The first step in setting up a business is to choose the legal status. This is a crucial step, because it's the status you choose that determines how the company will operate in the future.
To select the right legal framework for your business, it's therefore essential to ask yourself the right questions. 💡
Going it alone: how do you choose between sole proprietorship and company? 🧑💻
If you're a sole trader, you have 2 options: a sole propri etorship (micro enterprise, EI, EIRL) or a sole proprietorship (EURL, SASU).
Sole proprietorship 👤
The most easily accessible legal form is the micro-business. This is a simplified form of sole proprietorship. This status is ideal for starting up on your own, without an employee, to test the potential of a project while keeping a job on the side.
EI (Entreprise Individuelle ) and EIRL (Entreprise Individuelle à Responsabilité Limitée) are legal forms suitable for businesses that are not expected to bring in shareholders or partners. These 2 legal forms are designed to enable you to remain the sole owner 🧑✈️, while still being able to hire employees.
With the exception of the EIRL, whichever form of sole proprietorship you choose, it's important to understand that you incur liability as a manager. There is no distinction between your personal assets and your business assets.
The individual company 🏢
Individual companies such as theEURL (Entreprise Unipersonnelle à Responsabilité Limitée)** or the SASU (Société par Actions Simplifiées Unipersonnelle) are designed to evolve.
They allow new shareholders and associates to be brought in, and then evolve into SARL (Société À Responsabilité Limitée), SA (Société Anonyme) or SAS (Société par Actions Simplifiées) status.
Although a company is a little more complex to set up than a sole proprietorship, it offers greater security for the manager. Indeed, the company is an entity in its own right, which protects the manager's personal assets. 🔒
Doing business with partners: which form of company to choose? 👥
If you're setting up a business with associates, you need to opt for a company: SARL, SA or SAS. Your choice will depend in particular on the amount of your initial investment 💸, and the number of associates destined to join the company. 👫
| Legal status | Minimum share capital | Number of associates |
|---|---|---|
| SARL | 1 symbolic | 2 à 100 |
| SAS | 1 symbolic | 2 to unlimited |
| SA | 37,000 without public savings or €225,000 with public savings | 7 to unlimited |
The SARL (limited liability company) is the most common business form in France 🇫🇷 because it offers a number of advantages: it can be adapted to all types of projects with 2 or more partners, and requires little initial investment, making it easily accessible.
The SA and SAS are more suitable for large-scale projects, requiring a high initial investment and/or involving a large number of shareholders. 🚀
Which social security regime for the manager(s)? 🏥
Before you set out to create a company, you may have a specific idea of the social security system you wish to be covered by as a manager. This parameter also plays a decisive role in your choice of legal status.
The social security system for the manager of a sole proprietorship
If you are the sole director of your company, you can choose your social security scheme according to your legal status.
- EI or EIRL: Non-salaried worker (TNS)
- EURL : Non-salaried worker (TNS)
- SASU: assimilated employee (status of company Chairman)
Social security for company directors
In a multi-partner company, the regime for each partner depends on his or her status within the company.
- SARL: the majority manager is considered a TNS (Travailleur Non Salarié - non-salaried worker), while an equal or minority manager is considered a salaried employee.
- SA: the Chairman of the Board of Directors is treated as an employee.
- SAS: the Chairman of the company is treated as an employee.
What is the difference between TNS and assimilated employees? 🤕
While managers who are assimilated to salaried employees contribute to the general scheme and enjoy the same benefits as salaried employees (paid leave, sick leave, unemployment insurance, etc.), self-employed workers are subject to contributions and are covered by the self-employed workers' scheme.
What kind of income tax? 💰
The income tax regime is also a key point when it comes to choosing a legal status. Depending on your situation, opting for income tax or corporation tax will have a completely different impact. 💥
| Legal status | Option to choose income tax (IR) | Option to choose corporate income tax (IS) |
|---|---|---|
| Sole proprietorship - Micro enterprise | yes | no |
| EIRL | yes | yes, under certain conditions and irrevocable choice |
| EURL | yes | yes, optional and subject to certain conditions |
| SARL - SA - SAS - SASU | yes, optional and subject to certain conditions | yes |
Tax brackets: IR and IS 🧮
Info updated in June 2021
If you choose to have your company taxed on a personal income tax basis, its profits will be subject to a 6-bracket progressive tax system.
- Up to €10,084: 0%.
- from €10,084 to €25,710: 11%.
- from €25,710 to €73,516: 30%.
- from €73,516 to €158,122: 41%.
- more than €158,122: 45
If you opt for corporation tax, the company's profits will be subject to a 3-bracket progressive tax.
- 15% on profits of less than €38,120, provided the company qualifies for the reduced rate.
- 26. 5% on profits between €38,120 and €500,000 (from January 2021)
- 31% above that.
💡 If your legal status allows you to choose your form of taxation, it's worth opting for corporation tax, especially if you expect to make substantial profits.
Knowing which status to choose for your business is no small matter. To get a clearer picture, calling on legal assistance is a wise choice 🎯. This will provide you with essential information, and enable you to launch the creation of your business by making appropriate choices.
Anytime can help! Our partners will help you choose your legal status, draw up your articles of association, and take care of all the declarations and certifications you need to obtain your Kbis and set up your business quickly 💥
