Everything you need to know about starting a business in France
March 21, 2022
1. What are the primary legal statuses out there when starting a company?
Individual enterprises (Entreprise Individuelle)
- The classic individual enterprise (entreprise individuelle ****or EI);
- The limited liability individual enterprise (entreprise individuelle à responsabilité limitée or EIRL);
- The individual enterprise as a micro-enterprise regime, more commonly referred to as micro-entreprise (formerly auto-entreprise). Note that there are revenue thresholds for this status. Micro-enterprises also cannot make itemized deductions on their income tax return.
Sole proprietor company structures: EURL and SASU
- The Limited Liability Sole Proprietor Enterprise (Entreprise Unipersonnelle à Responsabilité Limitée or EURL);
- The Simplified Single Shareholder Company (Société par Actions Simplifiée Unipersonnelle or SASU).
- The SASU allows you greater freedom in how you set up operations
- The EURL, on the other hand, allows the head of the company to make smaller contributions to social charges than would be the case with a SASU.
Multi-partner corporation: SARL and SAS
There are a number of multi-partner entities out there, like the anonymous business (société anonyme or SA), the general partnership (société en nom collectif or SNC), the limited partnership via stocks (société en commandites par action or SCA), or even cooperative companies (les sociétés sous forme de coopérative)...each with their own particularities. For the sake of this article, we’ll focus on the two most commonly found forms most entrepreneurs and small businesses go with, namely the Simplified Shareholder Company (Société par Actions Simplifiée or SAS) and the Limited Liability Company (Société à Responsabilité Limité or SARL).
These company structures suit those who seek to start a company with one or several other associates. Just as with the single-shareholder companies, the business’ associates also benefit from a limited liability, commensurate with the amount of their personally invested capital.
You understood right: there’s no legal status that outshines another. It really just boils down to your business plan and the nature of your project.
- An entrepreneur who wants to work alone and set out as a freelancer with few administrative hoops to jump through may want to keep it simple and file as a micro-enterprise (formerly auto-enterprise);
- A merchant who, while wanting to run their business alone, has many associated costs for their company, would do well to file as a corporation or an EIRL (just as a reminder, micro-entrepreneurs can’t deduct costs from their income tax statement);
- A entrepreneur wanting to bring one or more associates into the fold will most likely have to opt for creating a multi-partner entity, like one of the corporations above.
Still not sure which legal structure fits your project best? You’re right not to take this decision lightly. Best to seek out the advice of a professional who will be best equipped to point you in the right direction for setting up your business.
2. Starting a business: 5 crucial steps to follow when creating a corporation
The process for creating a corporation is a bit more complicated than creating an individual company.
Here are the five key steps to keep in mind:
Step 1: Compose your Articles of Association
Your Articles of Association are very important for the running of your company, as they set out how the company functions, as well as how the associates relate to one another.
It is every bit a formal document, set out as a series of articles. And in order for it to carry legal weight, it has to include some vital legal mentions, such as:
- the full legal names of the associates;
- the legal structure of the company, its purpose, its legal address, as well as its legal name;
- the lifespan of the company (with the understanding that it cannot extend further than 99 years at a time);
- the amount of share capital invested;
- a breakdown of equity shares by associate;
- the legal name of the company director, an outline of their authority within the company, their remuneration and the duration of their position’s term.
You have to work your way through these articles with a keen eye. Try to include every last pertinent detail. That can be easier said than done, because you have to anticipate future needs and dynamics that can involve the company down the line. And as an entrepreneur, you may not have the legal knowhow to catch everything. It may be in your interest to hire a professional (e.g. a lawyer or a CPA) to help you draft the Articles of Association, or at least look it over. And - as a bonus - they can help you with all the rest of your business creation paperwork.
Step 2: Deposit your share capital
- a monetary contribution (a sum of money, for example);
- a non-cash contribution (an asset like a car, for example);
- an industry contribution (like a professional skill or expertise).
- a bank or a payment institution like Qonto;
- a notary;
- the Deposit and Consignment Office (Caisse des dépôts et consignations or CDC).
Step 3: Publish a notice in the Legal Announcements Journal (JAL)
Here we have yet another mandatory requirement: the constitution notice. Once you’ll have finished drafting your Articles of Association and deposited your share capital, you have to publish a constitution notice in the Legal Announcements Journal (Journal d’Annonces Légales or JAL).
This notice serves to notify the greater community of your company’s creation.
Be sure to publish your notice in your company’s department’s journal. You can find a comprehensive list of departmental journals on the official legal announcements website.
Step 4: Establish your company’s legal address
While you’re at it, you should also register your company’s legal address as you submit your constitution notice. Every company needs to have a legal address that corresponds to the headquarters’ location.
In this instance, you have a few choices:
- your professional premises;
- one of your associates’ personal addresses;
- signing up for a tertiary domiciliation service. This option allows you to set up a legal address anywhere in France, with some services even offering additional services that can prove quite useful (i.e. mail digitization and forwarding). This option can be helpful if you don’t actually have an official place of work, or if you don’t want to share your personal information with third parties (as a reminder, your company’s legal address is publicly accessible and can be easily found on the internet).
Step 5: Send your registration file to the appropriate Business Formalities Center (CFE)
- the Cerfa form for your applicable legal status (such as the cerfa 11680*09 for EURL and SARL and the cerfa 13959*08 for SASU and SAS);
- a copy of the company director’s ID;
- proof of the company’s legal address;
- a sworn statement asserting the director has no criminal convictions;
- proof of your notice’s publication in the JAL and a copy of the certificate of deposit of the company’s share capital.
For free. No obligations.