What you need to know before setting up a general partnership
Starting a business together means agreeing on each partner’s responsibilities, how you will work together and what happens if someone leaves. A Dutch general partnership (VOF) has at least two partners. Clear agreements matter even when you are working together on a single project. Here are the main points to consider before setting up a VOF.
What is a VOF?
VOF stands for vennootschap onder firma, the Dutch general partnership. A VOF has at least two partners. These can be individuals, but also legal entities such as BVs. You register the VOF with the KvK under a single name. The VOF receives its own VAT number and keeps a single set of accounts. The partners are jointly and severally liable for the VOF’s debts.
If a partner is an individual, their personal assets may also be used to settle those debts. This makes clear agreements particularly important. An advantage of a VOF is that the entrepreneurs can go to the KvK, register their business and start working as soon as that is arranged. There is no need for shares, articles of association or other formalities of that kind.
It is straightforward and flexible, but only suitable for people who trust each other and can make clear agreements about responsibilities and other important matters.
Does a general partnership suit me and my plans?
A VOF may suit people who want to run a business together under one name. Discuss each partner’s contribution, how profits will be shared and who may enter into commitments on behalf of the partnership. Also agree on the duration of the collaboration and what happens when a partner leaves. Suitability depends on your activities, risks and arrangements; a temporary collaboration is not automatically excluded.
When a general partnership is not a good idea
Joint and several liability deserves particular attention when substantial investments or a high risk of claims are involved. Partners’ contributions need not be equal and may consist of money, work or goods. Record differences in contributions and profit sharing clearly. A smaller share of profits does not automatically limit liability towards creditors.
Choosing between a VOF and a BV depends on more than business size or employee numbers. Liability, profits, taxation, costs and the intended collaboration also matter. A BV can offer greater protection for personal assets, but personal guarantees or directors’ liability may still create personal risks. Choose a legal structure that fits your circumstances.
Getting started with a general partnership
Suppose you and your life partner want to start an accountancy practice. You make clear agreements about dividing the work and decide to work from home. That can work well, because you need little more than a desk, a laptop or PC and a reliable internet connection. The finances are manageable: you send invoices to the few dozen clients you hope to attract for services such as filing VAT returns, advising on business finance or preparing profit and loss accounts.
You come up with a memorable business name and commission a web designer to create a professional website. You arrange the VOF’s registration with the KvK and can, in principle, start work straight away.
Your partnership’s registration address
If your VOF operates from home, your home address may be its visiting address. You can also register a separate business postal address for correspondence. A postal address does not automatically replace the visiting address. To use our address as your business registration address, actual use and the agreement must meet KvK requirements. Contact us to discuss the way of using the address that suits your partnership.
A separate postal address alone does not hide a VOF’s visiting address.
Would you and your business partner also like to work at an office location? Our virtual office is based at real premises with workspace available. In addition to using your business address, you can rent a flexible workspace from us. Ask us about options, availability and rates for working together.
