SAS or SARL, are the differences sometimes blurred? Find out here which status suits you best!
The SARL (Société à Responsabilité Limitée) and the SAS (Société par Actions Simplifiée) are relatively similar, which is why we can't objectively recommend one or the other depending on your activity: civil, commercial and mixed activities are perfectly suited to the SARL or SAS.
At first glance, the founding characteristics of the two companies are quite similar
The SAS and SARL have the same formalities for creation, and the same duration of existence for the company (i.e. 99 maximum with possible extension, and they both have to draw up articles of association). In addition, there is no minimum initial share capital for either type of company, and contributions must be made in kind or in cash. Finally, the liability of associates is limited in both cases to the amount of the contributions.
As for the appointment of a contribution auditor, which can prove onerous, here too the regulations are the same in both cases. The appointment of a contribution auditor may not be compulsory if no contribution in kind exceeds 30,000 euros, and if the majority of the company's capital is not made up ofcontributions in kind.
However, there are a number of differences that cannot be overlooked. On the one hand, the number of associates of a SARL is limited to 100, whereas that of an SAS is unlimited. On the other hand, in the case of a SARL, the director is one or more managers, and in the case of a SAS, it is the chairman, with or without the help of other decision-making bodies (in both cases, the registered office may be located at the director's domicile ).
Lastly, share capital is not distributed in the same way
In a SAS (simplified joint stock company), it is divided into shares, which may be of several types, and in a SARL (limited liability company), it is divided into shares.
The management differences between the SAS and the SARL are mainly due to the different rigidity of the legal provisions governing the two structures. Indeed, since the SARL provides greater security for the partners than the SAS, where the partners can freely determine the company's articles of association and change them whenever they like, the SARL cannot evolve as quickly as the SAS in the face of a change in the economic context, for example.
So, if the company needs to evolve constantly - for example, if it works with new technologies and takes the form of a start-up- it will be preferable from a management point of view to opt for an SAS. The SARL represents a more traditional, stable business model.
SAS and SARL are both subject to corporate income tax, and may also be subject toincome tax. However, with regard to corporate income tax, it is possible in both cases to set up direct taxation in the name of the partners under certain conditions.
The only essential tax difference between the two types of company is that relating to the case of the family SARL. If an SARL is made up solely of related persons (filiation, siblings, partners) bound by a family civil solidarity pact, then the SARL may choose to operate as a partnership.
The social status of the spouse varies according to the type of company chosen
In a SARL (limited liability company), it is possible to bring your spouse into the business as a collaborating spouse.
This means that the spouse will receive full social protection even if he or she is not remunerated for his or her work.
This arrangement avoids the need, for example, to hire an employee whose salary will be much more expensive.
The SAS does not allow such a status to be set up.
The manager of an SAS is covered by the general social security system in the same way as the manager of a SARL, except if he/she has a majority shareholding, in which case he/she will be covered by the self-employed workers' scheme.
This self-employed status means that you pay lower social security contributions, and benefit from low flat-rate contributions at the start of your business. However, this status does not offer the same level of social protection as that of an employee, particularly as regards retirement. What's more, managers taking advantage of this status are subject to more restrictive rules.
The question of the amount of dividends received by the company director in both cases also presents a particularity. In the case of the SAS, they are not considered as part of the remuneration he receives, and are therefore not subject to social security contributions. This is not the case for dividends paid by the president of a SARL, which are subject to social security contributions at a rate of 40% if the sum in question exceeds 10% of the company's share capital, sums paid into current accounts and share premiums.
In conclusion: SARL or SAS?
Would you like to maximize your immediate income? The SARL is for you. Do you want to ensure a good retirement? The SAS makes this possible. Are you more interested in flexibility than stability? An SAS will allow you to evolve at your own pace. These are just some of the questions to ask yourself before setting up your company.
The choice depends on your priorities!
Written by our expert Audrey Nouvel
December 4, 2017
