What is a company's legal status?
A company's legal status represents its legal operating structure. It is essential to choose the right legal form for your business, so that you can operate under the best possible conditions. Legal status influences :
- how the company operates;
- legal responsibilities ;
- tax system ;
- managerial responsibility.
Micro-business (formerly auto-entreprise)
Characteristics of micro-business
Micro-entrepreneurs, formerly known as auto-entrepreneurs, are highly simplified legal entities. Although it offers many advantages, micro-entrepreneur status is subject to certain sales ceilings and lower social security coverage.
- Minimum share capital: Not applicable
- Number of associates: Not applicable
- Financial liability of partners : Limited to business assets
- Type of income tax: Income tax with option Corporate income tax
The advantages of micro-business
The steps involved in setting up a micro-business are very simple. All you need to do is enter a few details on the Guichet Unique website to declare the start of your activity. Becoming a micro-entrepreneur is accessible to a wide range of professional profiles (salaried, retired, self-employed). Under certain conditions, it is possible to combine salaried employment with the status of auto-entrepreneur.
A micro-enterprise has a simplified micro-social and micro-tax regime. Social security contributions are limited and indexed to monthly or quarterly sales. They represent between 12.3% and 21.2% of sales, depending on the activity carried out by the micro-entrepreneur.
Micro-entrepreneurs benefit from a VAT exemption based on their sales:
- Sales of less than 36,800 euros for services;
- Sales of goods under 91,900 euros.
Micro-entrepreneurs can opt to pay income tax in full discharge.
The disadvantages of micro-business
Micro-enterprises are subject to sales ceilings:
- 77,700 euros (excl. VAT) per year for self-employed professionals and service providers;
- 188,700 euros excluding VAT per year for the sale of merchandise and the provision of accommodation.
VAT is not recoverable for auto-entrepreneurs as long as they are VAT-exempt. Finally, although they are affiliated to the Social Security system, their daily benefits in the event of work stoppage are low. Unemployment cover does not apply to auto-entrepreneurs.
EURL : One-man business with limited liability
Characteristics of EURL
An EURL, or Entreprise unipersonnelle à responsabilité limitée, is an attractive status for people wishing to set up their own business without partners.
- Minimum share capital: Free
- Number of associates: 1
- Financial liability of associates : Limited to the amount of contributions
- Type of income tax: Income tax with option Corporate income tax
The advantages of EURL
One of the advantages of an EURL is its administrative flexibility. Registration with the RCS remains compulsory, but no publication in the Bulletin officiel des annonces civiles et commerciales (BODACC) is required. The clerk of the commercial court performs this task free of charge for the entrepreneur.
The major advantage of an EURL is that the entrepreneur's liability is limited to the total amount of his or her contributions. Personal assets are protected in the event of bankruptcy and business debts. The minimum share capital required is one euro. This advantage frees the individual entrepreneur from the obligation to devote part of his cash flow to building up share capital.
The disadvantages of EURL
EURL's accounting obligations are much more onerous than those of a micro-business. The manager must publish his annual accounts at the end of each financial year. It's best to call on the services of an expert to help you with this process. The social security system for the manager of an EURL is assimilated to the Social Security system for the self-employed. They do not enjoy the same social benefits as employees.
SARL: limited liability company
Characteristics of the SARL
The SARL, or limited liability company, is one of the most widespread legal forms in France.
- Minimum share capital: Free
- Number of associates: Between 2 and 100 associates
- Financial liability of associates : Limited to the amount of contributions
- Type of income tax: Corporate income tax with option Income tax
The advantages of the SARL
The liability of SARL partners is limited to the amount of their contribution to the company's capital. They can choose between corporate income tax and personal income tax. SARLs are ideal for entrepreneurs wishing to set up a business as a couple or as a family, thanks to the status of "conjoint-collaborateur". Spouses can benefit from reduced-cost social security coverage.
The disadvantages of the SARL
The articles of association of a SARL are more rigid in terms of drafting. Administrative and accounting procedures are also less flexible than those of a SAS. Another disadvantage is that the rules governing the arrival of new investors in a SARL are very strict. Last but not least, social protection for the majority shareholder is not optimal, and social security contributions for employees are very high.
SASU: Société par actions simplifiée unipersonnelle (simplified one-person company)
Characteristics of SASU
The SASU, Société par actions simplifiée unipersonnelle, is a legal form appreciated for its flexibility and its social and tax regimes.
- Minimum share capital: Free
- Number of associates: 1
- Financial liability of associates : Limited to the amount of contributions
- Type of income tax: Corporate income tax with option Income tax
The advantages of SASU
The chairman of a SASU is treated as an employee. They are therefore affiliated to the general Social Security system. The rules governing the chairman's remuneration are defined in the company's articles of association. The chairman can choose how he or she wishes to be taxed.
The disadvantages of SASU
Drafting the articles of association for a SASU requires professional assistance. The bylaws define how the company will operate. If they are not properly drafted, day-to-day management problems may arise. If the SASU chairman does not pay himself a salary, he is not covered by social security.
SAS: simplified joint-stock company
Characteristics of SAS
The SAS, Société par actions simplifiée, offers real flexibility in its day-to-day operations.
- Minimum share capital: Free
- Number of partners: At least 2
- Financial liability of associates : Limited to the amount of contributions
- Type of income tax: Corporate income tax with option Income tax
The advantages of SAS
The major advantage of an SAS is the flexibility of its operation. In contrast to a SARL, the social security system enjoyed by the company's directors is very protective. Partners are only liable for the company's debts up to the total amount of their contribution. Entry of new partners into the company's capital is simplified.
The disadvantages of SAS
An SAS implies a precise drafting of its articles of association in order to function optimally. Directors' social security contributions are very high, even though there is no minimum social security contribution as in a SARL.
Other legal forms
Among the various legal statuses, there are other, more marginal forms with more singular characteristics:
- The SA, Société anonyme, is reserved for larger companies.
- Limited partnerships: SCS (Société en commandite simple) and SCA (Société en commandite par actions).
- The SNC, general partnership
Your choice of legal status must correspond to your business project. To set up your business in the best possible conditions, you may need to seek professional advice.
Written by our editorial expert
July 24, 2024
