While you're in the process of setting up your company, the fateful question of domiciliation arises.
Where can you domicile your head office?
It's important to weigh up the pros and cons of each option, including domiciliation at home, in a business premises, through a domiciliation company, in a coworking space or in a business incubator.
What about domiciliation with a third party?
Today we take a look at the pros and cons of such a decision!
At first glance, the option of domiciling your business with a third party seems like a good solution.
The simplicity of such a solution brings definite advantages (which we'll develop further below) and limits the need for administrative procedures.
However, it is important not to fall into the trap of illegality.
In fact, this is only possible if the premises you wish to use (whether it's your parents' home, or even that of very good friends you can trust) is also the principal residence of the individual wishing to domicile his or her business there.
Once again, you need to be vigilant about any contractual and/or legislative provisions that might run counter to such a decision.
You must therefore be careful with this form of domiciliation.
Despite the need for vigilance, domiciliation with a third party has definite advantages, making it a viable option.
This offers two attractive financial advantages
First and foremost, domiciling with a third partysaves you the cost of renting your business .
This possibility, often used in the early stages when the company has no employees, makes launching an entrepreneurial project accessible by limiting financial costs. It also allows for experimentation.
Secondly, there are tax advantages . The third party with whom the company is domiciled can decide to lease the space to the company.
This requires a lease to be signed by both parties, as well as the need to align with market prices, but reduces the tax burden on the company.
In return, the third party must declare this cash inflow as property income, so it's essential to have a good relationship with the third party in question.
Before deciding to domicile your company with a third party, you need to be aware that such a choice also has many limitations.
First of all, domiciling your business with a third party does not mean that you can carry on your business on the same premises: you can't receive customers or store goods there.
Secondly, the company's image may also suffer. Indeed, having a prestigious address in a well-known business district is a plus when it comes to building trust.
On the contrary, having an ordinary address, and a third party's address at that, can have the effect of discrediting the company and putting off potential investors.
Finally, you need to be aware of the role that your professional life can play, and learn to manage the permeability between it and your personal life, particularly that of the third party with whom the company is domiciled.
It takes a lot of organization!
Commercial domiciliation is undoubtedly the most attractive alternative to domiciliation with a third party.
First of all, the latter has the merit of providing a lower-cost domiciliation than a business premises, and thus comes close to the advantages of domiciliation with a third party.
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What's more, unlike the latter, it helps to maintain or even give greater prestige and credibility to the company, by allowing it to have an address referring to a business district, for example.
Last but not least, the company founder can rest assured that his or her private life will be preserved.
Written by our expert Editorial staff
February 28, 2024
