Creating an EURL: the complete guide

An Entreprise Unipersonnelle à Responsabilité Limitée is exactly the same as a SARL with just one employee. Easy to access and suitable for a wide range of business sectors, it is a legal status that is very popular with entrepreneurs: 15% of companies created in France are EURLs. Only one partner is required, who may be an individual or a legal entity.

This status offers great freedom to set up and manage a business throughout its life. Here's how it works.

Why set up an EURL?

When creating an EURL, no minimum capital is required.

Above all, the liability of the sole shareholder is limited to the amount of his or her capital contributions to the company.

His or her personal assets cannot be involved, unless he or she has committed an acknowledged management error. The operation of the company is governed by its Articles of Association, which are relatively freely drafted.

You can carry out a wide range of commercial, agricultural and craft activities.

The EURL is managed by a manager, the company's legal representative. Lastly, you can choose whether to be taxed on the basis of income tax or corporation tax.

Why choose an EURL over a SASU?

There are several differences between EURL and SASU.

First of all, the social security regime for company directors is not the same: the sole managing partner of a EURL is a self-employed worker, while the chairman of a SASU is treated as an employee.

This has an impact on social charges and the quality of social protection.

SASU profits are taxed in the company's name

In EURL, they are taxed directly by the sole shareholder.

If you receive dividends, the tax rules are more restrictive in EURL, with the obligation to pay social security contributions for the portion exceeding 10% of the sum of share capital, additional paid-in capital and sums paid into a partner's current account.

On the other hand, the SASU only has to pay social security contributions at the rate of 15%.

How much does it cost to set up an EURL?

Several costs need to be taken into account:

• Installation preparation course, around €200 ex VAT
• Involvement of a contribution auditor
• Publication of a notice of the creation of your EURL, between €100 and €200 excluding VAT
• Commercial court clerk's fees: €41.50

How long does it take to set up your EURL?

It takes several months to draw up the articles of association, compile the necessary administrative documents(M0 form, deposit of blocked capital in a bank account, etc.) and publish an announcement in a legal gazette. It all depends on your responsiveness.

Once you have submitted your complete application to the commercial court clerk's office, it takes an average of 3-4 weeks before you receive confirmation that your company has been created.

Which tax system should I choose?

By default, EURLs are subject to income tax, unless the sole shareholder is a legal entity.

In this case, the company's profits are taxed in the hands of the partner, according to the progressive income tax scale.

Income tax can be very advantageous, as losses can be set off against the sole partner's income, which can considerably reduce the partner's tax rate.

How are you remunerated?

The sole managing partner may choose to receive remuneration or perform his duties free of charge.

In this case, they are taxed at the progressive income tax rate. Dividends may also be distributed if the EURL is taxed at corporate income tax rate.

They are also subject to income tax and social security contributions.

What is the social security system for the manager of an EURL?

The social security status of the manager of an EURL depends on whether he or she is also the sole partner of the company. If he is the sole partner, he is affiliated to the independent workers' scheme as a self-employed person. If he or she is not a partner, he or she is treated as an employee and is affiliated to the general social security scheme.

What assistance are you entitled to when setting up your EURL?

EURL managers can benefit from ACRE(l'Aide aux Créateurs et aux Repreneurs d'Entreprises), which waives part of their social security contributions for 12 months.

They can also receive a lump-sum payment of part of their remaining compensation entitlement under the ARCE scheme.

Finally, check with your local authorities (mainly your city and region), as there are often support schemes in place for entrepreneurs, in the form of interest-free loans, guarantees or advice to optimize the success of your project.

Although EURL offers many management advantages throughout its life, it is often advisable to seek professional advice before making your final choice.

There's no such thing as an ideal status, but rather the one best suited to your needs.