La SARL is one of the most popular and versatile corporate legal forms, as it can be adapted to any business project. Inexpensive creation, great freedom of organization and simplicity of management are all key advantages of the SARL. Nearly 40% of companies created in 2019 have adopted this status.
A SARL (limited liability company) can also be a one-person company (with a single shareholder), known as anEURL. In other words, this is the simplest form of company, run by a day-to-day manager and an annualgeneral meeting attended by all associates.
The manager can be a minority or majority shareholder, depending on the number of shares he or she holds in the company's capital. If he holds the most, he is the majority shareholder. If another partner holds more, he is a minority shareholder.
Let's find out everything you need to know about this key position in an LLC.
The manager of a SARL is its legal representative, acting as a corporate officer in the name and on behalf of the company he represents.
He must be appointed by the partners in the articles of association or in an extra-statutory deed when the company is created. The decision must be adopted by one or more partners representing at least 50% of the shares. The appointment must be made before the notice of incorporation is published in a legal gazette.
The manager's powers are defined in the company's articles of association.
The partners may also decide to appoint several managing partners. This is known as a co-manager. The co-manager is appointed in the same way as the managing partner. They are also legal representatives and have the same powers, distributed equally.
The majority shareholder of a SARL (limited liability company) is a self-employed person covered by the social security system for the self-employed. This regime brings with it specific requirements for calculating retirement pensions.
The social security contributions paid by self-employed workers are lower than those paid by employees, but they benefit from less extensive social security coverage. Self-employed workers must pay social security contributions even if they are not paid.
Remuneration received by the SARL's majority manager is subject to income tax as salary and wages.
They are subject to the same rules as salaried employees concerning actual expenses: a 10% deduction for professional expenses is applied to calculate the net taxable amount. It is possible to waive the flat-rate deduction and opt for reimbursement of actual expenses.
Dividends received are taxed according to the flat tax (or Prélèvement forfaitaire unique) of 30% voted in 2017. They may also be taxed at IR level, subject to an option with the tax authorities. The fraction of dividends exceeding 10% of the share capital is subject to the payment of social security contributions.
There are several advantages to being the majority manager of a limited liability company:
- Social security contributions are lower than for employees covered by the general social security scheme
- Incentives exist to limit the amount of social security contributions when starting a business
- The distribution of remuneration in the form of salaries or dividends is left to the discretion of the manager.
On the other hand, there are several disadvantages to consider:
- The social security coverage offered in return for the low rate of contributions is low compared to that of employees.
- The social security coverage offered is often considered precarious by many self-employed workers.
- Even in the absence of remuneration, it is compulsory to pay minimum social security contributions to URSSAF.
- Dividends in excess of 10% of share capital are subject to social security contributions.
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Written by our expert Paul LASBARRERES-CANDAU
December 22, 2020
