Legal forms
Whether you’re starting a company, organizing a festival, or launching a freelance business, at some point you’ll need to decide which legal structure to use. A legal structure determines how your organization is officially registered, who is responsible for financial matters, and who makes the decisions. We’ve listed the most common legal structures in the cultural sector, explaining what they mean in practice.
What is a legal form?
A legal structure is the legal framework of your organization or business. It determines who is liable for debts, how decisions are made, and what taxes you must pay. Some structures can be easily set up on your own (such as a sole proprietorship), while others require a notary (such as a foundation or a private limited company). The right legal structure not only helps you with practical matters such as taxes and liability, but also says something about your professional standing in the field. Especially when you apply for funding, collaborate with partners, or want to hire staff, choosing the right legal structure is a crucial decision for the future of your practice.
The main legal forms
- Sole proprietorship
The easiest way to get started. You are personally liable for any debts, but you do benefit from tax advantages, such as the self-employment deduction. Many artists, designers, and self-employed individuals start out this way.
Who is it for? Ideal if you work independently, face little risk, and want to get started quickly.
- General Partnership (v.o.f.)
You use this structure when you work with other people. You share profits, responsibilities, and risks. The terms of the arrangement are set out in a partnership agreement.
Who is it for? It’s ideal for duos or small groups that collaborate on a regular basis, such as creative agencies or co-production teams.
- Foundation
By far the most common legal structure in the cultural sector. A foundation has a board of directors, is a nonprofit organization, and, in principle, its members are not personally liable (unless there is gross negligence).Who is it for? Suitable for organizations that apply for grants, pursue social goals, or produce projects using public funds.
- Private limited company (LLC)
A private limited company (BV) is a business with one or more owners (shareholders). The company itself is liable for its debts. It is incorporated through a notary and entails certain obligations, such as the preparation of annual financial statements.
Who is this for? This is of interest to creators or producers who want to hedge against risks, reinvest profits, or work with investors.
- Association
An association is ideal if you work with members or pursue a common goal together, such as an artists’ collective or an advocacy group. With a notarized incorporation (full legal capacity), the board is not personally liable.
Who is it for? It’s a good fit for initiatives that arise from collaboration and where members have a say in decision-making.
How do you choose the right shape?
When choosing a legal structure, you should consider three key questions:
Do you work alone or with others?If you work independently, a sole proprietorship or a private limited company is the obvious choice. If you work with others, consider a general partnership, a foundation, or an association.
How much risk are you willing to take?With a sole proprietorship or general partnership, you are personally liable for debts. A foundation, association, or limited liability company has legal personality: the organization is liable, not you personally (except in cases of mismanagement).
What are your financial goals?If you have a social or artistic goal that is not for-profit, a foundation is the right choice. If you want to be able to make a profit or invest with partners, a limited liability company (LLC) makes more sense.
💡 Tip: Don’t just look at your current situation—think about the future, too. Are you starting out as a self-employed professional, but do you plan to manage projects or hire staff down the line? If so, a foundation or a limited liability company (LLC) might be a better fit for your growth.
Other legal forms
Other legal structures, such as a general partnership, a limited partnership (LP), or a cooperative, are less common in the cultural sector. They can be useful for collaborations with independent professionals or joint investments. You can find more information on this at the Chamber of Commerce.