Starting a business from social assistance: how the Bbz works

What the Bbz offers you

For starters the Bbz has two parts. The first is the preparation period: you keep your benefit for up to twelve months and the job-search duty lapses, so you can use that time entirely to write your business plan, explore your market and find your first clients. The second part begins once you actually start: your municipality can top up your income to assistance level while your business earns too little, and business capital can be provided for your initial investment.

The scheme is administered by your own municipality, sometimes through a regional desk. That means the process varies per municipality in lead time and guidance, but the core of the Bbz is arranged nationally. If you are already an entrepreneur in temporary difficulty, the Bbz has a separate route for that; this article covers the starter variant.

Applying: talk first, register second

The order matters and often goes wrong. Raise your plan with your case manager before you register with the Chamber of Commerce and before making investments. Start first and apply afterwards, and the preparation period can no longer be granted; you may also run into trouble with your current benefit, since income from work is offset as normal.

1. Discuss your plan with your case manager and ask about the Bbz starter scheme in your municipality.
2. Submit a business plan with operating, investment and private budgets.
3. Expect a viability assessment by an external adviser, including an interview.
4. If you get the preparation period, genuinely use it: acquisition, trial assignments and setting up your records.
5. Register with the Chamber only once your municipality agrees, unless they advise otherwise.

What it does to your tax and benefits

Two income streams alongside each other make your return a little more complex. Support finalised as assistance is box 1 income with payroll tax withheld; your business profit comes on top. That means paying close attention to your tax reserve in the first year, because tax credits are already partly applied to the benefit, so your profit is taxed at the full rate sooner.

Also watch your benefits: they are calculated on your total assessment income, so benefit plus profit combined. Estimate that too low and a clawback follows. And keep an eye on the hours criterion: in your starting year you often miss the 1,225 hours, so the self-employed deduction does not yet apply. That is no disaster, but it does affect your budget.

Records: keep things separate from day one

With the Bbz two parties look over your shoulder: your municipality and the tax authorities. Your municipality finalises your benefit afterwards on the basis of your annual figures, so your records matter financially as well as fiscally. So open a separate account straight away, keep private and business separate and store receipts digitally. A monthly routine takes half an hour and prevents having to reconstruct everything in March.

Also think ahead about the small business scheme. Staying under € 20,000 revenue and working mainly for private customers, the scheme saves you VAT returns and admin. Working for businesses and making large investments, it costs you money because you cannot reclaim VAT on your start-up spending. That is a choice you make at the outset, so run the numbers in your plan.

Frequently asked questions