The SARL (société à responsabilité limitée), although now rivaled by the SAS (société par actions simplifiée), remains a widespread legal form, and is still chosen by many entrepreneurs. This type of company is made up of a minimum of two partners, each of whom is liable for the amount of the contributions he or she makes to the share capital. A maximum of one hundred associates, individuals or legal entities, can form a SARL. Let's take a look at how an SARL works, and how its partners are remunerated.
How does a SARL work?
To set up an SARL, you need to draw up articles of association. These clearly define the company's operating rules and the nature of the relationship between the partners. Among the compulsory details to be included in the articles of association are the identity of the founding partners, the amount of cash contributions and the terms and conditions for paying up these contributions, any in-kind and industrial contributions, and the distribution of shares.
The managing director(s) is/are appointed when the articles of association are drawn up, or in a separate deed of appointment. The managing director may be a majority, equal or minority shareholder. Unlike ordinary partners, he or she will be held criminally liable in the event of serious mismanagement.
The associates must meet at least once a year at an Ordinary General Meeting to approve the accounts and vote on certain matters concerning the running of the company. One or more Extraordinary General Meetings may be held to take more important decisions, such as amending the Articles of Association.
In an SARL, the manager's spouse can, if necessary, benefit from the status of " collaborating spouse", which enables him or her to enjoy full social protection. Members of the same family can set up a SARL, known as a family SARL, and opt for income taxation rather than corporation tax.
The rules governing SARLs are governed by law, giving partners a degree of security.
How are SARL partners remunerated?
It should be noted that the majority shareholder of a SARL, i.e. those holding more than half the shares, are systematically considered as non-salaried workers (TNS). This regime is less costly, but also offers less social protection than the assimilated salaried employee regime.
An assimilated employee is an associate manager who is covered by the general Social Security system. In the case of SARLs, assimilated employees are managers with minority or equal voting rights. Social security contributions are due only if the assimilated employee receives remuneration. It should be noted that the deduction rates for all health and maternity insurance, old-age pension, family allowance, industrial accident, provident fund and supplementary pension contributions are relatively high. In addition, assimilated employees are not entitled to unemployment benefits.
In return for his work, a partner, whether a manager or not, may very well receive no remuneration. Nor is he or she obliged to receive the minimum wage (SMIC), which is compulsory only for salaried employees.
Working for free is either a necessity, as the start-up company does not have the funds to pay salaries, or a choice to leave as much cash as possible in the account to invest in growth projects. In both cases, associates always have the option of earning dividends.
Dividends are profit shares distributed to each shareholder at least once a year. Admittedly, dividends are a form of cash flow that reduces the company's assets, but if profits are substantial, associates can still earn a return without having to pay social security contributions, which are not applicable to dividends. Earnings after corporate income tax may be distributed in full or in part to associates in proportion to the number of shares they hold.
The minority managing partner, i.e. those holding 50% or less of the shares, may have an employment contract and be an employee. They will also be entitled to dividends. These will be added to his income, and will be subject to income tax after deduction.
Finally, non-managing partners will receive income in the form of dividends only.