Various legal statuses

You have a creation project of company and you wish to choose the best legal structure.

Findfrenchlawyers informs you to help you to choose the good statute and presents the various shapes of companies to you.

The Individual business (EI)
The individual business, so called “undertaken in personal name”, consists of a natural person who will declare herself as a tradesman, craftsman or a liberal profession.
The contractor has the full powers to direct his company and makes only the decisions. He can carry on his activity without associate. The capacity to make the trade is obligatory. According to the Commercial law, only major (old of with-less the 18 years) can be commercial. The contractor with the possibility of working with its spouse for whom various statutes can be adopted.
The company carries officially the patronymic of its leader, to which it is possible to associate a trade name.

At the legal level
There is no minimum capital to constitute to start. The contractor is indefinitely responsible for the professional debts on the whole of his inheritance. The choice of the matrimonial mode can prove very important. The contractor must take care to separate his inheritance from that of joint sound. The contractor has the full powers to direct his company and makes only the decisions. It is, now, possible to protect its principal residence from the continuations of the creditors while proceeding to a declaration of elusiveness in front of notary (cost: 117,68 euros), published in the office of the mortgages and according to the cases, with the Company and Trade register, Repertory of the Trades or newspaper of legal advertisements.
There is no concept of authorized capital; the capital necessary to the creation of the individual business is consisted the personal capital contribution of the contractor. Financial liabilities are function of the investments and the Requirement in estimated working capital (BFR).
No drafting of the statutes is obligatory and the formalities are relatively simplified; the contractor must ask for his registration, as a natural person, near the centre of formalities of the companies.

At the tax level
The contractor cannot be paid of his own company. He will be personally indebted income tax of the natural persons on the amount of the taxable profits carried out by the independent activity without possibility of option for the corporation tax. There is no imposition on the level of the company. The benefit of the company will be carried in the declaration of the incomes of the contractor in the category corresponding to its activity.
The individual businesses profit from specific measures:
- exemption of the VAT,
- simplified tax declarations,
- countable obligations limited to the behaviour of a simple book to record the receipts from day to day.

With the social status
The individual contractor is always fixed with the social mode of the free lances for the disease and the mode of the industrial and commercial professions for the retirement. It with the possibility of contributing to a mode complementary to state pension scheme, disability-death and of supplementary pension. There is no allowance unemployment but the possibility of subscribing a personal insurance.

The advantage of this shape of company is the absence of conflict between associates to share the benefit and to control the company.

The transmission of the company is done by:
- transfer of the funds (craftsmen and tradesmen) or presentation of the customers (liberal professions),
- possibility of bringing the company to the capital of a company in creation or of entrusting the exploitation of it to a third (hiring-management).

The Unipersonal Company with Limited Responsibility (EURL)
The EURL is a limited liability company made up of only one associate. This associate can be a natural person or morals.

At the legal level
It limits the responsibility for the single associate to the contributions; however, in the event of fault of management, its responsibility can be wide with its personal goods.
The EURL authorizes the creation of a company with relatively little capital; the amount of the capital is freely determined by the single associate in the statutes according to the size, of the activity and the requirements in capital for the company. The amount of the capital must be made up of cash subscriptions and/or in kind.
The contributions in cash of 20% must be released (i.e. versed) obligatorily, at the time of the formation of the company. The balance imperatively having to be released in the 5 years.
The drafting of the statutes is obligatory.

At the tax level
If the associate is a natural person, the company is subjected to the income tax; but if the single associate makes the request of it, it can be subjugated with the corporation tax.
The remuneration of the leader is not deductible from the receipts of the company except the option for the corporation tax or if the manager is not the single associate.

With the social status
The statute of non-associated manager: he is assimilated to that of paid in comparison with social protection. He contributes to the general scheme following the following distribution: a wage share and an employers' share of Social security. The non-associated manager is not obliged of contributing to the general scheme of the employees that if it is remunerated. The provisions of the Labour regulation do not apply to the non-associated manager, it will be able to thus profit from the dismissal indemnities, neither of the allowances unemployment, nor SMIC…

The statute of associated manager: he is assimilated to that of a tradesman. He profits from the same mode of social protection. However, the first 2 years, this contribution is calculated on the basis of fixed price independent of its income.

The transmission of the company is done by transfer of partnership shares.

The Partnership (SNC)
It is a business firm whatever the carried on activity. It is managed by one or more managers who provide at the same time the administrative duty and that of representative of the company. The associates can be at least two. They can be companies or natural persons. Two husbands can be associated in a SNC. An emancipated minor can be manager but not associated.
The SNC is indicated by a company name which can comprise the name of one or more associates or be purely whimsical.

