Starting a business while receiving unemployment benefits

You lost your job and are currently receiving unemployment benefits. You have the ambition to start your own business, but you also want your income to be secure and predictable. Did you know that you may be able to make use of the UWV scheme for starters, or the reduced benefits scheme? Read all you need to know about starting a business while receiving unemployment benefits.

In 2021, 140,000 people in the Netherlands received unemployment benefits (Werkloosheidswet, WW). Around 25% of these started a business while receiving benefits. Learn how to start a business in this situation and what you need to look out for. UWV adviser Bas Koorndijk helps people do this every day, offering tips below to help you make a successful start.

Conditions for starting a business with unemployment benefits

If you want to start a business while retaining (part of) your WW benefit, you need permission from the UWV. Your UWV employment adviser needs to know if you are capable of running a business. Start with the compulsory online training course Zelfstandig ondernemen met een WW-uitkering (‘Self-employed with WW benefit’, in Dutch). This looks at all the required conditions. You can then discuss your plans with your employment adviser and apply for a research period. During this discussion, you will work on making the necessary business plan, among other things.

Tip! Take the Netherlands Chamber of Commerce ‘KVK Krachtmeting’ (in Dutch) to find out if you have the skills you need to become a successful entrepreneur.

Research period

During the research period, you create your business plan and research the feasibility of your idea (is there a demand for your product/services?). You do not have to apply for jobs during this period, as you will need all your time to focus on your research and plans. You gather information, find out which types of insurance you need, and chart your finances. The research period can run for a maximum of 6 weeks.

The business plan

Prepare well to do well. Write a business plan to gain insight into your business skills, goals, market position, and the feasibility of your idea. Your business plan is the translation of your ideas into concrete plans. UWV also requires that you present a plan. They recommend you use this template, which you can download from the website of the microfinancing organisation Qredits. Several banks also offer template business plans.

Choosing the right sector

UWV adviser Koorndijk confirms that your chances of success are much better if you start in a sector you know well. Popular sectors among entrepreneurs starting from a WW benefit are professional services, construction and timber, and financial services. In this respect, they do not differ much from the average starting entrepreneur. Find a sector that offers opportunities. Always conduct a thorough industry analysis, and find out if the market for your product or services is thriving. Get the answers to the following questions:

• What are the new trends and developments?
• Which rules and regulations apply to your sector?
• How high is the average turnover?
• Is it common in your sector to have a strong online presence?

Rules for the research period

What is allowed and what is not allowed during a research period? You are not yet allowed to acquire customers or advertise. Your website should not be online yet either. In short, business activities are not allowed. If you do, you can no longer make use of the UWV starters scheme.

Starting a business with WW: 3 ways

You can set up a business while on WW benefits in 3 ways:

1. Starting with the UWV start-up period
2. Starting with reduced benefits (urenkorting)
3. Starting without WW

With either of the first two options, you retain some unemployment benefits.

Starting with the UWV start-up period

After a research period of 6 weeks, you can use the start-up period. You focus on your business and keep part of your benefit. The start-up period lasts 26 weeks. You focus completely on your company while receiving 71% of your WW benefit. It does not matter how many hours you work, or how much you earn during this period. WW benefit is always 70% of your last earned salary (or 75% for the first 2 months). If you make use of the start-up period, this is reduced by 29%. This leaves you with roughly 49%. You are exempt from the duty to apply for jobs during this period.

Koorndijk: “The start-up period is also often called the start-up scheme, or startersregeling in Dutch. That can be confusing. The official term is the start-up period (startperiode). To make use of this arrangement, you always need approval from your UWV work adviser. The aim of the start-up period is that the client is fully self-sufficient after 6 months, and no longer receives unemployment benefit from UWV.”

The conditions for using the start-up period are:

• Your business plan shows that you will earn enough to live on.
• You do not work for the employer who released you. If you do, you will not receive further benefits until the end of the start-up period. You may also be fined.
• Do you continue as self-employed after the start-up period? From that moment, you must report how many hours you spend on your business.

Starting with reduced benefits ('urenkorting')

To make use of this scheme, you have to report the hours you spend on setting up your business to UWV. They will reduce your WW by the number of hours you have reported. All hours count, those spent directly on setting up your business and those spent indirectly (such as administration). You do still need to apply for work.

Starting without WW

If you are ready to stand on your own 2 feet, you can start working as an independent entrepreneur. You will not receive any WW benefits. Before taking this step, discuss it with your UWV work adviser first.

Start-up period or reduced benefits?

Which option is best for your situation? Koorndijk explains when to use the start-up period or reduced benefits.

Working full-time: the start-up period

“Will you be working as an entrepreneur full-time? The start-up period will most likely be the right choice for you. You get to spend as many hours as you want on your business, plus you do not have to apply for work. You get to keep what you earn from your business. And you remain insured against disability.”

Working part-time: reduced benefits

Will you be a part-time entrepreneur? Or were you already running a part-time business next to your job, and do you want to increase the number of hours spent on your business? In that case, the reduced benefits scheme is probably the better option. Be aware though that all hours count, including those spent on acquisition and travel. Always report your hours to UWV immediately. If you do not, you risk a reduction of your benefit or even a fine.”

Part-time business

4 out of 10 entrepreneurs starting on WW eventually combine their business with a job in paid employment. The big advantage of being a part-time entrepreneur is that, as a rule, you have less financial risk. After all, you do have a steady source of income. There can be several reasons to start part-time. Running a part-time business also has fiscal consequences, for instance for your income tax return, and any allowances you might be eligible for.

70% of entrepreneurs successful after the start-up period

The UWV start-up period lasts for a maximum of 6 months. After that, you decide to continue or end your business. If you continue, you must report the hours spent on your business to UWV. These hours will be offset against the WW benefit you receive. Koorndijk: “Over 70% are still active as entrepreneurs after the period. Many of them are still successful after 3 years. They do not need to fall back on their remaining claim on unemployment benefits.”

Is your business not successful during or after the start-up period, and are you ending your business? If you are once again available for employment, you might be eligible for continued WW. This is only possible after the 26-week start-up period has passed. 

Register with KVK

Every entrepreneur or self-employed professional without staff has to register with KVK. If you use the start-up scheme, you need UWV’s approval first. So always ask your UWV work adviser if you are allowed to register your business with KVK.