Convert sole proprietorship/VOF to BV

This article describes the actions to be taken when an existing legal form transfers to a new legal form. For convenience, the transfer of a sole proprietorship to the BV is taken as an example. This article also applies to the conversion of a VOF to the BV.

The two most important elements that come into play when choosing a BV are the joint and several liability and the tax advantage.

The entrepreneur has the choice of two conversion variants:

• the non-silent conversion
• the silent conversion.

The non-silent conversion

If you want to bring the sole proprietorship/VOF into the BV non-silent, from a tax point of view you choose to discontinue your current business. You then have to pay income tax on the hidden and fiscal reserves and on the goodwill of your business. You may deduct the cessation deduction from the resulting profit. You may also pay part of the cessation profit into an annuity. After the contribution of the sole proprietorship/VOF, the business resumes in the BV with the new book values.

The silent conversion

A silent converdion is a true transfer of everything the sole proprietorship/VOF has on its balance sheet into the BV. Without settling capital gains or tax reserves. You continue with the balance sheet of the sole proprietorship/VOF as it is on January 1. The sole proprietorship/VOF is then transferred to the BV at the same book value (with a recalculated share capital / CA management). This route is frequently chosen and is interesting when the sole proprietorship/VOF has a lot of capital gains (hidden reserves and goodwill) that do not appear on the balance sheet. Think of a filled order portfolio, a client list, a frequently visited website or a property that is worth more than for what it is currently on the books.

Submit required documents

Before starting to set up the new legal form, a number of documents need to be provided:

• final notarial deed of incorporation of the BV, the deed of incorporation is important because it states when the new legal form will be started and under what conditions.
• excerpt from the Chamber of Commerce of the BV
• shareholders register of the BV
• final deed of conversion of sole proprietorship/partnership/VOF into the BV
• opening balance sheet as of the date of the conversion of the BV.

Filing VAT returns for sole proprietorships/VOF and BV

As long as the VAT number is not deregistered with the tax authorities, the sole proprietorship/VOF is subject to VAT. For this reason, it is not chosen to change the old legal form of administration directly to the new legal form.

Suppose the sole proprietorship/VOF is converted into a BV in the month of July, then the BV is liable for VAT for the next quarter and the BV must send the VAT return. 

ATTENTION!

It is important to note that the BV's first VAT return must be submitted on paper. After that, the VAT returns can be submitted electronically.

The sole proprietorship/VOF is actually empty as of the third quarter, but as long as the VAT number has not been deregistered with the tax authorities, the sole proprietorship/VOF is obliged to send nil returns for the periods (often this concerns a quarter) for which the VAT number has not yet been deregistered.

When converting the legal form, sending the nil returns from Yuki is not possible, and the partner must send the return outside Yuki. 

TIP!

It is possible to enter the sales tax number of the sole proprietorship/VOF in the administration profile and manually correct the current VAT return. Then the VAT return of the BV can be sent with the sales tax number of the sole proprietorship/VOF. After confirmation of the VAT return by the tax authorites, the XML data and PDF document should be downloaded.

Finally, the VAT return is deleted, the sales tax number is changed to the BV's VAT number and the VAT return is generated again.

Actual creation and setup of BV

The following four steps must be completed to actually create and set up the BV.

Step 1: Create new administration for BV in the same domain

In Yuki, the choice is made to create a new administration for the BV in the same domain as the old administration for the sole proprietorship/VOF.

It is important to verify that all data are entered correctly. Then the documents can be transferred to the BV.

For a detailed description see article Create administration profile (company).

In the 'Legal form' section you have to indicate which directors have an CA relationship with the BV and fill in their contact name. 

ATTENTION! 

An important point of attention is that the bookkeeping is converted silent to the BV, in short, this means that the figures of the sole proprietorship/VOF must be transferred to the BV one on one.

