Starting a company: the different legal structures

For most, the point at which setting up a company (une société) becomes a more suitable proposition than remaining self-employed will depend on a number of factors.

Though turnover and scale are relevant, in France there is no fixed level at which creating a company automatically becomes preferable to remaining self-employed. Finances are a key factor, once micro-entreprise ceilings have been exceeded, prompting many people to reconsider their structure, but so too are profit and risk.

As profits rise, self-employed workers are taxed personally on their profits, with relatively high social charges. A company can offer greater flexibility, allowing income to be split between salary and dividends, which may reduce overall charges in some situations.

Setting up a company also creates clearer separation between personal and business assets, which becomes more important as activities involve contracts, borrowing or staff. Doing so can also open up possibilities for reinvestment, partnerships and other large-scale projects. 

How do I set up a company?

Setting up a company in France involves several formal steps, as follows:

1. Choose a legal structure (commonly SAS / SASU, SARL / EURL - see below), as this determines tax, social charges and management rules.

2. Draft company statutes, define share capital and appoint directors. 

3. Registration of the company must then be done online via Inpi, which forwards details to the tax authorities, Urssaf and the commercial court. A business bank account is required to deposit share capital. 

4. Professional qualifications or insurance may be needed, depending on the activity. 

5. A SIREN number is issued once registered, and the company can begin trading, subject to ongoing accounting and reporting obligations.

Legal structure

Choice depends mainly on liability, tax treatment, social charges, number of owners and growth plans. The most common structures are SAS / SASU as the default choice, while SARL / EURL also remain common.

Tax-wise, impôt sur les sociétés (corporation tax levied on company profits) is the standard regime for SAS / SASU and most SARL; EURL usually involves income tax.

SAS / SASU (société par actions simplifiée / unipersonnelle)) 

Most popular company form in recent years (SAS: multiple shareholders / SASU: single shareholder) favored by startups and growing businesses due to flexible statutes and governance. The president of the company is treated as a salaried employee for social security purposes - social charges are high but there is greater benefit from broader social protection. 

SARL / EURL (société à responsabilité limitée / entreprise à responsabilité limitée) 

Common for family businesses and smaller firms (SARL: two or more partners / EURL: single partner), with a more rigid legal framework than SAS / SASU - this allows for legal certainty but less flexibility. Managers are usually classed as self-employed for social charges.