Starting a business: the consequences for the home

In the run-up to your own business, your partner supported you in all those extra emotions. A foundation needed to make your dreams come true. But your partner’s involvement can go beyond just mental support. Economic or solidarity. What does it mean, should it ever go wrong with your business or your relationship? And what if you start a business with your spouse or partner?

What if?

It is important to review the characteristics of your relationship and the company. So you both do not run any unwanted risks. Because ‘what if’? What if the business grows? What if the company goes bankrupt? What if you end the relationship or get divorced?

What you and your partner have or have not arranged on paper is an important factor when starting your business. Do you live together or are you married? Is there a cohabitation contract or is there a marriage contract? The legal form of your business also plays a role in the extent to which your partner is involved. Although the choice of legal form often depends on financial circumstances or tax benefits, this is also crucial to your private responsibility. Is your business private? Your relationship is part of the same private. And with that, your partner automatically goes along with your entrepreneurial risk.

Tip! Consider hiring a legal adviser or notary. To arrange something now for an uncertain future.

All forms of cohabitation and most common legal forms and the consequences for your situation:

Live together

Without cohabitation contract

If you live together without a cohabitation contract, your cohabitant is independent of agreements you enter into as an entrepreneur. Are you unable to meet commitments you have made as an entrepreneur alone? Then your partner stays out of harm’s way. A bailiff can seize your joint property.

Once you and your partner have entered into an agreement for the company, you are both responsible for it. This may be the case if you need business financing and the lender wants to limit his risk by letting your partner with a permanent job sign up for the financing. Do you go apart as partners? Then you will have to arrange that financing in a different way.

With housing association contract

You can also choose to enter into agreements about your relationship in a cohabitation contract. The content of such a contract is not bound by legal rules. You can determine simple agreements, such as the allocation of household costs.

Are there any uncertainties surrounding the start of your business? For example, what happens to debt or assets if you separate? Then it is good to get a notary to make a cohabitation contract. Starting your own business is not only a good reason for a cohabitation contract. The contract may also have implications for future agreements. Such as the right to each other’s pension or agreements on what happens to assets in the event of death. Are you taking out a mortgage together? In that case, a cohabitation contract is still mandatory.

Married or registered partnership

To know what the risks and involvement of your partner are, 2 things play a role. Since 1 January 2018, the law on limited community of property applies. If you are married or have entered into a registered partnership, it plays a role. It is also important whether you have signed a marriage contract or partnership.

Before 1 January 2018

Were you married or entered into a registered partnership before this date and no conditions have been drawn up? Then there is an ordinary community of wealth. Your business is also a part of this. Everything between you and your partner is joint property. Also the company. Your partner therefore shares the entrepreneurial risk. And if it ever comes to a divorce, then there must be financial sharing. To prevent these risks, it is wise to have a marriage contract made.

Have marriage contracts or partnership terms been drawn up? When starting a business, keep these up to date. Agreements from the past can be seen in a completely different light or become obsolete when you start your own business.

Tip! Review your marital or partner relationships once every 5 years. The growth or reduction of your business has an effect on entrepreneurial risk. The once conceived strict separation of assets in marriage contracts may become less desirable over time.

After January 1, 2018

The assets earned from the wedding date or registration date are then shared. Unless otherwise provided in the Terms and Conditions.

Are you still getting married or entering into a registered partnership?

If you started the business before marriage or partnership, it remains private. Even without a marriage contract, your business will be outside the common property.

A point of attention here is an article from the Dutch Civil Code (Article 1: 95a). This presupposes that a reasonable contribution must be paid from the company, which already existed before the marriage, to the ‘marriage community’. If you do not comply with this, the company may still fall into joint ownership. This ‘reasonable contribution’ can be a point of contention, especially in the event of a divorce. Are you going to start a business and then get married? Then go to a notary for information.

What if you get divorced?

By 2020, 3,1802 marriages and registered partnerships ended in divorce. It is therefore good to know what the consequences of a divorce are for your business.

Does the company, or the value of the shares in a BV, fall into joint ownership? Then you need to buy your ex next for half. Is the money not there? Then it has to be funded. These additional fees have a negative impact on the profitability of your business.

Partly for the sake of a company’s continuity, couples often enter into a marriage contract or partnership agreement. In these conditions you can make agreements on movables. Will there ever be a divorce after that? Then do not repay half the value to your partner.

One point of attention is always to act in your relationship in accordance with the agreed marriage or partner terms. When drafting a marriage contract, a ‘settlement clause’ is often included. An agreement that additional income from partners is periodically shared. In practice, this settlement clause is hardly complied with. The conditions lie neatly in a deep drawer and never come out again. Usually it is not a problem either. Unless it’s a divorce. The marriage contract can no longer be considered valid due to the negligence of the settlement. The court then finds that there is a community of property anyway. And then the value of your business still needs to be shared.

The importance of your legal form

The legal form of your business plays an important role in your partner’s responsibilities. For each legal form, this comes down to:

The one-man business

Almost 90% of all businesses start with the legal form of sole proprietorship. Self-employed persons also fall into this group. An important feature of this form is that you are 100% privately liable. Have you not arranged anything regarding property matters or responsibilities within your marriage or partnership? Then you have 1 privacy together, so your partner also runs the entrepreneurial risk.

If you live together, your partner does not fall under the entrepreneurial risk. Unless otherwise stipulated in a cohabitation contract.

The General Partnership (VOF)

Do you want to start a general partnership with a partner? Then you have another ‘business marriage’ in addition to your spouse or partner through your business. An important characteristic of a complementary company is that partners are jointly and severally liable. Each partner can be held fully responsible for debt separately. This means that you can be fully addressed privately for the other partner’s actions. And it’s the same private thing you have with your partner. The same, of course, applies to your business partner if he or she also has a life partner at home. As a result, it can be said that within a general partnership, 4 people fall under one entrepreneurial risk. Unless marriage contracts or a cohabitation contract provide otherwise. All in all, a subsidiary is a vulnerable legal form in this situation.

It is not mandatory, but the advice is to make a partnership contract with a general partner. As partners, you can make agreements with each other in this. Up to what amount you can only put one signature? What happens to the customer portfolio if you separate as partners? What is the profit distribution? See these agreements as an internal rules of procedure. However, full joint and several liability for each individual partner can not prevent a contract.

Husband-wife company (vof)

Will you both be active in the new business as a couple or couples? Then you can create a partnership together (VOF). A partnership with tax benefits.
This form is very common. In all industries, but especially in agricultural enterprises and catering. More than 82,000 of these general partnerships are registered with the Chamber of Commerce in May 2020.

Tax benefit

Do you work every 1225 hours a year in the company? Then you have separate options for tax deductions on your own share of the profits. Such as self-employment deduction, starter deduction or SME profit exemption. Because you apply these deductions twice, you have to pay less tax. And then the net income of the joint household is higher.
A disadvantage of this construction is the joint and several liability of both parties. Marriage contracts or provisions of a cohabitation contract are set aside.
Does your partner cooperate and do not want to take part in the responsibility? Even with a one-man business, there are still attractive tax options, such as employee deductions.

Private limited company (BV)

Are you going to start your business with legal form bv? In that case, you as an entrepreneur are not personally liable. And neither does your partner.
If you, as an entrepreneur, run your business incorrectly, you may still be held personally liable in the event of bankruptcy. You have the same private with your partner. So it also makes your partner responsible.
If there is financing at the start of your BV, it may happen that a financier makes you sign privately. Without a cohabitation contract or marriage contract, there is only 1 privacy, that with your partner. And in that case, your partner is also jointly and severally liable.

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