When setting up a new business, there are many expenses to consider before registering the company. These costs can quickly weigh heavily on the wallets of the partners, who often come to use their personal contributions during this formative phase. To remedy this situation, it is possible to obtain reimbursement of all costs associated with setting up a company.
We'll take a look at the expenses involved, the reimbursement terms and conditions, and the procedures to be followed.
A company becomes a legal entity when it is registered with the RCS (Registre du Commerce et des Sociétés). Before this stage, the company is in a so-called "formation" phase, which begins when the partners have acknowledged their willingness to create the structure. The best way to validate this decision is to sign the articles of association, but this period can be opened up by creating a bank account in the company's name, for example. Company formation ends when the company is registered.
All expenses relating to this training period will be estimated by a chartered accountant, who will decide whether or not reimbursement is feasible. Without share capital, the founding members of the company are obliged to incur expenses in their own names, making them liable for all transactions entered into.
Setting up a business involves expenses of varying degrees, often unavoidable. As a result, we can reimburse all expenses incurred in setting up or preparing for business.
There are several types of costs to consider:
- Purchase of supplies
- Commercial lease
- Expert fees
- Production of communication tools
- Acquisition of computer equipment
- Travel expenses
- Internet domain name purchase
- etc.
Since it's often impossible to wait until registration to incur these types of expenses, the possibility of future reimbursement greatly facilitates company formation.
To be sure of being reimbursed once the company has been registered, it is essential to keep all receipts for expenses, which should be added to the appendix to the articles of association. Also, the words "deed carried out in the name and on behalf of the company in the process of being formed". must be included on all deeds and invoices. In the case of sole proprietorships, you need only keep the invoices relating to these expenses.
But beware of contributions in kind! These are not eligible for reimbursement.
Expenses incurred must be entered in the accounts in one of two ways. Either as an expense once registration has been effected, allowing a deduction to be made in the first year, or as an asset on the balance sheet, allowing the costs to be amortized over a maximum of 5 years.
Expenses can be reimbursed simply by transferring money from one account to another, at any time once the company's share capital has been released by the bank. For those who wish to wait, it's also possible! You can wait several months(within a maximum of one year) or evenincorporate it directly into the share capital.
It's also important to take your company's accounting seriously if you want to benefit from your reimbursement. In fact, all these expenses must be clearly mentioned in the company's accounts, taking care to enter each cost on the right corresponding line. All these business expenses can be amortized over a maximum period of five years. This makes it easier to spread costs over several accounting periods, especially in the case of major expenses.
VAT refunds for companies undergoing training
And what about VAT, you ask? Obviously, your initial expenses could not have escaped VAT payment, since it was not the company, but the partner's personal account, that established these expenses. It is therefore only possible to claim back the VAT if you have opted for the "VAT-free" regime. This allows the company to benefit from the price quoted exclusive of tax (HT).
Make sure you take this option into account when setting up your company, otherwise you won't get any VAT refund.
It should be noted that micro-entrepreneurs will not be able to claim VAT on their expenses under any circumstances.
It's no secret that as a company grows, so does its portfolio. And it's not always easy for young entrepreneurs to keep up with these often onerous expenses. This possibility of reimbursing all expenses is therefore a godsend for forming a business with greater peace of mind. All expenses incurred in setting up a business can be reimbursed within one year, or incorporated into the company's share capital. It is essential to keep all receipts, without which reimbursement will be impossible to obtain. Whatever happens, it's always a good idea to call on the services of a chartered accountant well in advance of your registration to avoid any mishaps in the accounting of your company-in-training.
Written by our expert Maeva Girardot
September 22, 2017
