All legal forms are compatible with the purchase and sale of automobiles:
- SARL: limited liability company
- SAS: simplified joint-stock company
- EURL : Limited liability company
- SASU: Société par actions simplifiée unipersonnelle (simplified one-person company)
The legal status depends on the entrepreneur's needs in terms of business model. Separating personal assets from those of the business may be necessary, depending on the corporate structure sought. The status of manager is an option to be taken into account in the desired business model.
The auto entrepreneur and sole proprietorship (EI) statutes are two possible solutions. They simplify the administrative procedures involved in setting up and running a business. They do, however, have certain drawbacks, such as sales ceilings. Whether you're already a professional dealer, or a car enthusiast looking to set up your own business, here's some advice on how to get started in the car sales market.
The auto-entrepreneur status offers undeniable advantages. Business registration is quick. Management procedures are simplified to the maximum, as are accounting requirements. If the micro-entrepreneur has accounting skills, there's no need to hire an accountant.
A self-employed entrepreneur does not charge VAT if annual sales remain below the exemption thresholds thresholds set by law. Under certain conditions, a car salesman operating as a micro-business is obliged to charge VAT:
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On January 1ᵉʳ of the year, if the sales figures for years N-1 and N-2 have both exceeded the limit of 91,900 euros each for sales activities.
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In the current year, if sales exceed the threshold plus 101,000 euros for sales activities.
The auto-entrepreneur status allows you to benefit from tax breaks during the first few years of business, particularly in terms of CFE (business tax). Insurance regulations are also less restrictive. However, buying and selling used vehicles as an auto-entrepreneur does require risk coverage, for greater peace of mind.
Since the auto entrepreneur does not charge VAT to his customers, he cannot deduct it from the purchases he makes. The sales declaration is made every month or quarter via the URSSAF website or application. The process is simplified and income tax can be paid at the same time.
The auto entrepreneur status offers flexibility in administrative and accounting management. However, VAT thresholds can be quickly exceeded if the car-buying and resale specialist has a high volume of sales. Turnover data must be updated on a monthly or quarterly basis.
The legal status ofsole trader (EI ) is ideal for getting started quickly in vehicle sales, with streamlined formalities. This advantage is offset by the association of your assets with those of the sole proprietorship.
With the EI status, you don't need any share capital to operate your business. Accounting obligations are less restrictive, and overall management is simplified. The sole trader does not need to publish his annual balance sheet via the commercial court clerk's office.
Unlike the auto-entrepreneur, the EI is subject to VAT. It invoices this tax and files VAT returns with the tax authorities. They can deduct VAT paid on purchases. The sole trader is not subject to sales ceilings, exceeding which would force him to change status.
The sole trader has excellent decision-making leeway. He or she is the sole decision-maker in this business model. This is an advantage for people who like to go it alone.
Selling cars to professional or private customers requires registration with the Registre du Commerce et des Sociétés under certain conditions. To make sure you take the right steps as a car dealer, read our advice on setting up a SARL / EURL.
The sale of vehicles is possible with a SARL or EURL status.
- SARL: Limited liability company (several partners)
- EURL : Entreprise unipersonnelle à responsabilité limitée (one-man business)
In both SARLs and EURLs, managers' personal assets are protected. They are not assimilated to the business. SARL partners are liable for the company's debts in proportion to their shares in the company. The sale of automobiles under either of these forms requires registration with the Registre du Commerce et des Sociétés (RCS).
Reselling new or used cars requires premises or land. Setting up a business specializing in the sale of vehicles to private individuals and professionals involves running costs. These include energy, telephone and Internet costs, and rent.
Partners can take out loans on behalf of the company. A simple increase in share capital offers attractive development prospects via bank financing.
Specific features of the SARL
The creation of a SARL requires the drafting of bylaws governing its operation. A manager is appointed, and decisions are taken by all partners at an ordinary or extraordinary general meeting. When it is created, the SARL must deposit 20% of its contributions in the form of share capital.
The SARL is an attractive option for transferring shares following a change of partners. In the event of succession, this transfer is simplified. The SARL's articles of association can make the arrival of new partners subject to approval by a general meeting.
The SARL legal status is an attractive option for selling cars if several partners join forces within the same company. It enables you to protect your personal assets and receive a share of the company's profits.
Specific features of an EURL
The SARL does not offer the freedom to go it alone. The EURL makes up for this disadvantage. The manager can recruit staff to help him sell cars. In the process of setting up his company, he is obliged to draw up articles of association and deposit share capital.
The EURL legal form is ideal for people wishing to sell cars while separating their personal assets from their professional activity. If a second partner were to join the company, it would become a SARL (limited liability company).
It is possible to sell cars under the SAS or SASU status:
- SAS: simplified joint-stock company
- SASU: Société par actions simplifiée unipersonnelle (simplified one-person company)
The SASU operates in the same way as a SAS. The only difference is that the SASU has a single shareholder. Drafting the articles of association involves more freedom than for a SARL or EURL. The share capital does not tie up the company's finances at the outset. Its deposit is valid from 1 euro. When creating a SAS or SASU, the company must be registered with the Registre du Commerce et des Sociétés (RCS).
The liability of each partner in the company is proportional to his or her capital contribution. Personal assets are therefore protected in the event of business failure. The director of an SAS or SASU may be entitled to assimilated employee status. They are affiliated to the general Social Security system, but cannot benefit from unemployment insurance.
The SAS or SASU status is interesting for people wishing to sell cars with the advantages of a salaried employee. Personal assets are protected. The company's operating procedures are more fluid.
To find the right status for used or new car sales, you need to carry out an in-depth market study. Setting up a car-buying and selling business calls for a thorough analysis of costs, social security contributions, investments in vehicles and premises, and so on.
Written by our expert Editorial staff
May 15, 2024
