The one-man business is the most simple form of doing business. There are few limitations if a natural person wishes to operate a business alone.
There is, however, a drawback. The operation of a business can have detrimental effects for the assets of the entrepreneur and even for the assets of his or her spouse .
Why is that? Because creditors make no distinction between the assets of the entrepreneur and those of the business itself. Everything constitutes a whole. We call this the principle of ‘unity of assets’. By this principle, the entrepreneur-natural person can never assert that only his commercial undertaking serves as security for his professional debts. In reality, his/her full assets, including his/her private possessions, also constitute security for his/her (private) debts.
The principle of “unity of assets” has two consequences:
- the private creditors of the entrepreneur can always recover their claim from the assets of the business.
- the debts deriving from the business activities can always be recovered from the private properties (house, furniture, personal bank accounts) of the entrepreneur.
If the entrepreneur is married under a community of property regime, whether or not with a marriage contract, the full joint assets stand, moreover, surety for his/her professional debts, i.e. also the half belonging to the other partner!
To guarantee minimal protection, self-employed persons with a one-man business can make before a notary a so-called declaration of the family home not being subject to attachment.
In order to set up a one-man business, a number of step must be taken.
First of all, you will need to open a professional checking/bank account with a bank. Thereafter, you can apply for a company number at a business advice centre. That is the number which shall be mentioned in the Crossroads Bank for Enterprises. Subsequently, you can activate your VAT-capacity through the business advice centre. As soon as the VAT-number has been applied for, you can start your business activities.
In addition to this, a proof of knowledge of business management is required in the Walloon Region and Brussels-Capital Region. That proof can be furnished by a certificate or by means of relevant practical work experience. For some regulated professions you must, furthermore, also submit a proof of professional competence in the Walloon and Brussels-Capital Region (e.g. for professions in the construction sector).
The incorporation of a one-man business cannot be carried out through this platform. For more information www.notaris.be.
Closing a business
In order to close a one-man business, you must take a number of steps to end your status as a self-employed person. First of all, the independent activity must be cancelled from the Crossroads Bank for Enterprises through the business advice centre. In addition to this, you must inform the VAT-administration of the cessation. Finally, you must also inform the social security fund and the health insurance fund about the termination of your independent activity.
A company can be dissolved in three ways:
- by a dissolution automatically by law (e.g. after the expiry of the term of the company);
- by a judicial decision; or
- voluntarily by a decision of the shareholders.
During the dissolution, a liquidator will sell the assets of the company to pay off the creditors with the proceeds. The balance which remains after payments to the creditors, accrues to the shareholders of the company. Upon the conclusion of the liquidation, the company loses its legal personality and ceases to exist.
A voluntary dissolution can also occur in a simple manner through the procedure of dissolution and liquidation in one deed. Through this procedure, the shareholders decide unanimously to dissolve at a moment in which all debts have already been paid to the creditors. No liquidator is appointed and the remaining assets accrue, after the dissolution, automatically to the shareholders.
Additionally, it is also possible that the company may be declared bankrupt by the commercial court. The bankruptcy order can be issued if the company can no longer pay its debts and no longer obtains credit from its creditors.