It's simple: the first step in setting up your business is to choose a legal form. At present, the two most popular legal forms for entrepreneurs are the SARL (Société A Responsabilité Limitée) and the SAS (Société par Actions Simplifiée).
There are a number of similarities between these two structures, particularly in terms of the formalities involved in setting them up, but there are also differences that should not be overlooked when making your decision.
Before you begin the process of incorporating your company, you need to decide which legal status is best suited to your business project. To this end, ask yourself the following questions:
Do I want to protect my personal assets from those of the company?
This question is of paramount importance in your decision-making process when choosing the legal form of your company.
SARLs and SASs are both limited liability companies. This means that in both structures, the liability of partners/shareholders is limited to the amount of their contributions.
In the event of difficulties, your personal assets will therefore be protected in both cases, whether you have chosen the SAS or the SARL.
How many partners will my company have?
To set up a SARL or SAS, you generally need at least two partners.
However, both SARLs and SASs have their individual counterparts. When a SARL has only one partner, it is known as an EURL (Entreprise Unipersonnelle à Responsabilité Limitée).
Similarly, if there is only one shareholder when the SAS is set up, it is known as a SASU: Société par Actions Simplifiée à Associé Unique.
This means that the number of associates will not be a decisive factor in your choice of legal form when you set up your company.
However, if you're looking for growth, you should be aware that the SARL cannot have more than 100 partners. On the other hand, there is no such limit in the SAS.
What configuration do I need to manage my company?
An SAS can only be managed by one person: the Chairman. If you wish to have collective management, you should opt for a SARL, which can have several co-managers.
Other differences distinguish the SARL from the SAS in terms of the status of the company's manager.
The status of the SAS Chairman
In an SAS, the Chairman is treated as an employee. He or she is therefore affiliated to the general Social Security system, and is not covered by the self-employed workers' scheme. The Chairman therefore benefits from the same protection as employees, with the exception of unemployment insurance.
From a tax point of view, his remuneration will be taxed as salary and wages.
The advantage of this status is that, if the Chairman receives no remuneration, he has no social security contributions to pay. Otherwise, the social security contributions to be paid are substantial and represent, as for any employee, almost half of his or her salary.
The case of the SARL manager
In the case of the manager of a SARL, a distinction must be made between majority and minority/equal shareholding managers.
- When the manager has a majority shareholding (i.e. holds more than 50% of the company's shares, either alone or with his family), he comes under the social security scheme for non-salaried workers. He is therefore affiliated to the social security system for self-employed workers.
The amount of social security contributions to be paid is calculated provisionally: a lump sum is established at the start of the business (first two financial years), and if there is a difference with reality, an adjustment will be made.
- If the managing director is a minority or equal shareholder, he or she is covered by the social security system for assimilated employees, like the Chairman of an SAS, for the remuneration received in respect of his or her corporate mandate. They are therefore required to pay substantial social security contributions, and benefit from enhanced social protection in return.
Finally, as regards the tax status of SARL managers, whether they have a majority, minority or equal shareholding, they are subject to the same tax regime as salaried employees (income tax).
Thus, in terms of social security contributions, the status of SARL manager, particularly if he/she has a majority shareholding, is generally more advantageous than that of the Chairman of an SAS. However, when setting up a company, it is up to the entrepreneur to weigh up his choice according to his needs and expectations in terms of social protection.
Will the presence of a statutory auditor be mandatory?
The obligation to appoint a statutory auditor (CAC) varies according to the legal status of the company.
In the case of a SARL, this is mandatory if one of the following thresholds is exceeded:
- 1,150,000 on the balance sheet
- 3,100,000 in sales excluding VAT
- 50 employees
In the case of SAS, the thresholds to be exceeded are lower:
- 1,000,000 on the balance sheet
- 2,000,000 in sales excluding VAT
- 20 employees
Similarly, if the SAS created is controlled by another company or controls another company, the presence of the CAC is mandatory even if the above-mentioned thresholds are not crossed.
So, if you want to set up a company of a certain size, with more than 20 employees, you will be obliged to appoint a statutory auditor, which involves a certain cost.
This criterion may therefore influence your decision to incorporate your company.
As mentioned in the introduction to this article, the formalities for setting up a SARL and an SAS are very similar, if not almost identical.
To set up your company, whether a SAS or a SARL, you need to follow the steps below:
Drafting by-laws
One of the major advantages of the SAS is the great freedom given to those who draft its articles of association. Its operation (supervisory bodies, voting procedures, corporate purpose, share transfer procedures, etc.) can be widely adapted by its founders.
The SARL is more closely regulated by the French Commercial Code. For example, its articles of association must always contain the identity of the founding partners and the distribution of shares between partners, which is not mandatory for an SAS.
Filing a business start-up application with the Registrar's Office
If you want to set up an SAS or SARL, you need to fill in a cerfa M0 form.
In general, the supporting documents to be provided are the same:
- Proof of occupancy of head office premises
- Articles of association dated and signed by all associates or shareholders
- Declaration of beneficial owners
- Certificate of deposit of funds in a blocked account
- The M0 form
- A power of attorney, when the form has not been signed by the legal representative. This power of attorney empowers the representative to carry out any legal act in the name and on behalf of the principal.
- Proof of publication of the creation notice in a legal gazette. The average price of a legal announcement is €150.
Documents relating to the Chairman/Managing Director :
- A copy of the deed of appointment of the Manager/Chairman
- A declaration of non-conviction and filiation from the Manager/Chairman
- A copy of the latter's identity card, certified as a true copy of the original.
