Which address to choose for your sole proprietorship?

The sole proprietorship is an excellent choice for small projects, but although it does not require the drafting of any legal statutes, it must nevertheless be registered with the Registre du Commerce et des Sociétés.

As a result, when you opt for this status, you need to have a registered address, which will serve as both your administrative address and your head office. In addition to your business address, you should be aware that the status of sole trader has evolved considerably.

Understanding what a sole proprietorship is

Thesole proprietorship is a legal status, like the EIRL, SARL, EURL and others. This status is identical to that of the micro-enterprise, so that since January^1, 2016, the sole proprietorship is automatically considered as a micro-enterprise. This means that tax benefits only cease to apply if the manager opts for the actual tax regime, or if he or she reaches the maximum annual sales threshold.

Its management system is based on a single individual, who is totally confused with his or her business. For the time being, the sole proprietorship has no legal personality of its own, which gives it an advantage and a disadvantage that are truly the obverse and reverse of this type of company: wealth.

No distinction between business and personal assets

The fact that a sole trader's personal assets merge with those of his business has long been the downside of this legal status. Why is this? Because it has two major legal consequences:

• There is no abuse of corporate assets,
• Company debts are borne by personal assets.

For the first point, it's very advantageous to be able to enjoy the company's earnings freely, without having to worry about separating the company's budget from your personal budget.

However, this lack of patrimonial distinction leads to the second point, which is that company debts can be repaid out of personal assets. In other words, for a long time, the bankruptcy of a sole trader meant his outright ruin.

We're not talking here about matrimonial property regimes, which, in the case of community property regimes, still result in the loss of the spouse's assets, which are legally the property of both.

Faced with the potentially disastrous consequences of this legal form, the legislator has decided to strengthen the protection of the sole trader. Thus, the law of August 07, 2015 prohibits professional creditors from seizing the principal residence of the sole trader.

This law also states that the dwelling cannot be seized when it is "used in part for professional purposes". However, in this case, the part intended for professional use can be seized.

So what happens if you've made your home the company's registered address? Your creditors cannot seize your home on the grounds that it is your company's registered office.

However, a law passed on February 14, 2022 has just revolutionized the status of sole trader.

Separation of assets becomes automatic

The law of 2022 provides for the assets of sole traders to be separated from their business assets.

In other words, a sole trader's business creditors will no longer be able to seize assets unrelated to the business activity, as long as these debts are incurred after May 15, 2022. This separation of assets is automatic, i.e. no administrative action is required to benefit from it.

This law aims to compensate for the EIRL status, whose complexity made this type of company particularly rare, to the point that the legislator decided to put an end to the possibility of choosing this status.

Beware, however, of debts you incur out of your personal assets. If your assets are insufficient to settle the debt, your creditor can seize your business assets, up to the limit of what you owe.

How do you register your sole proprietorship?

As we mentioned earlier, sole proprietorships have no real legal personality. The law of February 14, 2022 confirms this, since it still states that " the sole trader is a natural person who carries on business in his own name ".

Nevertheless, this lack of legal personality is no exception to the obligation to have a business address, also known as a "domiciliation address". Why is this? Because registration in the Trade and Companies Register, or in the Trade Register, is compulsory, and this registration requires a business address.

Corporate domiciliation is defined as the company's administrative and tax address. This is the address that will appear on your invoices, or on your website.

What are the different ways of domiciling a sole proprietorship?

Sole proprietorships enjoy the same conditions for domiciliation as all other types of companies. In fact, as a sole trader, you can domicile your company :

• In commercial premises,
• In a business incubator,
• In a domiciliation center,
• In a business center.

Each has its advantages and disadvantages.

Domiciliation in commercial premises

Domiciliation in commercial premises requires you to own or rent commercial premises. Buying commercial premises will almost certainly require you to take out a loan with a lending institution.

Although the law of February 14, 2022 strengthens your protection against creditors, they can still use your personal assets as collateral for the loan.

What's more, you need to be aware of the distinction between goodwill and business premises, which is particularly important.

Last but not least, a simple business lease is also possible. However, this is a complex option to set up at the start of your business. Often costly, it has to be paid for out of profits you don't yet know about, unless you have a customer base.

Domiciliation in a business incubator

Although it's all the rage with start-ups, which are often nurtured in business incubators, these are mainly dedicated to the process of starting up an entrepreneurial adventure.

Their support services are often used before the company is set up, and only continue for a few months afterwards. In other words, setting up a business with the address of the business incubator to which you belong will quickly force you to find a new address.

This change of address is a costly operation, which, especially at the start of your business project, is much more useful elsewhere.

Domiciliation with a domiciliation company

A domiciliation company is a company with prefectoral approval to operate. It offers a wide range of services, validated by a contract:

• Mail follow-up,
• Mail scanning,
• Provision of office space,
• Meeting room available,
• Prestigious address,
• Telephone answering service.

The services of a domiciliation company can be chosen à la carte, according to your needs. Prices start at 1 euro per month, as at Sedomicilier.fr, and rise according to the options chosen.

The affordable rates offered by domiciliation companies make this solution ideal for sole traders. In particular, it makes it possible to separate the private address from the company address, thus physically separating business from private life.

With the possibility now offered of separating the company's assets from its private assets, this solution is fully in line with the new legislation, which aims to guarantee private entrepreneurs a genuine separation between their person and their company.

Domiciliation in a business center

Business centers offer services very similar to those of domiciliation companies. These include traditional mail forwarding, telephone answering services and office and meeting room rentals.

Nevertheless, the price differences are considerable. A business center offers a number of services that rapidly increase the total monthly payment. It's not certain that it's adapted to the needs of a self-employed entrepreneur.

How do you transfer the registered office of a sole proprietorship?

The advantage of sole proprietorships lies in the simplicity of the administrative formalities involved in setting up a business. Changing the company's registered address is no exception.

To change your corporate address, simply :

• Download Cerfa n°16678*07,
• Please enclose proof of address.

Send it to either the Chamber of Commerce and Industry, or the relevant Chamber of Trades, or URSSAF, if you are a micro-business or self-employed. The change of address will then be recorded in the Trade and Companies Register.

Please note, however, that if you run a mixed business, for which you know you are registered with both the Chamber of Commerce and Industry and the Chamber of Trades, you will need to send the form and proof of address to both bodies.

Domiciliation companies offer to take care of all these formalities for you. Their aim is to ensure that you can concentrate on your core business, rather than wasting time on red tape.

Conclusion

The status of sole trader has undergone a thorough overhaul. Whether through the law of August 07, 2015, or that of February 14, 2022, the precarious situation of the sole trader vis-à-vis professional creditors has been greatly improved.

The end of the distinction between private and professional assets guarantees greater business security, and therefore allows greater risk-taking, an essential element in the business world.

However, the sole trader is not immune to the practice of financial institutions demanding security interests, particularly on non-professional movable and immovable property. As a result, you need to pay particular attention to this pitfall, to ensure that the guarantees provided by law are not undermined in practice.

When it comes to administrative and tax domiciliation, sole traders have the same opportunities as all other companies. However, to ensure a permanent address, it's best to register at your personal address, at the address of your business premises, or at the address provided by a domiciliation company such as Sedomicilier.fr.

The advantage of these companies is that you can clearly distinguish between family life and professional life, and you don't have to see your home address posted on the Internet, in the registers of sites such as société.com, or verif.com.