Many entrepreneurs wonder what the difference is between a sole trader, a ZZP and a freelancer. Often these terms are used interchangeably, yet they are not the same. In this article, we will explain the differences to you. We will also show you what they have in common and give tips on when it is better for you as an entrepreneur to switch to a BV.
Definitions
Independent contractor
ZZP stands for Zelfstandige Zonder Personeel. It is a term we mainly use in the Netherlands for entrepreneurs who work without personnel. A ZZP'er does work for different clients, but therefore does not employ any staff. The nice thing is: the term says nothing about the legal form of the business. It is purely about how the entrepreneur does his work.
Sole proprietorship
A sole proprietorship is a legal legal form. This means that the company and the owner are actually one and the same in the eyes of the law. The disadvantage of this? The entrepreneur is personally liable for the debts and liabilities of the business. Many self-employed people choose a sole proprietorship because it is easy to set up and offers tax advantages.
Freelancer
Freelancer is not a legal term, but more a way of describing a self-employed professional. You often come across freelancers in the creative or knowledge-intensive sector. Think of copywriters, graphic designers and IT specialists. In practice, a freelancer is often simply a self-employed person who has a sole proprietorship as a legal form.
Difference between sole proprietorship and ZZP
Although the terms are often used interchangeably, there is an important difference: sole proprietorship is a legal form and ZZP is a way of working. So you can be a ZZP with a sole proprietorship, but you can also choose another legal form as a ZZP. Think of a BV or a VOF (general partnership).
Difference between ZZP and freelancer
The difference between a ZZP'er and a freelancer lies mainly in the type of work. This is because a ZZP'er can work in all sectors, while a freelancer can often be found in creative or specialist fields. Freelancers usually work on a project basis, while ZZP'ers can also have longer assignments or contracts.
Overview of similarities and differences
| Feature | Independent contractor | Sole proprietorship | Freelancer |
| Legal legal form? | No | Yes | No |
| Staff employed? | No | Yes | No |
| Type of work | All sectors | All sectors | Creative and specialist occupations |
| Works on a project basis? | Sometimes | Sometimes | Yes |
| Could also be a BV? | Yes | No | Yes |
When do you make the switch to a BV?
When your business grows and you start earning more, it may be smart to switch from a sole proprietorship to a limited company. Here are the main reasons to make that switch:
- Limited liability: With a sole proprietorship, you are personally liable, but with a limited company, on the contrary, you can separate private and business assets.
- Tax benefits at higher profit: If your profit is around €100,000, a limited company (BV) may be more tax advantageous for you.
- Professionalism and growth: A limited company often looks more professional to larger clients and investors.
Conclusion
The difference between sole proprietorship, ZZP and freelance is mainly in the legal structure and how you work. A sole proprietorship is a legal form, while ZZP and freelance are more about the way you work. Are you curious about which form best suits your business? Get advice from an accountant to make the best choice for your situation.
Do you still need to register with the Chamber of Commerce? Read here more about it!