Step 2: Import closed years and current year via historical or interim import

You can export an XAF audit file from the current domain and you can import this file into the new administration via historical import. It is also possible to import closed years and the current year at the same time. For this it is important that the start date of the new administration is set to, for example, 01-01-2020 and you can upload an XAF audit file of 2020 and 2021 at the same time. 

During the import of the audit file(s) you have the option in step 4 to link the GL accounts of the old administration to the new one and thus you can link the capital accounts to the personal CA account of the DGA. 

From step 6, 7 and 8, you need to import the outstanding items debtors, creditors and the asset statmeent using a CSV file, respectively. You can find the Yuki import format of these CSV files at the bottom of this article. 

Please note that via a combined import (where closed financiial years and the “current” financial year are imported at the same time), the open items and asset statement are imported as of 01-01-2020 and not as of 01-01-2021 or 01-07-2021, should you import fiscal year 2020 and 2021 at the same time, for example.

For a detailed description see article Import historical data or Import interim data.

Step 3: Processing financial data (documents) in Yuki

To correctly process the financial data in the BV's administration, attention must be paid to the following documents in Yuki:

• Purchase invoices
• Sales invoices
• Sales invoices created in Yuki
• Payroll tax assessment
• Bank
• VAT returns
• Balance sheet
• Asset statement.

Purchase invoices

In the Archive, only the purchase invoices that are currently still under the administration of the sole proprietorship/VOF and actually should have already been in the BV must be retroactively transferred to the new BV.

ATTENTION!

However, this is not without danger, because in some situations a VAT return has already been filed on the basis of this ‘incorrect’ processing. These invoices must still be transferred to the BV, but this must be corrected in the VAt return of the sole proprietorship/VOF by means of a supplement. 

In the navigation bar, click on the Archive icon and then click on the Purchase folder. 

Go through the following steps:

• Select the administration of the sole proprietorship/VOF and the correct year from which all purchase invoices are to be transferred.
• Click on > in front of the purchase invoice you want to transfer and then click on the Edit button.
• In the now opened screen, behind Administration click on the arrow behind administration and then select the administration of the BV.
• Click on the Save changed data button to actually transfer the purchase invoice from the sole proprietorship/VOF to the BV.
  
  
• Repeat this operation until all purchase invoices have been transferred to the BV. 

Sales invoices

In the Archive, only the sales invoices that are currently still under the administration of the sole proprietorship/VOF and actually should have already been in the BV must be retroactively transferred to the new BV.

In the navigation bar, click on the Archive icon and then click on the Sales folder. 

Go through the following steps:

• Select the administration of the sole proprietorship/VOF and the correct year from which all sales invoices are to be transferred.
• Click on > in front of the sales invoice you want to transfer and then click on the Edit button.
• In the now opened screen, behind Administration click on the arrow behind administration and then select the administration of the BV.
• Click on the Save changed data button to actually transfer the sales invoice from the sole proprietorship/VOF to the BV.
  
  
• Repeat this operation until all sales invoices have been transferred to the BV. 

Sales invoices created in Yuki

Sales invoices created in Yuki need to be transferred differently. The Sales folder needs to be exported after which the sales invoices can then be uploaded and processed in Yuki again.

Only a user with the 'Management' role can export all documents from the Archive.

A user with the 'Back office' role in the domain can only export the documents from the financial folders (gray folders).

After the export, the export file is created the same night, i.e. within 24 hours. When this file is ready, the relevant user will receive an email from Yuki with a link. Using this link, the user can log into the domain and download the file.

For a detailed description, see article Export documents from Archive.

Payroll tax assessments

If the company changes its legal form, the entrepreneur must re-register as an employer with the tax authorities. The company will then receive a new payroll tax number. It is important to verify from the supporting documents whether the change of payroll tax was entered correctly.

Bank

If the company changes legal form, the bank transactions can be imported into the new legal form in the following way. However, it is important that the bank account number, credit card number and/or payment provider is created in the new legal form.

