Have you decided toopen an e-commerce site? Before choosing your legal status, ask yourself the following questions:
- Will your online store be managed solely by you or by several people?
- Are you planning to deduct your business expenses or protect your assets?
- Have you defined a low or high sales forecast?
- What financial needs do you have?
- How much is your capital contribution?
- How much growth do you expect your e-commerce site to achieve in the medium term?
The answers to these questions will help you determine the legal status that best suits your needs in the short, medium and long term. Bear in mind, however, that there is no such thing as the perfect legal form for an e-commerce business. So take into account the nature of your project, and choose the legal status that's right for you, based on its advantages and disadvantages.
The advantages and disadvantages of micro-enterprise (auto-entreprise) for an e-commerce site
One of the greatest advantages of the auto-entrepreneur or micro-entrepreneur status is that you can set up your company quickly and free of charge online. With this legal status, it's easier and less costly toorganize accounting and administrative services. Indeed, if you open a micro-enterprise, you don't need to hire an accountant, as you don't have to manage VAT. The only obligations are quarterly or monthly declarations, revenue bookkeeping and invoicing.
What's more, basic VAT exemption helps the entrepreneur to offer products that can be up to 20% cheaper than the competition. Customers buy services or products exclusive of VAT. This is only possible if your sales do not exceed 91,900 euros. With the legal status of auto-entreprise, the entrepreneur's personal assets are better protected, and social security contributions are low.
Unfortunately, micro-business status does not allow entrepreneurs to reclaim VAT on purchases, or deduct expenses from sales. Moreover, sales are capped at 188,700 euros excluding tax. With all these constraints, is it worth setting up your e-commerce business as an auto-entrepreneur? This status is recommended if you want to test the feasibility of your business and your market. You can then easily switch to sole proprietorship status if your business evolves. You cannot, however, convert your e-commerce business into a company. What's more, if you expect sales to exceed 188,700 euros in the first year, this solution is not suitable for your business.
Sole proprietorship for an online sales site
Since the law of February 14, 2022, the EIRL status has disappeared, leaving only the EI. This makes it easier to set up a business under this regime, and limits liability to professional assets.
Unlike the micro-enterprise, this status enables the creation of a real business. With the sole proprietorship (EI), the entrepreneur is subject to VAT, but can deduct it from professional investments or purchases. There are no sales limits. The company's various expenses are calculated on the basis of your profits. In practical terms, the entrepreneur is not subject to corporation tax (IS), but rather to income tax (IR). Even if your business doesn't make a profit, you're still required to pay a flat-rate range of charges. Setting up a sole proprietorship does not necessarily require you to contribute capital.
Should you open your e-commerce site as a sole trader? Yes, but only if you don't want to have any partners and expect to generate substantial sales. When setting up a sole proprietorship, you have the option of applying to be taxed as a company. This is a highly advantageous solution, especially if your sales are fairly high, but your margins are low.
SAS, SASU, SARL, EURL: which legal status should you choose for your e-commerce site?
Setting up an e-commerce company helps protect your personal assets. With these legal forms, the entrepreneur can open an e-commerce site with several shareholders or partners. The company is also easier to sell. However, there are many rules to follow when setting up a company, as well as complex administrative and accounting procedures.
SAS or SASU for opening an e-commerce site
The société par actions simplifiée (SAS) is known for the freedom of action it offers. It is also available as a société par actions simplifiée unipersonnelle (SASU). The latter is ideal for creating a stand-alone online sales site that generates enough money for the manager to pay a salary and social security contributions. Entrepreneurs can set up a SASU or SAS for as little as one euro. Managers of this type of company are automatically covered by Social Security and are considered as employees. It is also very easy to add shareholders to an SAS.
Creating an SAS for your e-commerce site is a very good choice, especially if your business is growing rapidly and you want to be able to bring in other investors. The SAS or SASU legal form gives you the freedom to set up and manage your e-commerce site as you see fit. If you opt for this legal form, it's a good idea to call in a chartered accountant to help you draw up your company's articles of association properly.
SARL or EURL for opening an online store
The limited liability company (SARL) is the most popular legal form for e-commerce. There is also a single-member limited liability company (EURL), which is suitable for a single partner.
As with the SAS, you can set up a SARL with capital as low as 1 euro, whatever your field of activity. Each partner's liability is limited to his or her business assets. With this status, you can opt for income taxation under certain conditions. However, setting up a company of this kind requires a number of administrative and accounting formalities and procedures. The manager's status is that of a self-employed worker, requiring heavy social security contributions.
Choosing the SARL legal status to open your e-commerce business is advantageous if you want to have partners. However, it offers little protection compared with the SAS. It's also easier to work as a family, while benefiting from social protection.
Written by our editorial expert
September 19, 2023
