Like most micro-entrepreneurs, you're probably thinking of domiciling your business in your own home, as authorized by the French Commercial Code.
It's an option that has its advantages, but also its disadvantages. Since you're interested in domiciling your company in your own home, we're going to tell you all about them.
The French Commercial Code requires registered companies and individuals to have a registered address.
A company cannot be registered without an administrative and tax address. This obligation applies equally to auto-entrepreneurs and legal entities such as SARLs, EURLs, SASs and other companies.
Domiciliation for auto-entrepreneurs
Domiciliation of a sole proprietorship is similar to that of any other legal entity. Although sole traders often choose their home address as their company domicile, this is by no means compulsory.
Domiciling your company at your home address has no impact on the separation of your personal and professional assets. This distinction is provided for by law.
Moreover, as far as sole proprietorships are concerned, a law dated February 14, 2022, now stipulates that the personal assets of sole proprietors can be separated from their business assets. These provisions will automatically come into force on May 15, 2022.
However, once you've decided to domicile your business in your own home, what about displaying and selling products, or welcoming customers? We'll answer this question after looking at the rules that apply to other legal entities, as they are common to all legal forms.
Company domiciliation for other legal entities
Companies have an autonomous legal personality, known as moral personality. This is in contrast to the physical personality of each individual.
A legal entity, whatever its legal status (EURL, SARL, SASU, etc.) must therefore have its own physical address. This address must be specified in the articles of association.
This is why the question of the company's registered address is so important, as each change of address implies a change in the company's articles of association. This means a general meeting of all associates, and payment of the costs associated with changing the articles of association to the clerk's office of the court with territorial jurisdiction, publication in a gazette, etc.
Although a company can change its registered address without restriction during the course of its existence, a change of address is rare. Thinking it through means knowing where you're going to receive your customers, as well as your merchandise.
Regulations governing the reception of customers and the sale of goods in the home depend on building and housing regulations, as well as town-planning rules. These rules depend on the municipality in question. As a result, you need to ask your local council :
- A change of use,
- A change of use.
Each of these requests must be approved by your condominium or landlord, and submitted to your local town hall.
You need to declare a change of use if you want to convert your premises from residential to commercial use, or if you live in a commune with a population of over 200,000, or in the Hauts-de-Seine (92) and Val-de-Marne (94) départements, with the exception of urban free zones (ZFU).
Declarations of change of use are subject to prior declaration. If you need to create more than 20 m² of floor space, or modify the load-bearing structures of your facade, you'll need a building permit.
When you decide to change the use of your home, thetax authorities are also interested. Indeed, it has a bearing on the calculation of property tax, since the rental value of your property changes.
You will therefore need to complete form 6704 IL to inform the tax authorities of the conversion of part of your dwelling into commercial premises.
By law, you can benefit from a temporary property tax exemption if you submit this form to your tax office within 90 days of completion of the work. So don't waste any time.
Are commercial premises suitable for sole traders?
Renting or buying commercial premises imposes a heavy monthly burden. Whether it's the rent or the loan used to purchase the premises, it's rare for this type of initiative to qualify as a sole trader.
Before the law of February 14, 2022, the non-separation of private and professional assets directly committed the personal assets of the sole trader to creditors.
In the event of bankruptcy, renting or buying commercial premises could lead the entrepreneur's entire family to ruin. With the 2022 law, the situation hasn't changed much if you take out a loan with a credit institution.
Indeed, it is not uncommon for banks to create a guarantee on one of your real estate assets that has nothing to do with your business assets. This guarantee consists of including a significant part of your personal assets as collateral for the loan. In other words, the bank will be able to seize your house in the event of non-payment, if it is the collateral for the loan.
It's a good idea to weigh up your decisions carefully before you decide to buy or lease commercial premises. In other words, as a sole trader, be sure of your profits and your customer base, before embarking on major financial investments.
Regardless of your legal status, does your lease authorize you to make mixed use of your premises? In other words, can you stay in your house, or in your rented apartment, while receiving customers and merchandise, and displaying products for sale?
The answer depends on your lease contract. It's rare for such contractual clauses to be included from the outset. The obligation to make peaceful use of the premises at your disposal often prevents you from embarking on this kind of activity.
When it's not the lease contract that forbids it, it's the condominium manager who has serious reservations about the tranquility of the premises. Rarely are co-owners interested in having a line of customers passing in front of the building every day.
In this case, a commercial lease is often preferable to a mixed lease, which allows you to use your premises for both residential and business purposes.
That's the problem with domiciliation. Very often, this solution is limited in time, to five years.
This limitation in time results from a contractual prohibition (lease, co-ownership regulations) or a regulatory prohibition (town planning regulations). The right to domicile one's business at the address of one's principal residence cannot be refused by the lessor or the municipality.
However, it cannot be registered on a long-term basis, and will be limited to a period of 5 years. This duration will be subject to review by the clerk of the court having territorial jurisdiction.
Three months before the end of the five-year period, the latter will send you a letter asking you to inform him of the new address of your company's registered office. In the absence of a new address, your company will be automatically struck off the register of companies.
In other words, three months to change your company's articles of association, compile a change of address file and pay the relevant fees is a very short time.
Domiciling your company at home can be particularly tempting. On the face of it, it's a simple solution for fulfilling the requirements for compulsory company domiciliation, but only on the face of it.
Once you've considered all the regulations governing the use of your home as business premises, the lack of durability of this type of domiciliation, and the administrative obligations involved in changing your address, this solution immediately appears much less attractive.
The initial savings can quickly turn into a legal headache, whether with your local authorities, your landlord or your co-owners.
Therefore, although the law favors domiciliation of companies at home, at least for a period of five years, using a domiciliation company like sedomicilier.fr, allows you to perpetuate your address as soon as your company is created, while offering you the possibility of renting office space or a meeting room if necessary.
So, when choosing your domiciliation address, it's a good idea to ask yourself what your needs are, and what legislation applies to the solution that seems best for you.