ATTENTION!

In the details of the bank account in the sole proprietorship do NOT change the administration. It is important to create a new bank account for the BV instead of "shuffling. A bank account number in Yuki must be unique. To ensure that this is technically possible, it is recommended to add a ‘1’ in the details of the bank account in the sole proprietorship/VOF. After this, the bank account can only be created with correct number (i.e. without ‘1’) in the BV administration.

In the navigation bar, click on the Bank icon. 

Go through the following steps:

• Select the administration of the sole proprietorship/VOF and click on the corresponding bank account.
• Then select the year whose bank transactions are to be transferred.
• Click on the green icon behind a bank transaction.
• In the now opened screen you will see the specification of the bank statement.
  
  TIP!
  It is useful to duplicate this screen so you can check how the bank transactions were linked to the documents.
  
  
• Click the Standard button to convert the bank statement to a standard document.
  This will unlink the documents that were matched to the bank transactions.
• Select the administration of the BV
• Then directly select the document type 'Electronic statement' in the standard document.
• Then click on the Reimport button in the now-opened screen.

The bank transactions have now been imported into the BV and can be matched with the documents again.

TIP!

Importantly, all banking transactions that were booked in the sole proprietorship/VOF on private ledger accounts such as “Private withdrawals,” “Private deposits,” “Private insurance,” etc. in a BV must be booked on CA ledger accounts.

VAT return

The VAT return has already been sent from the sole proprietorship/VOF. You need to upload this VAT return in the BV and archive it. Set the VAT return in the BV on the status ‘Historical’ because the VAT return has already been sent in the sole proprietorship/VOF.

Balance sheet

You book the conversion balance in the BV.

A general journal entry must be made to write off the outstanding debtors as of 31-12-2019 in the sole proprietorship/VOF. You do this by making the entry below as of 01-01-2020 in the sole proprietorship/VOF:

• CA [new legal form]
• To debtors
• To debtors etc.

A general journal entry needs to be made to write off the outstanding creditors as of 31-12-2019 in the sole proprietorship/VOF. This is done by making the below entry as of 01-01-2020 in the sole proprietorship/VOF:

• Creditors
• Creditors etc.
• To CA [new legal form].

The outstanding invoices as of 31-12-2019 in the sole proprietorship/VOF are zeroed with the general journal entry just described. You then book the outstanding debtors and creditors list as of 01-01-2020 in the BV. You then match these with the receipts or payments.

Asset statement

You also need the overview of the asset statement in order to process it correctly in the BV. If the asset statement has not yet been provided by the customer, you request it.

Step 4: Set sole proprietorship/VOF administration to inactive

When all matters such as VAT, VpB, supplements, CPI, year-end closing, etc. for the sole proprietorship/VOF in Yuki are technically completed, the relevant administration can be set to inactive in Yuki. 

Only the domain owner with the ‘Management’ role can cancel the contract of an administration via the ‘Cancel contract’ menu option in the domain. 

After the term of the contract has expired, Yuki automatically changes the status of the cancelled administration to ‘Inactive’. An inactive administration remains visible in the overview of all administrations in the domain. 

In an inactive administration, data can still be viewed, however, it is no longer possible to process data in this administration. 

Invoices yet to be received

In practice, it often happens that an invoice is sent in one year and payment is received in another year.

When converting the sole proprietorship/VOF to the BV, invoices from the previous year are not included in the BV (new legal form). So invoices sent in December 2019 and received in 2020 are not included in the BV, simply because they relate to expenses for the year 2019.

In some cases, it also happens that the invoices were sent in the current year, but they relate to costs from 2019. Examples include accounting and administrative fees. These invoices are also processed as outstanding invoices.

On the GL accounts ‘13001 Suspense account opening balance debtors’ and ‘16001 Suspense account opening balance creditors’, this can be specified later. All transactions can be linked to these, even if they apply to the sole proprietorship/VOF.