When managing a limited liability company (Société à Responsabilité Limitée), remuneration is a complex issue. If income is too low, the manager may find himself in a delicate personal situation. And conversely, remuneration that goes beyond the company's financial capabilities may jeopardize the economic viability of the structure and be considered an abuse of corporate assets. In such a context, it may seem a good idea to pay yourself minimum wage. What are the implications of remunerating SARL directors?
Regulations governing the status of SARL manager
Among the various options available, the legal status chosen when setting up a company will depend largely on a number of financial parameters. These include the criteria governing the manager's remuneration.
In the case of a limited liability company (SARL), a sum of money may or may not be paid to the director in return for exercising his or her corporate mandate. This amount must be set out in the articles of association when the SARL is opened, or subsequently by a decision taken at an ordinary shareholders' meeting. Care must be taken, however, as excessive remuneration set by a majority shareholder may constitute an abuse of majority voting rights.
Administrative procedures then differ according to the social status chosen for the manager. A majority shareholder is considered as a non-salaried worker (TNS). Their remuneration does not require a pay slip. Equal, minority or non-partner managers, on the other hand, are treated as salaried employees. A payslip must show the amount of net remuneration.
Social security contributions on the salaries of SARL managers
Unless you have a sideline activity or a steady income stream in addition to your corporate mandate, the remuneration of an SARL director must enable you to meet your personal expenses. To do this, we need to estimate the minimum monthly salary required, which may be less than, equal to or greater than the minimum wage. This figure can then be used to draw up financial forecasts for the company, taking into account the total cost of the salary.
- For SARL majority managers, social security contributions amount to 45% and are calculated on the basis of net income.
- For managers with employee status, employer and employee contributions represent approximately 65% of gross salary (or 80% of net salary, excluding dividends).
This difference can be explained in terms of affiliation and social security coverage. Assimilated employee status offers better protection in terms of sick pay and pension contributions.
Please note that social security contributions are due even in the absence of remuneration, in order to benefit from minimum health coverage.
Dividend payments to SARL managers
The compensation paid to a SARL's manager may include fixed and/or variable components: benefits in kind, percentage of sales, payment into a partner's current account, etc.
Dividends are sums paid out by the company to its shareholders. Their payment is subject to approval at an ordinary annual general meeting, after the accounts have been closed and subject to the company having made a profit. The tax authorities consider this remuneration as income from movable capital.
By default, dividends are subject to the flat-rate withholding tax (PFU) of 30%. However, it is possible to switch to the progressive rate. This option allows dividends to be taxed as income from movable capital (RCM), with a 40% allowance on the gross amount and deductible CSG.
Note: when dividends paid exceed 10% of the capital, the excess portion is subject to 45% social security contributions.
The limited liability company tax regime
The last factor not to be overlooked when it comes to the remuneration of the SARL manager is the tax system. The tax authorities apply different rules depending on how the company is taxed.
In the case of a SARL subject to corporate income tax, the minority, equal or non-partner manager is required to declare basic remuneration, bonuses, gratuities and benefits in kind in the "salaries and wages" category. The majority shareholder is not treated as an employee for tax purposes, but is still required to declare his or her remuneration for income tax purposes as "executive remuneration". The 10% flat-rate deduction is applied in both cases, unless actual expenses are claimed.
In the case of a SARL (limited liability company) subject to income tax, executive remuneration is treated as a distribution of the company's profits. These sums must be entered in the category corresponding to the nature of the company's activity (BIC, BNC, BA, revenu fonciers), with the exception of the remuneration of the non-partner salaried manager, who is taxed in the salaries and wages category.