and the new
companies tax relief
Private business ownership allowance: is an amount that entrepreneurs may deduct from
profits
In the year that someone starts a business, the new companies tax relief is added, an
amount of 2123. Of the remaining profit, 14% is exempt from tax – this is known as the SME
profit exemption
The calculation of the amount of tax payable by the entrepreneur is:
Incurred profit
- Entrepreneurial tax relief
Profit after entrepreneurial tax relief
- Profit exemption (14 % of profit after entrepreneurial tax relief)
Taxable profit
X Rate (according to table
Taxes
- Tax credits
Payable taxes
