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Hiring Staff as a Sole Proprietor: Is It Allowed, and What Changes?
Can a sole proprietor hire employees in the Netherlands? Learn what changes when you hire your first employee, what it really costs, and the employer obligations you need to know.
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14 mins
Intro
Many founders assume that the Dutch word eenmanszaak literally means you must run your business alone. It doesn't. An eenmanszaak refers to a business with one legal owner, not a business with only one person working in it. Dutch law places no limit on the number of employees a sole proprietor can hire, which means your business can grow without immediately changing its legal structure.
What does change, however, is almost everything that comes with becoming an employer. Hiring your first employee introduces payroll obligations, employer taxes, insurance requirements, and significant legal responsibilities. On top of that, the stricter enforcement around false self-employment (schijnzelfstandigheid) in 2026 makes it more important than ever to choose the right staffing structure from the start. Understanding both the financial impact and the legal obligations can help you avoid expensive surprises later.
Yes, You Can, But Eenmanszaak Means One Owner, Not One Person
The name eenmanszaak causes confusion for many entrepreneurs, especially international founders. Literally translated, it means "one-person business," leading many people to believe they cannot hire employees unless they convert to a BV.
That assumption is incorrect.
An eenmanszaak simply means that one natural person owns the business and is personally responsible for its obligations. It says nothing about how many people can work for the company. Under Dutch law, there is no maximum number of employees that a sole proprietorship may employ. Across the Netherlands, many successful sole proprietors employ teams ranging from one or two staff members to dozens of employees in sectors such as retail, hospitality, healthcare, construction, and cleaning.
The moment you hire your first employee, however, you become an employer in the full legal sense. Your rights and obligations are the same as those of any other Dutch employer, regardless of whether your business is an eenmanszaak, partnership, or BV.
Some things remain exactly the same:
Your legal structure remains an eenmanszaak.
Your KvK registration remains unchanged.
You continue to pay income tax as an IB entrepreneur.
What changes immediately includes:
Payroll administration
Employer tax obligations
Employment law responsibilities
Sick pay obligations
Insurance requirements
Increased financial and legal risk
For many founders, hiring staff is also the first moment they start reconsidering their legal structure. While an eenmanszaak can employ people perfectly well, growing businesses often reach a point where limited liability becomes increasingly attractive. If you're evaluating whether your current structure still fits your business, it's worth understanding the differences between a BV or sole trader before making your next hiring decision.
What It Actually Costs: The Real Number
The first question almost every entrepreneur asks is simple:
"Can I actually afford my first employee?"
Many founders base their calculations solely on the agreed gross salary (brutoloon). Unfortunately, that number tells only part of the story.
As an employer in the Netherlands, you are responsible for several mandatory employer contributions on top of the employee's gross salary. Together, these significantly increase the real monthly employment cost.
Below is an example for an employee on a permanent contract earning €3,000 gross per month in 2026.
Cost component | Rate | Monthly amount |
Gross salary | — | €3,000 |
Zvw employer contribution | 6.10% | €183 |
AWf WW premium (permanent contract) | 2.74% | €82 |
Aof premium (small employer) | 6.27% | €188 |
Whk premium (average) | Approx. 1.52% | €46 |
Childcare contribution (Wko) | 0.50% | €15 |
Holiday pay accrual (minimum 8%) | 8% | €240 |
Total monthly employer cost | Approximately €3,754 |
This calculation already surprises many entrepreneurs because the actual employer cost is roughly 25% higher than the advertised salary.
However, even this is not the full picture.
The table does not include additional costs such as:
Pension contributions (if applicable)
Sick pay insurance (verzuimverzekering)
Laptop and equipment
Training and onboarding
Office space
Travel reimbursements
Employee benefits under the Work-Related Costs Scheme (WKR)
For many businesses, a realistic monthly budget for an employee earning €3,000 gross is therefore closer to €4,000 to €4,500 per month.
These higher employment costs naturally reduce your taxable business profit. While that means you may pay less income tax, it is important to remember that lower taxes never fully offset higher employment expenses. Entrepreneurs planning their first hire should therefore understand not only the salary cost, but also how much tax you pay as your business grows.
A useful way to think about hiring is this:
Hiring your first employee is rarely an expense on its own. It is an investment that should generate more revenue than it costs. Before signing an employment contract, calculate whether the additional capacity will realistically produce enough income to cover the full employer cost, not just the gross salary.
What You Must Register and When
Hiring your first employee is not simply a matter of signing an employment contract. Before your employee starts their first working day, several legal and administrative steps must already be completed.
One of the biggest mistakes new employers make is assuming they can register everything afterwards. They cannot. The Belastingdienst expects you to register as an employer before your employee starts working, not after the contract has been signed. Missing this timing can create unnecessary administrative problems and, in some cases, penalties.
The following sequence helps ensure you're fully compliant before day one.