At the legal level
It is a limited liability company for the associates. Those, usually called “active partner”, have all the quality of tradesmen and are responsible jointly and in an unlimited way with regard to the debts for the company. If they want to leave the company, they can yield their shares only with the assent of all the associates. The death of an associate puts an end to the company in common noun.
There 'is no minimum amount for the authorized capital, it is divided into partnership shares; those are not freely transferable, even between associates, any transfer having to be authorized beforehand by the associates ruling unanimously.
The authorized capital can be made up of various contributions which are the subject of a very flexible payment:
- cash subscriptions, there does not exist any fixed legal delay for their release;
- contributions in kind, the law does not envisage any procedure of checking:
- contributions in industry, they are authorized without restriction.
The main part of the operating conditions of the company results from the statutes.

At the tax level
It is a transparent company. The benefits are imposed not in the name of the company but directly in the name of the associates. Each associate is subjected to the income tax on the share of the benefit which returns to him in proportion to its share in the capital of the company. It is possible to choose an imposition on the companies but, attention, the choice of this option is irrevocable.
The remuneration of the manager associated and that with joint sound are deductible from the result, whatever their mode matrimonial.

With the social status
All the associates are affiliated with the social mode of the free lances.
The transmission of the company is unanimously made by transfers of shares associates.

The Limited liability company (limited liability company)
It is a company joining together 2 at least associated and to the maximum 100 which freely establish the amount and the distribution of the capital of the company. These associates can be either of the natural persons or of the moral persons. The associates name one or more managers in the majority. A limited liability company can be created between spouses. The legal representative of a limited liability company is his manager.
The head office of a limited liability company is normally established in a commercial premise. However, it is possible to domicile the company:
- is in the residence of the legal representative, without time limit, since no legislative measure or contractual is opposed to it;
- is in a company of domiciliation;
- is in buildings occupied by another company.

At the legal level
The authorized capital is freely fixed by the associates in the statutes.
The limited liability company is created with a minimum capital of 1 Euro. The capital is free but 20% of the contributions in cash are obligatorily versed at the time of the constitution, the balance having to be released in the 5 years as from the registration of the company. The authorized capital can be made up of cash subscriptions, and/or in kind.
The responsibility for the associates is limited to the amount for their contributions, except if they made faults of management or granted guarantees to personal capacity.

At the tax level
The benefit are subjected to the corporation tax. It is however possible to choose the income tax in the case of the limited liability company of family.
The limited liability company of family is a limited liability company of common right, whose specificity lies in the will of the associates to choose the tax mode of the partnerships.
The remunerations paid with the managers are deductible from the taxable profit. The remuneration paid with the minority managers is imposed according to the mode of paid and that versed with the majority managers is taxable according to the mode of the leaders of company.

With the social status
The minority statute of manager is compared to that of an employee in comparison with social protection. It profits from the mode of Social security from paid except for the mode from insurance unemployment and contribute with the general scheme following the following distribution: a wage share and an employers' share of Social security.
The majority statute of manager is compared to that of a tradesman. It profits from the same mode of social protection as that of the self-employed persons.
The advantage of this statute is to put joint, with people in whom one has confidence, of competences, of knowledge…

The transmission of the company is done by transfer of partnership shares.
 
The Public limit company (SA)
It is a joint stock company at least cash 7 associated and a minimum capital of 37.000 euros or 225.000 euros if SA calls the public upon saving, releasable for half during creation and the remainder over 5 years.
It includes/understands a general meeting of the shareholders who name the administrators (3 minima) and a board of directors which appoints among its members the leader and one or more managing directors.
Its creation requires the intervention of a lawyer or of a lawyer, his management must be followed by a cabinet of expertise-accountant and its operation is rather heavy.

At the legal level
The authorized capital must be completely subscribed. It consists of contributions in kind or in cash, the contributions in industry are prohibited. The responsibility for associated and the shareholders with regard to the social debts is limited to the amount for their contributions in the capital. The actions are easily negotiable and transferable, the shareholders can enter or leave the company without paying fees registration. The variability of the capital is not possible without amending.

At the tax level
The benefit of the company are subjected to the corporation tax. Remunerations of the chairman and the managing directors are deductible from the taxable profit, and they profit from the tax mode of the employees.

With the social status
The chairman and the managing directors have the statute of paid and are affiliated with the general scheme of paid except for the mode unemployment.

