How to set up an EIRL

EIRLs (sole proprietorships with limited liability) are gaining popularity, with 20% more businesses created in 2018 compared to the previous year.

INSEE reports these particularly encouraging figures, which demonstrate the attractiveness of this legal status.

The sole proprietorship with limited liability (EIRL) is a legal status for individual entrepreneurs who want to limit their liability to the amount of their contributions to the business.

There's no minimum share capital required.

This legal status doesn't allow for multiple partners. It's generally well-liked because it fits all kinds of projects: shopkeepers, artisans, and agricultural professions are all good to go.

An EIRL is very similar to a sole proprietorship, except that the sole proprietor's liability is limited, and they can opt for taxation under the IR (Income Tax) or the IS (Corporate Tax).

Setting up an EIRL isn't too tricky, as long as you follow the official steps carefully.

Let's explore our step-by-step guide to creating your EIRL (sole proprietorship with limited liability) in 2019 together.

What documents do I need to bring to create an EIRL?

When submitting the creation file to the commercial court registry, the business founder must include all the necessary information for it to be processed correctly.

The first step is to fill out the official administrative form CERFA PO CMB to provide all the legal information relating to the EIRL.

Another form must accompany it: « P EIRL CMB » for artisanal, commercial or boat activities or "P EIRL PL" for liberal activities.

Also, your contributions to the EIRL must be evaluated by a chartered accountant or an auditor.

It's mandatory for any asset exceeding €30,000, or half the value of the share capital.

Among the other supporting documents to be provided, do not forget:

• A certificate of filiation
• A copy of the identity document of the sole partner
• A copy of the assigned assets valuation report (if applicable).
• A copy of the business creation support agreement (if applicable).
• A declaration of non-conviction from the sole partner.
• A copy of the commercial lease or domiciliation certificate to prove the existence of the company's registered office.

If you're in a regulated profession, don't forget to include the certificate that allows you to practice.

Finally, all that's left to do is include a check to pay the fees to the commercial court registry.

How much does it cost to set up an EIRL?

If the declaration of allocation is simultaneous with the application for registration with the Directory of Trades (for craftsmen), the Trade and Companies Register (for merchants), or the Special Register of Commercial Agents, then the formalities are free. If the filing of the declaration is later, then fees generally between €40 and €60 are required.

However, keep in mind the cost of publishing a legal notice in an approved journal.

According to newspapers, they are generally billed between €75 and €130.

The deed of assignment for a property must be drawn up by a notary. The cost for this is 139.93€. You'll have to pay the same amount if you want to have a property valued.

What administrative procedures should you follow?

Creating an EIRL requires completing three main formalities.

First of all, it is essential to declare your activity to the CFE (Centre de Formalités des Entreprises - Business Formalities Center).

The business registration is done via a PO CMB form. It must be completed and sent to the CFE (Business Formalities Centre) to be able to carry out a commercial or artisanal activity as a sole trader.

Next, you need to declare an allocation of assets. This specifies all the tangible and intangible assets allocated to the EIRL's assets.

Some goods can be for mixed use, that is, for both private and professional use.

These two declarations must be filed with the competent business registration center (CFE).

Finally, you'll need to open a bank account specifically for your business. This is important because, if you don't, it could jeopardize the limitation of your liability to the assets of your designated business assets.

Creating an EIRL has many advantages, first and foremost being the protection of the entrepreneur's private assets.

The setup costs are reasonable, and there isn't a ton of paperwork to fill out. Lots of entrepreneurs chose this status for their business in 2019, so why not you?