Register as an employer with the Belastingdienst. Submit the Melding Loonheffingen Aanmelding Werkgever before your employee's first working day. You will receive a loonheffingennummer, which you need to submit payroll taxes.
Update your KvK registration. Notify the KvK that your sole proprietorship now employs staff. This can be done using the relevant change form. If you're still setting up your business, it's helpful to understand the process of getting your KvK number first.
Verify the employee's identity. Before the first working day, you must check and copy a valid identity document. This is a legal obligation under the Dutch Wage Tax Act.
Set up your payroll administration. Every Dutch employer must maintain payroll records, including payslips (loonstroken), payroll ledgers (loonstaat), annual income statements (jaaropgaven), and payroll tax filings. Many entrepreneurs choose payroll software or outsource this to an accountant or bookkeeper.
Arrange occupational health support (arbodienst). Every Dutch employer must have access to occupational health services from the employee's first day of employment.
Check whether a collective labour agreement (CAO) applies. If your industry falls under a mandatory CAO, its terms override any conflicting clauses in your employment contract. This affects salaries, holiday entitlement, pension arrangements, and many other employment conditions.
Once these registrations are complete, you officially become an employer under Dutch law, with all accompanying responsibilities.
The Sick Pay Risk Nobody Budgets For
Most entrepreneurs carefully calculate salary costs before hiring.
Far fewer calculate what happens if their employee becomes ill.
Under Dutch employment law, employers have a legal obligation known as loondoorbetalingsplicht. This means you must continue paying an employee's salary during illness for up to two years.
The minimum legal requirement is 70% of salary, although many collective labour agreements require employers to continue paying 100% during the first year.
Importantly, salary is not your only cost during this period.
You continue paying:
Employer social security contributions
Payroll administration costs
Pension contributions (where applicable)
Occupational health costs
Reintegration obligations
A Realistic Example
Suppose you employ someone earning:
€3,000 gross per month
If that employee is unable to work for an entire year, your financial obligation can quickly reach:
Approximately €45,000
while receiving little or no productive work in return.
For a sole proprietor, that can have a significant impact on cash flow.
This is why many experienced entrepreneurs consider verzuimverzekering (sick pay insurance) essential before hiring their first employee.
Although premiums vary by sector and risk profile, they typically range between 2% and 5% of annual salary, a relatively modest cost compared to the potential financial exposure.
A practical rule followed by many advisers is simple:
Do not sign your first employment contract until your sick pay insurance is in place.
Employee or ZZP? Understanding the 2026 Risk
Some founders look at the costs and obligations of employing staff and decide to hire a self-employed contractor (ZZP) instead.
In certain situations, this is perfectly legitimate.
However, using a ZZP contractor purely to avoid employer obligations has become considerably riskier.
Since the Belastingdienst resumed stricter enforcement of false self-employment rules, businesses must be much more careful when deciding whether someone genuinely operates as an independent contractor.
The distinction is based on the actual working relationship rather than the contract itself.
Factor | Indicates employment | Indicates genuine ZZP |
Working hours | You determine the schedule | Contractor decides |
Equipment | You provide equipment | Contractor uses their own |
Substitution | Work must be performed personally | Contractor may send a substitute |
Client base | Works only for your business | Has multiple clients |
Integration | Performs core business activities | Provides specialist external services |
No single factor determines the outcome, but the overall picture matters.
A further development expected in 2026 is the proposed legal presumption of employment (rechtsvermoeden van dienstbetrekking) for workers earning below €38 per hour.
If introduced, this would shift much of the burden of proof onto the hiring business. In practice, companies engaging low-paid contractors would need to demonstrate that the working relationship is genuinely independent rather than disguised employment.
If the Belastingdienst later reclassifies the relationship as employment, the consequences can include:
Retroactive payroll tax assessments
Employer social security contributions
Interest charges
Potential penalties
For founders who are still starting a company in the Netherlands, this makes it even more important to choose the right staffing model from the beginning.
Hiring a genuine ZZP contractor remains perfectly possible, but only when the relationship truly reflects independent entrepreneurship rather than regular employment disguised as freelance work.
How Hiring Employees Changes Your Own Tax Position
One question many sole proprietors ask before hiring their first employee is whether becoming an employer changes how they are taxed.
The short answer is:
No.
Hiring employees does not change your legal structure or the way your own business profits are taxed.
As the owner of a sole proprietorship (eenmanszaak), you continue to:
Pay income tax (Box 1) on your business profits.
File VAT returns where applicable.
Remain personally liable for the debts of the business.
Qualify for entrepreneur tax benefits if you continue to meet the conditions.
Your employees are taxed separately through payroll. You withhold payroll taxes and social security contributions from their salary and remit these to the Belastingdienst, but these taxes are not part of your own personal income tax return.
What does change is your business profit.
