SAS or SARL, sometimes the differences are blurry? 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 advise you on one or the other of these statuses depending on your activity: civil, commercial and mixed activities are perfectly suited to the SARL or the SAS.
The creation characteristics of the two companies initially appear to be quite similar
The SAS and SARL have the same creation formalities, and the same duration of existence of the company (i.e. 99 years maximum with possible extension, and they both have to draw up articles of association). In addition, it should be noted that the initial share capital of both types of companies has no minimum and that the contributions must be provided in kind or in cash. Finally, on the question of the liability of the partners, this is limited in both cases to the contributions.
Regarding the appointment of a contributions auditor, which can be costly, the regulations are the same in both cases. The appointment of a contributions auditor may not be mandatory if no contribution in kind exceeds 30,000 euros and if the share capital is not mainly composed of contributions in kind.
However, there are many differences that cannot be ignored. Firstly, the number of partners in an SARL is limited to 100, while that of an SAS is unlimited. Secondly, in the case of an SARL, the manager is one or more managers, and in the case of an SAS, it is the chairman, assisted or not by other decision-making bodies (the registered office may possibly be located at the manager's home in both cases).
Finally, the distribution of share capital isn't done in the same way.
In an SAS, it is divided into shares that can have several categories, and in an SARL, it is divided into company shares.
The management differences between the SAS and the SARL are mainly due to the difference in the rigidity of the legislative provisions governing the two structures. Indeed, since the SARL provides greater security to the partners compared to the SAS, where the partners can freely determine the articles of association of the company and change them when they want, the SARL cannot evolve as quickly as the SAS in the face of a change in the economic context, for example.
Thus, in the event that the company needs to evolve constantly, for example if it works on new technologies and takes the form of a start-up, it will be preferable from a management point of view to opt for the choice of a SAS. The SARL is rather a traditional model of a stable company.
Both simplified joint-stock companies (SAS) and limited liability companies (SARL) are subject to corporate income tax and may be subject to income tax. However, in both cases, it's possible to implement direct taxation in the name of the partners under certain conditions.
The only key tax difference between the two types of company is related to family SARLs. If a SARL is made up only of family members (direct relatives, siblings, civil partners), then the SARL can opt for partnership tax status.
The social status of the spouse varies depending on the type of company chosen.
In an SARL, you can bring your spouse into your company as a collaborating spouse.
This means that the spouse will receive full social protection even if they are not paid for their work.
This arrangement helps you avoid, for example, hiring an employee, which would be much more expensive.
The SAS does not allow such a status to be set up.
The director of a SAS benefits from the general social security system like the director of a SARL, except if he/she is a majority shareholder, in which case he/she will benefit from the self-employed scheme.
This self-employed status means you pay lower social contributions and benefit from low fixed contributions at the start of your business. However, this status doesn't offer as much social protection as being an employee, especially when it comes to retirement. What's more, managers with this status are subject to more restrictive rules.
The amount of dividends received by the company director also has its own quirks in both scenarios. In the case of the SAS, they aren't considered part of the director's compensation, so they aren't subject to social security contributions. However, dividends for the president of a SARL are subject to social security contributions at a rate of 40% if the amount exceeds 10% of the share capital, amounts paid into current accounts, and issue premiums.
In conclusion: SARL or SAS?
Do you want to maximize your immediate remuneration? The SARL is for you. Would you rather ensure a good retirement? The SAS makes this possible. Does flexibility tempt you more than stability? The SAS will allow you to evolve at your own pace. These are all questions to ask yourself before creating your company.
The choice you make depends on your priorities!
Written by our expert Audrey Nouvel
December 4, 2017
