You're about to embark on a self-employed activity, but you're not sure how to select the status best suited to your project. To help you choose and make the right decision, we've drawn up a comparison between an EIRL, an EURL and an SASU.
EIRL (limited liability sole proprietorship)
The EIRL is not a company and therefore has no legal personality of its own. An individual entrepreneur is a natural person who carries out one or more activities in his or her own name, as does a micro-entrepreneur.
Under French law no. 2022-172 of February 14, 2022, it is no longer possible to opt for the status of individual entrepreneur with limited liability (EIRL). Only EIRLs that have already been set up can continue to operate under the same conditions.
The EIRL has been replaced by a single status for sole traders, enabling them to protect their personal assets. As a result, in the event of business failure, only the assets related to the business can be seized.
Setting up a sole proprietorship does not require any capital, and accounting obligations are simplified, since the entrepreneur is simply required to keep a journal, a general ledger and an inventory book.
The EI tax system
Sole traders and craftsmen are taxed on their income as BIC (bénéfices industriels et commerciaux). The liberal professions are taxed as BNC (bénéfices non commerciaux).
There are three different tax regimes, depending on the amount of sales you generate, and on your choice of option: micro-enterprise, simplified real income tax and normal real income tax. If your sales qualify you for the micro-business system, you can opt for payment in full discharge of income tax, provided that your reference tax income (RFR) for year N - 2 does not exceed a certain threshold for one share of family quotient.
The "régime réel simplifié" and the "régime réel normal" apply to the profits you have made during the financial year, and to VAT (value-added tax). The main difference between these two systems lies in the detail required by the tax authorities when filing your balance sheets and VAT returns.
The EI social security system
Social protection for entrepreneurs is now governed by the general social security system. Your social security contributions are calculated on the basis of your profits, unless you have opted for the micro-enterprise scheme, in which case they are assessed on your sales.
EURL (limited liability company)
The EURL is in fact a SARL (limited liability company), but with a single partner, who may be a natural or legal person. While the EURL allows you to create a company without the need for a partner, it also offers the possibility of transforming into a SARL, should the need arise. Unlike a sole proprietorship, the creation of an EURL entails certain expenses, and is subject to strict legal obligations (drafting of articles of association, deposit of share capital, publication in a legal gazette, registration with the RCS, etc.).
The tax system for an EURL with a sole shareholder who is an individual
Company profits are subject to income tax in the BIC category for commercial or craft activities, and in the BNC category for the liberal professions.
However, the sole proprietor may opt for the micro-enterprise tax regime, if sales remain below the authorized ceiling. They may also opt to be subject to corporate income tax, on the understanding that this option is irrevocable.
In the case of an EURL whose sole shareholder is a legal entity, the EURL is subject to corporate income tax.
The social security system of an EURL
If the sole shareholder is in charge of management (gérant associé), he or she is registered with the Sécurité sociale des indépendants (RSI), which has been integrated into the general Social Security system since January 2020.
On the other hand, if management is entrusted to a third party (non-partner manager) and this person is remunerated for his or her corporate mandate, he or she is covered by the general Social Security scheme as an assimilated employee, but does not benefit from unemployment insurance.
SASU (single-member simplified joint-stock company)
The SASU is an SAS with a single shareholder. It offers greater freedom than an EURL in drafting its articles of association, making it easy to adapt its structure to the needs of the company.
However, as the formalities for creating an SASU are identical to those required for an EURL, creating an SASU represents a financial cost.
The SASU tax system
A SASU is automatically subject to corporate income tax. However, it may be subject to income tax for up to 5 years, provided the following conditions are met:
- Commercial, craft, agricultural or self-employed activity
- Sales under €10 million
- Less than 50 employees
- Not listed.
Social security arrangements for a SASU
The director of a SASU is considered as an assimilated employee if he/she receives remuneration, but does not benefit from unemployment insurance. On the other hand, in the absence of remuneration, they are not subject to social security contributions, and do not benefit from any social security coverage.