Because salaries, employer contributions, payroll administration, pension costs, and other employment-related expenses are deductible business costs, your taxable profit usually decreases after hiring staff.
This means:
Higher operating expenses
Lower taxable profit
Potentially lower income tax
However, lower taxes should never be the reason to hire someone. The primary goal should always be generating more revenue than the additional employment costs.
The First Employee Checklist
Hiring your first employee involves much more than signing an employment contract.
Use the checklist below to make sure you've covered the essential steps before your employee starts work.
Before the First Working Day
✔ Register as an employer with the Belastingdienst.
✔ Receive your payroll tax number (loonheffingennummer).
✔ Update your KvK registration if required.
✔ Verify and copy your employee's identity document.
✔ Draft and sign an employment contract.
✔ Check whether a mandatory collective labour agreement (CAO) applies.
✔ Arrange an occupational health service (arbodienst).
✔ Set up payroll administration.
✔ Arrange sick pay insurance (verzuimverzekering).
✔ Register for a pension scheme if your industry requires one.
During Employment
✔ Process payroll every month.
✔ Submit payroll tax returns on time.
✔ Provide monthly payslips.
✔ Keep payroll records up to date.
✔ Pay holiday allowance.
✔ Monitor sickness absence and comply with reintegration obligations.
Having these processes in place from day one significantly reduces administrative risks and helps avoid costly compliance issues later.
Should You Stay a Sole Proprietor or Convert to a BV?
Many entrepreneurs assume that hiring employees automatically means it's time to incorporate a BV.
In reality, there is no legal requirement to do so.
An eenmanszaak can employ one person or fifty people.
The decision to switch to a BV depends on factors such as profitability, liability, tax planning, and future growth not simply on headcount.
Generally speaking, remaining a sole proprietor may still be appropriate when:
Your profits remain relatively modest.
You want to continue benefiting from entrepreneur tax deductions.
Personal liability is manageable within your business activities.
Administrative simplicity is a priority.
A BV may become more attractive when:
Annual profits continue to grow significantly.
Liability risks increase.
You plan to retain profits within the company.
Investors or shareholders become involved.
You want greater flexibility in salary and dividend planning.
There is no universal profit threshold at which every entrepreneur should incorporate.
Instead, the decision should consider:
Tax implications
Legal risks
Future hiring plans
Cash flow
Long-term business strategy
If you're considering whether it's time to change legal structures, comparing a BV and sole proprietorship can help clarify which option best suits your situation.
Hiring Staff Doesn't Mean Leaving Your Sole Proprietorship Behind
One of the biggest misconceptions among entrepreneurs is that an eenmanszaak can only have one worker.
In reality, the legal structure places no limit on the number of employees you can hire.
What does change is your responsibility.
The moment you become an employer, you're responsible for payroll administration, employment law, tax compliance, sickness obligations, and a range of ongoing administrative duties.
For many growing businesses, these responsibilities become increasingly time-consuming as the team expands.
At Neno, we help entrepreneurs manage everything that comes with growth from bookkeeping and payroll to tax compliance and proactive financial advice.
Whether you're hiring your first employee or building a larger team, we'll help ensure your financial administration grows with your business.
Book a demo and discover how modern, AI-native financial services make hiring and managing employees simpler.
Frequently Asked Questions
Can a sole proprietor hire employees?
Yes. A Dutch sole proprietorship (eenmanszaak) can hire employees. The name refers to having one owner, not one worker.
Is there a limit to how many employees a sole proprietor can have?
No. Dutch law does not set a maximum number of employees for an eenmanszaak.
Do I need to change my legal structure before hiring someone?
No. You can employ staff without converting to a BV.
What is the biggest additional cost besides salary?
Employer social security contributions, holiday allowance, pension contributions (where applicable), payroll administration, and potential sick pay obligations significantly increase the total employment cost.
Do I have to continue paying an employee who becomes ill?
Yes. Dutch employers are generally required to continue paying at least 70% of salary during illness for up to two years, although many CAOs require higher payments.
Should I arrange sick pay insurance?
For many sole proprietors, yes. A verzuimverzekering can protect your business against the financial impact of long-term employee sickness.
Can I hire a freelancer instead of an employee?
Yes, provided the working relationship is genuinely independent. If the arrangement resembles regular employment, the Belastingdienst may reclassify it as employment.
Does hiring employees change how I pay tax?
No. As the owner of a sole proprietorship, you continue paying income tax on your business profits. Your employees are taxed separately through payroll.
When should I consider converting to a BV?
Hiring staff alone is not a reason to incorporate. The decision usually depends on profitability, liability, growth plans, and long-term tax planning.
Can Neno handle payroll as my business grows?
Yes. Neno combines AI-powered bookkeeping, payroll, tax, and proactive financial advice, helping entrepreneurs manage growing teams without the administrative burden.
Written by
Nick Knuppe
CEO & Founder
