How to set up an EIRL

EIRLs are on a roll, with 20% more businesses created in 2018 than the previous year.

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

The limited liability sole proprietorship (EIRL) is a legal status aimed at sole proprietors wishing to limit the extent of their liability to the amount of the contributions made to the business.

No minimum share capital is required.

This legal status does not allow multiple partners. It is generally very popular, however, as it can be adapted to all types of project: shopkeepers, craftsmen and farmers are all eligible.

The EIRL is very similar to a sole proprietorship, except that the liability of the sole shareholder is limited, and the company can opt to be taxed under the IR (Impôt sur le revenu) or IS (Impôt sur les sociétés) tax systems.

Setting up an EIRL presents no particular difficulties, provided you follow the official procedures step by step.

Let's take a look at our instructions for setting up your EIRL in 2019.

What documents do I need to create an EIRL?

When submitting a business start-up application to the commercial court clerk's office, the entrepreneur must not forget to include all the information required to ensure that the application is processed correctly.

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

Another form must accompany it: "P EIRL CMB" for craft, commercial or inland waterway activities, or "P EIRL PL" for self-employed activities.

Also, your contributions to the EIRL must be assessed by a certified public accountant or a commissaire aux comptes.

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

Other supporting documents include :

• Proof of parentage
• A copy of the sole shareholder's identity document
• A copy of the valuation report (if applicable )
• A copy of the business start-up support contract (if applicable)
• A sworn statement that the sole shareholder has no criminal convictions
• A copy of the commercial lease or certificate of domiciliation to certify the existence of the company's head office.

If you practice a regulated activity, don't forget to enclose the certificate authorizing you to do so.

All that's left to do is enclose a cheque to pay the clerk of the commercial court's fees.

How much does it cost to set up an EIRL?

If the declaration of business assignment is filed at the same time as the application for registration with the Répertoire de métiers (for craftspeople), the Registre du commerce et des sociétés (for traders), or the Registre spécial des agents commerciaux, then the formalities are free of charge. If the declaration is filed later, a fee of between €40 and €60 is generally required.

You should, however, allow for the cost of publishing a legal notice in an approved newspaper.

Depending on the newspaper, they are generally priced between €75 and €130.

The deed of assignment of a property must be drawn up by a notary. It costs €139.93. The same fee applies if you wish to have a property appraised.

What administrative procedures do I need to follow?

Setting up an EIRL involves three main formalities.

First of all, you need to register your business with the CFE(Centre de Formalités des Entreprises).

A PO CMB form is used to declare your activity. It must be completed and sent to the CFE to be able to carry out a commercial or craft activity as a sole trader.

Next, it is necessary to declare an asset allocation. This specifies all the tangible and intangible assets allocated to the EIRL's assets.

Certain goods can be used for both private and professional purposes.

These two declarations must be filed with the relevant CFE.

Finally, you need toopen a bank account dedicated to your business. This is an important detail, as failure to do so may jeopardize the limitation of your liability to the assets making up the "patrimoine d'affectation".

Setting up an EIRL has many advantages, not least of which is the protection of the entrepreneur's private assets.

Set-up costs are moderate, as is the amount of paperwork involved. Many entrepreneurs have chosen this status for their business in 2019, so why not you?