The transmission of the company is done by transfer of shares except contrary clause of the statutes.

The Joint stock company Simplified (SAS)
It was created to allow the new companies, especially in the field of the technological innovation, to develop easily.
SAS can be made up by one or more natural persons or morals which support the losses of the company only to the amount of their contribution. The law does not fix any minimum.
When SAS comprises only one person, this one is called “single associate”. The associates who can be French or foreign do not have the quality of tradesman. A minor, represented by a legal representative (father or mother) can be associated.
The call to the public saving is prohibited. Mention “SAS” must follow the name of the company on all the acts and documents intended for the thirds.
The duration of the company cannot exceed 99 years.

At the legal level
The authorized capital must be completely subscribed. The minimal capital is fixed at 37.000 euros.
The actions representing the contributions of cash must be released from half at least their face value. The release of the surplus intervenes in one or more time within a 5 years maximum delay. The actions representing the contributions in kind must be released completely.
Each associate is held to make contribution at the company. These contributions whose total constitutes the authorized capital, can be in cash or in kind. The contributions in industry are prohibited.

At the tax level
SAS is subjected to the corporation tax. The president is taxable with the title of the income tax in the category of the treatments and the wages and profits from the same abatements as the employees.
SAS cannot call upon the public saving, it is fiscally opaque.

SAS is particularly appreciated for the reduction of the constraints and the fact that the inner working is primarily defined by the statutes, i.e. by the will of its associates and not by the law.
 
The Limited partnership with Share capital (SCA)
At the same time, partnership and joint stock company, it joins together two kinds of associated: the active ones (one at least) which is tradesmen and answers jointly of the social debts and the silent partners (three at the most) which is shareholders. The associates can be natural persons or morals, they can be French or foreign.
The sleeping partners have the quality of shareholders and support the losses of the company only to the amount of their contributions. Only the sleeping partners are held to make contribution at the company. These contributions can be in cash or in kind. Only the active associates can make contributions in industry. These contributions do not contribute to the formation of the authorized capital.
The creation of a SCA requires a notary act. The company is indicated by a company name, to which the name of one or more associates can be built-in. However, the name of sleeping partner cannot appear in it.

At the legal level
The authorized capital is divided into actions and is composed only of the actions of the silent partners. The shares of the active associates who do not have the quality of silent partner (i.e. did not subscribe of actions) do not contribute to the formation of the authorized capital.
The law fixes the capital at 37.000 euros. It is of 225.000 euros, if the company calls upon the public saving. The authorized capital must be completely subscribed.

The Civil society
The company cannot have a commercial object. With the disappearance of the company, the associates support the possible debts only with proportion of their share in the authorized capital.
The spheres of activities of companies are mainly: agriculture, liberal professions, the real estate and mental activities.
The statutes must envisage the denomination and the head office of the SC which is freely fixed by the statutes and which can be established in the residence of the manager. The statutes must be signed by all the associates.

At the legal level
A civil society must be made up of 2 at least associated. The associates should not have the quality of tradesman. The company can be directed by one or more managers. It can be an associate or not, a natural person or morals, of French nationality or foreign.
It is possible to create a civil society without capital. If a capital is made up, the law does not impose any minimum amount. It can be versed completely or not with creation. The contributions are possible in cash, in industry or in kind. The contributions determine the rights of associated in the authorized capital.
The responsibility for the associates is indefinite but non-interdependent on the unit of their personal goods. In the absence of capital, they are supposed responsible with equal share. The civil responsibility and penal of the manager can be committed.

At the tax level
There does not exist any imposition on the level of the company (tax transparency). Each associate is imposed on the income tax proportionally with his shares in the authorized capital (category of the land incomes for the natural persons). On option of the associates, the SCI can be subjected to the corporation tax.

Groupement d'Interet Economique (GIE)
The GIE is a structure, halfway between association and the company. It is a grouping of which the goal is to facilitate or to develop the activity of its members or to improve the results of this activity. It must be registered with the Register of trade and the companies.

At the legal level
The GIE must be made up of 2 members at least. It can be a question natural persons or morals. Each member of the grouping must carry on an economic activity which finds its prolongation in that of the GIE.
The GIE can be constituted with or without capital. With capital, no minimum amount is required. In the absence of capital, the grouping functions like an association. It is possible to make contributions in cash, in kind or in industry.
All the associates are in theory responsible jointly and indefinitely on their personal goods for the debts of the grouping towards the thirds, except if a convention with a determined third, limits this responsibility.

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