Société à Responsabilité Limitée
A SARL must have between 2 and 50 shareholders and a managing director (gérant), who’s usually paid a salary. any losses of half or more of the stated capital must be formally acknowledged by a special shareholders meeting and resolution, which is registered with the Registre National du Commerce et des Sociétés and then the information appears on your Kbis. Whatever amount of capital you choose to start with, this figure must be included on all your official documentation, e.g. letterhead, invoices and orders. The managing director (MD) of a SARL can be a salaried employee of the company (but isn’t eligible for unemployment benefit unless he buys private insurance). A SARL can elect, under certain circumstances, to pay corporation tax (impôts sur les sociétés) rather than having its net income included on the gérant’s personal income tax declaration (i.e. impôts sur le revenu).
Entreprise Unipersonelle à Responsabilité Limitée
An EURL is a type of SARL formed by a sole trader and has only one shareholder; otherwise it operates like a SARL. Although it’s operated by one person, an EURL is not an entreprise individuelle and the owner-operator of an EURL is considered a gérant rather than travailleur independent.
An SA must have a minimum of seven shareholders (there’s no maximum). It must be run by a board of directors ( conseil d’administration) and have a président directeur-général/PDG, roughly equivalent to a chief executive. To start an SA you must invest a minimum of €37,000. An SA is probably the most difficult sort of company to start; the registration requirements are elaborate (because an SA can sell shares on the public stock exchange) and you must have a commissaire aux comptes to audit your accounts every year. The biggest advantage of an SA over a SARL is that all risk is limited to the extent of the investment and all executives can be regular salaried employees of the company. The PDG can also be fired at any time by the board.
Société par Actions Simplifiées
An SAS is a simplified form of SA (see above), with at least two shareholders and a minimum capital of €23,000. An SAS isn’t allowed to trade shares publicly. The form of the corporation is much more flexible than that of a SARL; for example, you can hold annual general meetings by email or telephone, which is strictly forbidden in a SARL The major disadvantage of an SAS is that you must have a commissaire de comptes to audit your accounts every year; he must also be present at your AGMs – for a fee, of course.
Société par Actions Simplifiées Unipersonnelle
A SASU is a simplified version of an SAS, which can be set up by a single person. The minimum capital is €37,000 or €225,000 if you want your stock to be publicly traded. You still need a commissaire aux comptes, who must attend your AGM. An SAS is subject to corporation tax (impôts sur les sociétés) and the President (dirigeant) is considered an employee of the company and so pays normal social security contributions for an employee (except for unemployment insurance).
Société Civile Professionelle
An SCP is limited to certain regulated professions, such as medical personnel (doctors, nurses, physiotherapists, etc.), lawyers, certain types of ‘expert’ (agricultural, forestry, etc.) providing a consultancy service, commissaires aux comptes, and industrial property consultants. Precise requirements are controlled by the various professions.
Société d’Exercice Libérale
There are several types of SEL, which mimic the SARL, SAS, SA and SCA, for specific professions where practitioners are allowed to incorporate their practice; these include architects, dentists and accountants.
An SC is a non-commercial partnership, commonly formed by members of the professions libérales, e.g. farmers and those engaged in what are called ‘intellectual activities’, including writers, researchers and some types of consultant. An SC can elect to pay corporation tax or not; if not, each shareholder includes his portion of the partnership’s profit or loss on his personal income tax declaration.
Société en Nom Collectif
An SNC is a general partnership. There’s no capital requirement, but there must be at least two partners/shareholders. Profits and losses are passed on to the partners, who are liable for unlimited debts. All partners are considered to be traders (commerçants). All changes in partner shares must be unanimously approved and all decisions must be made collectively and documented (through minutes, which must be kept on file). Social security contributions are based on each partner’s total revenue.
You must set up a business (whatever entity best suits your circumstances) and then enter into a contract with the franchiser, which provides product, services, logos, marketing services, advertising material, etc. to help you run your business. The contract specifies what each business is going to do, pay for and provide for the other. You agree to buy certain products and services from the franchiser and to run your business according to the standards it sets. Contracts run for a number of years – usually five or ten initially. Normally, there’s an initial ‘buy-in’ fee which varies with the franchiser. Franchisees can, and do, go broke, and franchisers can, and will, take the franchise away if they find you breaking any of the terms of the contract or failing to meet their standards. A respectable franchiser should be a member of the Fédération Française de la Franchise (www.franchise-fff.com).
Like a franchise, a partnership (partenariat) entitles you to use an established brand, but it allows you greater autonomy. For example, you may sell products other than branded goods, provided these remain a sideline. You aren’t obliged to follow strict procedures, but can benefit from the knowledge and experience of other partners in order to adapt guidelines to personal and local needs. As with a franchise, there’s an ‘entry fee’, but it’s usually lower. Business decisions are generally made on a democratic basis rather than simply being imposed upon you, as with a franchise operation. A partnership contract is similar to a franchise contract, except that it isn’t standardized, but can vary from case to case.
Bureau de Liaison
A bureau de liaison (‘liaison office’) or représentation (‘representative office’) is essentially a ‘shop window’ set up by a foreign company. It’s regarded as a non-commercial entity and may therefore handle only activities such as information gathering and marketing. Being non-commercial, it isn’t liable for tax or VAT in France. To set up a bureau de liaison you must employ a French resident and register with URSSAF in order to obtain a SIREN . You must ensure that the office doesn’t engage in any commercial activity
A branch office (succursale) of a larger company, e.g. a French branch of a foreign publishing or software company, isn’t strictly a business entity, and the branch must register as one of the main French business entities. Like a bureau de liaison, a branch office is legally part of the foreign company and has no separate assets or liabilities, but it has greater autonomy: it can engage in advertising and contracting on behalf of the parent company (société mère) and is therefore liable for tax in France on the business it generates there. A branch office must be registered with the local Greffe du Tribunal de Commerce within two weeks of commencing activity, and obtaining a SIREN is more complicated than for a bureau de liaison.
A subsidiary (filiale) is, to all intents and purposes, an independent French company and must be set up as such, using one of the standard business entities, irrespective of the extent to which it’s controlled by the parent company.
The arrangement is designed for business owners who no longer want to run their business (e.g. to retire), but who still want to draw income from it. In a location gérance, the owner of a business (which can be a sole proprietorship or an EURL or SASU) ‘rents’ his business to you and you run it for him. As the renter (locataire-gérant), you must be qualified to run the business and must run it as it is (i.e. you cannot change the nature of the business at all). You must register yourself in the Registre National du Commerce et des Sociétés (www.euridile.inpi.fr). The agreement can be limited or open-ended, but is usually an annual contract. A location gérance gives you the chance to ‘test-drive’ a business before deciding whether or not to buy it.
An association of the law of 1901 is a not-for-profit association, and there are many restrictions on the types of activity they can undertake. Broadly, an association’s intentions must be social, cultural or informative and beneficial in a non-financial sense to its members and others. It may receive funds provided that the money is used for running the association and furthering its aims. An association must have at least two founding members. It may employ people, including the founding members, but there’s a restriction on an association’s ‘managers’ (dirigeants) drawing a salary. There are limits to how much an association can pay to any one officer. Employees of the association are subject to the general regime for social security. An association is usually an inappropriate vehicle for setting up a business – particularly one from which you want to make a living – and you can be heavily fined if you break the conditions relating to associations.