Have you decided to open an e-commerce site? Before choosing your legal status, ask yourself the following questions:
- Will your online store be managed only by you or by several people?
- Are you planning to deduct your professional expenses or protect your assets?
- Have you defined a low or high projected turnover?
- What are the financial needs you need?
- What is the amount of your capital contribution?
- What growth are you forecasting for your e-commerce site in the medium term?
The answers to these questions will help you determine the legal status that best suits your short, medium, and long-term needs. However, keep in mind that there is no perfect legal form for an e-commerce business. Therefore, take into account the nature of your project and choose the status that suits you based on its advantages and disadvantages.
The pros and cons of the micro-entreprise (auto-entreprise) for an e-commerce site
One of the biggest perks of being a self-employed or micro-business is that you can set up your company quickly and for free online. With this legal status, it's easier and cheaper to manage your accounting and administrative tasks. That's because a business owner who starts a micro-business doesn't have to use an accountant, since they don't have to deal with VAT. The only things they need to do are file quarterly or monthly returns, keep a record of income, and handle invoicing.
Also, the VAT franchise helps entrepreneurs offer products that can be up to 20% cheaper than the competition. Customers buy services or products excluding VAT. This is only possible if your turnover does not exceed 91,900 euros. With the legal status of auto-entrepreneur, the entrepreneur better protects his personal assets and is subject to a low rate of social security contributions.
Unfortunately, with micro-enterprise status, you can't reclaim VAT on your purchases or deduct expenses from your turnover. Plus, your turnover is capped at 188,700 euros excluding tax. With all these limitations, is it worth setting up your e-commerce business as a micro-entrepreneur? This status is a good idea if you want to test the feasibility of your business and your market. You can then easily switch to individual business status if your business grows. However, you can't turn your e-commerce business into a company. Also, if you expect to have a turnover of over 188,700 euros in the first year, this option isn't right for your business.
The sole proprietorship for an online sales site
Since the law of February 14, 2022, the EIRL status disappears to give way only to the EI. This simplifies the creation of the company under this regime and limits liability to professional assets.
Unlike the micro-enterprise, this status allows the creation of a real company. With the individual company (EI), the entrepreneur is subject to VAT, but can deduct it from their professional investments or purchases. This status does not require any limitation of turnover. The various expenses of the company are calculated on the basis of your profits. Specifically, the entrepreneur is not subject to corporate income tax (IS), but rather to income tax (IR). Even if your company does not make a profit, you must however pay the charges according to a fixed basic range. The creation of an individual company does not necessarily require the contribution of capital.
Should you open your e-commerce site under a sole proprietorship? Yes, but only if you don't want partners and expect to have a substantial turnover. When creating a sole proprietorship, you can request to be subject to corporate income tax. This is a very advantageous solution, especially if you have a fairly good turnover but not much profit margin.
SAS, SASU, SARL, EURL: Which legal status to choose for an e-commerce site?
Creating a company for your e-commerce business helps protect your personal assets. With these legal statuses, the entrepreneur can open an e-commerce site with several shareholders or partners. The company is also easier to sell. To create a company, however, there are many rules to respect as well as complex administrative and accounting procedures to carry out.
The SAS or SASU to open an e-commerce site.
The simplified joint-stock company (SAS) is known for the freedom of action it offers. There's also a single-member simplified joint-stock company (SASU) version. The latter is ideal for creating a solo online sales site that generates enough money for the manager to pay themselves a salary and social security contributions. Entrepreneurs can create an SASU or SAS with a minimum of one euro. Managers of this type of company automatically benefit from social security and are considered employees. It's also very easy to add shareholders to an SAS.
Creating a SAS for your e-commerce business is a great choice, especially if your business is growing rapidly and you want to be able to bring in other investors. The SAS or SASU has statutory flexibility that promotes better management of your e-commerce site. If you opt for this legal form, call on a chartered accountant to draw up the company's articles of association in accordance with the rules.
The SARL or EURL for opening an online store
The limited liability company (SARL) is the most popular legal structure for e-commerce businesses. There's also a single-member limited liability company (EURL) version, which is suitable for a single partner.
Just like with the SAS, you can create an SARL with a capital of 1 euro, regardless of your business sector. Each partner's liability is limited to their professional assets. With this status, you can opt for income tax under certain conditions. However, setting up such a company requires administrative and accounting formalities and procedures. The manager has the status of a self-employed worker, which entails heavy social charges.
Choosing the SARL legal status to open your e-commerce is advantageous if you want to have partners. However, it offers little protection compared to the SAS status. It's also easier to work with family while benefiting from social protection.
Written by our editorial expert
September 19, 2023
