Starting a Business in France as a One-Person Company: What you need to know.
The one-person company has a legal personality and its own assets. In fact, the sole partner limits their financial responsibility to just contributions. Another advantage is that it operates more easily because it is comprised of shares.
On the other hand, these companies must respect particular legal formalities outside of their constitution (establishing articles of association/bylaws) and throughout their social life (holding Annual General Meetings/AGMs) as well as more cumbersome accounting obligations than those for a sole proprietor, making them costlier.
There are two forms of associated corporation possible:
- The EURL (a one-person limited liability company)
- The SASU (a simplified shareholder company)
The former operates under the same legal regulations as the SARL (a limited liability company) and the latter as the SAS (a simplified joint-stock company), for which there is more contractual freedom. In effect, it is possible to insert clauses related to capital shares and determine the organisation, operation, remuneration and the power of the managing bodies in the articles of association.
The Tax Plan
The SASU is subject to corporate tax unlike the EURL. However, the EURL can opt for corporate tax; the profits would be taxed in the name of the company at the rate of 15% up until €38, 120 where the rate would become 33.33%. Although, opting for corporate tax is irrevocable. The sole partner would not be able to opt out at a later date.
Taxation of profits is as follows:
- Companies subject to corporate tax: the normal system
- Companies subject to income tax (BIC – for traders and artisans): the normal system
- Companies subject to income tax (BNC – for independent professionals): the declaration system (equivalent to the normal system)
The Social Plan
The entrepreneur either falls into the category of salaried directors for the SASU or into TNS (non-employed workers) for the EURL. Salaried directors benefit from the same advantages as those in the general scheme for employed workers with the exception of unemployment insurance. The disadvantage is that this is more expensive than TNS.
N.B. in the case of the EURL being subject to corporate tax, the basis of social contributions is made up by the net remuneration paid to the director and by dividends exceeding 10% of the capital shares as well as of the shareholder’s current account.
If you think that this matter applies to you, it is important to ensure substantial understanding of all relevant information, facts and procedures. Here at Maupard, we would be more than happy to advise you on the next steps and to allow you to make the most of these opportunities.
Do not hesitate to contact us by telephone on +33 (0) 1 53 93 94 20 or by e-mail to [email protected], so we can work out the needs of your business. Our team of experts is here to answer any questions you may have.