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Creating your own business

Setting up a company

Whichever legal form they choose for their operation, whether a one-person business, EURL [one-person limited company], SARL [private limited company], SA [public limited company], or some other form, entrepreneurs have many questions.

Setting up a company is an exciting adventure!  

  • Which legal form will be most appropriate?

    • The choice of legal form will depend upon the entrepreneur's marital situation and assets , and also, obviously, upon the project (is the entrepreneur setting up a business alone? does the business need substantial investment?) and the business activity envisaged.

    • These aspects must be considered with great care, as the various options have different legal, tax and social consequences. It is better to be assisted by a legal professional.

    • If the entrepreneur intends to set up a small business (for example in addition to working as an employee), auto-entrepreneur [self-employed] status is appropriate. This will mean they are classified as an individual entrepreneur, with less onerous administrative constraints and a simplified operation.

    • It is also possible to create a company directly (EURL, SARL, SA or SAS [simplified limited company]). This option is suitable, for example, for those who wish to create a large structure at the outset, and who need an appropriate tax and employment regime.

    • The notaire is a preferred adviser on the best legal form to adopt in the light of the entrepreneur's situation and plans.

  • What financial assistance is available when a business is first set up?

    • Entrepreneurs who set up a business while continuing a salaried activity are exempt from social security contributions for the first 12 months of operation.

    • Jobseekers in receipt of benefits may either receive a capital sum at the start of operations or are allowed to keep drawing their unemployment benefit. They are also exempt from making any social security contributions for a period of 12 months (under the ACCRE scheme).

    • Depending upon the area in which the business is located—a zone franche urbaine [urban area with a high level of social deprivation] for example—it may be allowed reduced tax and social security liabilities.

    • With respect to loans, the state can provide a little help. The public investment bank, BpiFrance (formerly OSEO), provides loans to business start-ups without any guarantee or personal security.

    • Finally, many local authorities and other organisations assist business start-ups by providing grants or more often interest free loans (information is available from chambers of commerce and industry and from France Initiative).

  • How can entrepreneurs protect their personal wealth?

    • 70% of business start-ups are registered as one-person businesses (and the owners of three quarters of those are classified as auto-entrepreneurs), while 30% of start-ups are registered as companies (most often as SARLs or private limited companies). In these circumstances the issue of how to protect one's personal assets is of great importance. Entrepreneurs who carry on their activity as a one-person business have a single set of assets which includes their professional and their personal assets without distinction.

    • In the event of poor business or bankruptcy, auto-entrepreneurs, members of the accredited professions, artisans, traders and farmers have to meet their professional commitments out of all their assets (both professional and personal).

    • It may be possible to get round this by signing a declaration of exemption from attachment, drafted by a notaire. With such a declaration, built and undeveloped land that is owned by the contractor but not used for its professional use (whether it is property, common property or even undivided property) becomes unseizable; That is to say they can no longer be seized (real estate, land, etc.). This exemption applies, however, only to professional creditors and only to debts arising after the publication of the declaration.
      It should be noted that since the Macron law of August 6, 2015, the main residence of individual entrepreneurs is automatically rendered unseizable, without any particular procedure being required.

  • How can the entrepreneur's spouse be protected?

    • Most couples hold their matrimonial assets under the French scheme known as the community of property ("communauté réduite aux acquêts). This statutory scheme is allocated by default to couples who do not sign any marriage contract. It is perfectly suitable for young couples who marry before they have built up any assets. However, in order to take account of changes in their situation, the law authorises them to change their matrimonial property regime after two years of marriage (which should be repealed in the first half of 2017), when the regime that they chose initially is no longer suitable. This will apply, for example, if one of them sets up a company.

    • A property regime in which all the property is owned separately is often preferable in order to protect the family assets, facilitate the management of the company and ensure the continued existence of the means of production in the event of the couple separating. However, it may also appear to be a source of imbalance and injustice. The spouse who does not have a professional activity may be totally deprived of all assets in the event of separation or the death of the entrepreneur.

    • You should discuss this question with your notaire in order to understand the impact of your choices and assess the appropriateness of changing your matrimonial regime .