SELARL: advantages and disadvantages

Would you like to launch an entrepreneurial project related to a regulated liberal profession?
It's possible if you opt for the SELARL legal form for your future business.

But what is a SELARL?

The SELARL or Société d'Exercice Libéral à Responsabilité Limitée is a legal form based on the SARL model.

This type of business is aimed at people wishing to set up a company to practice a regulated liberal profession such as a lawyer, architect or doctor.

To shed some light on this little-known legal form, let's focus today on the specifics, advantages and disadvantages of a SELARL.

Specific features of a SELARL 

To begin with, it's important to describe the specific legal and fiscal features of a SELARL.

The most striking features are as follows:

• A SELARL is a non-trading company. However, as opposed to Société Civiles Professionnelles or other SCPs, the latter have the advantage of operating on the capital company model.
• It's important to note that the content of a SELARL's articles of association is strictly regulated by law.
• Like a SARL, the minimumshare capital required is €1.
• The partners of a SELARL may be professionals working in the company, other natural persons or legal entities with a minority interest.
• Such a company can have from 2 to 100 partners. Beyond that, the SELARL gives way to a SELAFA or Société d'Exercice Libéral A Forme Anonyme.
• The SELARL can be a single-person company, in which case it will be presented as a SELURL or Société d'Exercice Libéral Unipersonnelle.
• In a structure such as a SELARL, the liability of all partners is limited to the contributions they have made. However, it should be noted that a partner's professional liability for professional acts is personal, and applies not only to the individual's assets, but also to those of the company.
• In principle, such a structure is subject to corporate income tax (Impôt sur les Sociétés or IS). However, it is possible to opt for Impôt sur le Revenu or IR.
• The managers of a SELARL are called "gérants". They must be practicing professionals. They may receive fixed remuneration for their status as managers. This remuneration is then taxed according to IR. Alternatively, they may receive dividends. Under no circumstances may they pay unemployment contributions.
• It is possible to transfer shares. However, such a decision must be approved by a ¾ majority of SELARL partners. This is the case for most major decisions concerning the company.

The advantages of SELARL

Secondly, we need to look at the various advantages of a SELARL.

A number of these are worth mentioning:

• First of all, such a structure allows the company to call on outside capital without putting the self-employed professionals exercising their professional independence at risk.
• As mentioned above, the liability of associates is limited to their capital contribution.
• Secondly, any remuneration paid to a managing director is deductible from taxable income. This remuneration is set directly by the managers themselves, who at the same time determine the amount of social security contributions they will have to pay, as these are linked.
• Finally, it is possible for associates not to pay dividends to each other at the end of the year. Such a decision allows them to avoid taxes on their dividends. This is a real advantage over SCPs, where profits are always taxed, regardless of whether or not they are distributed.

The disadvantages of the SELARL

It is necessary to list the disadvantages of this legal form.

The SELARL has a number of disadvantages compared to a conventional SCP, but also compared to a SELAS or Société d'Exercice Libéral par Action Simplifiée.

Compared to an SCP

The disadvantages compared to an SCP are manifold:

• From an accounting point of view, SELARLs are already required to keep "commitment" accounts , in which invoices are used as proof. This type of accounting is slightly more complex than the "cash in/cash out" accounting typical of SCPs. This often results in a higher bill for accountants.
• SELARL formalism is important. Far more so than in a SCP. As such, it is essential for SELARLs to approve the annual financial statements each year, which must be filed with the Greffe du Tribunal de Commerce, and to decide on the appropriation of profits.

Compared with a SELAS

Finally, a SELARL also has a number of notable disadvantages, when compared with a SELAS (Société d'Exercice Libéral par Actions Simplifiée):

• The directors of a SELARL must be self-employed, whereas those of a SELAS have the more protective status of "assimilé-salarié".
• Secondly, in the case of a share transfer, the charges payable by the purchaser are lower in a SELAS than in a SELARL.
• Finally, dividends from a SELARL are subject to social security contributions, whereas this is not the case for a SELAS.

Professions and sectors in which SELARLs are preferred

The SELARL is particularly popular with a large number of regulated professions, thanks to its specific advantages in terms of limited liability and tax flexibility. Here is a list of the main professions and sectors where the SELARL is often chosen:

Legal sector
Lawyers, notaries, bailiffs and other legal professionals find in the SELARL an appropriate structure for practicing their profession while benefiting from a corporate organization. This form limits their financial liability, while facilitating the integration of new partners and the transfer of shares.

Medical and paramedical sector
Self-employed doctors, dentists, veterinary surgeons, pharmacists, physiotherapists and nurses frequently adopt the SELARL structure. This structure enables them to pool resources, share the cost of expensive equipment and offer a more comprehensive, coordinated range of care within a single entity.

Architecture and engineering sector
Architects, engineers, surveyors and other building and construction professionals often opt for the SELARL. This enables them to combine their skills within a single company, while limiting the financial risks associated with their activity.

Accounting and finance
Chartered accountants, statutory auditors, wealth management consultants and other financial professionals find the SELARL an advantageous structure in which to carry out their activities. The SELARL allows them to structure their practices efficiently and optimize their tax situation.

Arts and culture
Self-employed professionals in the cultural sector, such as curators-restorers, art critics and certain artists, can also set up SELARLs to organize their activities. This legal form offers them greater flexibility while protecting their personal assets.

The SELARL is therefore a particularly popular legal structure in many regulated professional sectors. It offers a unique combination of legal protection, tax flexibility and growth opportunities, making it a strategic choice for many liberal professionals.

In conclusion, the SELARL is a legal form that can be interesting in terms of the entrepreneur's project and needs. However, despite its many features, it remains a little-known legal form. If you'd like to create or register your SELARL, you can do so easily with sedomicilier.fr.