Welcome to Behind the Hive: a short series of blog posts giving you a sneak peek into what goes on behind the scenes when running a small business!
In today's episode, we are going to talk about the creation of a company. This was definitely one of the most important steps in our journey, and not an easy one to overcome.
Our story, is that when we initially started thinking about MADU, our founder, who then lived in the UK, created a limited company in the UK. The UK being a country which encourages and promotes entrepreneurship, setting up your company there is extremely easy. At this point, MADU was only an idea, so we thought, 'let's set up a company here and get the project going'. And just like that, in 30 mins and for 30 pounds - there was our company. For the first year, this has been working well for us as we weren't in business yet, we were essentially just incurring costs as we developed our first product.
Coming closer to the point when we were ready to start selling our hair oil, we realized that a company in the UK is not going to work for us in the long term for a couple of reasons. First, we now had clearly defined values and we wanted to put 'Belgium' (where we are from and where our bees are) in the center of the brand. In addition to that, our main market would be Belgium and we were developing our products hand in hand with a Belgian lab. Basically, everything links us back to Belgium, which is what we wanted - except our company itself, which was located in the UK. Oh, and Brexit.
And this is how, in summer 2020, we embarked on our journey to create our SRL in Belgium. One thing became clear very quickly, the creation of a company in Belgium would be A LOT more complex and costly. So in the interest of helping our fellow future entrepreneurs who don't know where to start when creating their business, here are the steps we followed and the government help we received:
Before continuing, we would like to inform our readers that this article is written on the basis of our personal experience and does not constitute a professional opinion/recommendation/advice. We advise you to contact professionals such as an accountant and a notary to get more information about the process of creating a company.
1. Creation of a 5 year business plan
First, you will need to create a business plan together with an accountant. This document should outline the expected sales and costs the company will achieve over the next 5 years. This step was not required in the UK when we set our our limited company there, but we do think this was an important step for us to think about what we want our project to look like and to set our goals and milestones for the years to come.
The Belgian government offers subsidies to help start ups set up their company, these are called 'Chèques Entreprises'. The idea is that only selected accountants etc are licensed to perform these services and that their services are subsidized by the government. For instance, we applied for a help for the creation of our company with a licensed accountant firm which created the financial plan for us and helped us with the official registration of our company with a variety of governmental bodies. The whole service fee would have amounted to 2000€, but with the government subsidy, we ended up only paying 40% (exl. VAT), so about 400€. If you are looking to set up your company, we would highly recommend checking them out, but note that these may vary by region.
2. Incorporation
Once your financial plan has been finalized and you have reached out to a bank to create a business bank account, then you are ready for the most important step: incorporating your company at the Notary. This is a critical and expensive step, where your company is essentially registered in the government's books (Moniteur Belge). In order to create your company, each of the shareholders will need to transfer money into the official bank account, in accordance with their share holding in the company and this will make up for the starting capital of the business (for eg: if the starting capital is 10.000€, and Shareholder 1 owns 65% of the company, they will need to transfer 6.500€ into the company at creation, and Shareholder 2 will need to invest 3.500€).
When it comes to notary fees, these can be quite high and, based on our experience, can be around 1.500€-2.500€. For these costs, we did not receive any governmental benefits.
As you can see, setting up your company in Belgium is not easy and requires a large financial investment. We think this is a shame as this constitutes an additional challenge to entrepreneurship, when we already have a million other things to manage.
Note that you do not need to be an official company in order to 'trade' (sell products or services). If you are alone in your project, you do have the option to register yourself as a 'personne physique', which essentially allows you to do business but the company assets and yours are not separated and you are personally liable for any damage etc. The main reason why we decided to create a company for MADU, was because we are 3 individuals working on the project, and we waned to make sure each of us owned shares in the project. In addition to that, this way, we are not personally liable in case of damage etc.
That's it! We hope you found this helpful and that it gave you a sneak peek into the process to follow to set up your company in Belgium!
MADU is a natural self-care brand based on honey and beeswax from our family's hives. Discover our 100% natural hair oil today and follow us on Facebook and Instagram for more behind the scenes content.