In France, the labor market and business environment are tightly regulated and structured. For foreigners unfamiliar with bureaucracy or stringent procedures, France might seem like a country that discourages starting businesses. However, nearly a million new businesses are established every year in France, demonstrating that with patience and determination, anything is achievable.
France offers various "statuses" depending on the type of business you plan to establish: "commerçant", "micro-entrepreneur", "entreprise unipersonnelle à responsabilité limitée (EURL)", and others. It's crucial to choose the correct designation for your business project in France because it impacts permissible activities, legal protections, taxation, and the ability to hire employees.
As regulations often change, it's advisable to consult the texts and guidelines issued by the French administration. These resources are regularly updated and accessible through the Public Service website.
Types of companies in France
There are nine distinct types of company legal statuses in France, each tailored to specific criteria such as the nature of the business activity, number of partners, capital requirements, profit taxation, and the social or tax status of partners. It's crucial to familiarize yourself with these different company statutes before starting your business in France so you can select the one that best aligns with your business project. The French government website offers a simulator to assist you in making this decision.
You'll also find these different types of companies detailed below.
Limited liability company (SARL)
The limited liability company (SARL) is the second most popular business structure after the simplified joint-stock company (SAS). It offers the advantage of simplicity, with each partner's responsibilities limited to their financial contributions. SARLs require at least two partners, and there is no minimum capital requirement. Management can be handled by one or more directors, who may or may not be partners themselves.
One-man business with limited liability (EURL)
A single-member limited liability company is a natural or legal person whose share capital is held by a single partner. It is a form of SARL with a single partner. Profits generated by the company are subject to income tax. EURLs may, however, opt to pay corporate income tax.
Public limited company (SA)
The Société Anonyme has at least seven partners if listed on the stock exchange and two partners if not listed on the stock exchange. Each must contribute a minimum of 37,000 euros. The company must be managed by a chairman and a managing director (both roles can be filled by a single person). However, the Board of Directors must comprise at least three people, and an auditor must be appointed. This status is ideal if the company is of a certain size and the shareholders are not involved in the company's activities but still have powers within the Board of Directors. Lastly, shareholders' commitments are limited to the amount of their contribution.
Single-member simplified joint stock company (SASU)
The simplified one-person company is well-suited for small businesses with a single partner, whether an individual or a corporation. There is no minimum capital requirement, and at least half of the contribution must be paid upon company incorporation. The manager is required to be affiliated with the social security system, regardless of whether they are a partner or not.
General partnership (SNC)
A general partnership does not protect its partners' assets, and they are jointly and severally liable for the debts of their personal assets. There is no minimum capital requirement, but at least two partners (individuals or legal entities) with merchant status are required. There may be one or more managers. In addition, income tax applies to associates but may be replaced by corporate income tax.
Sole proprietorship (EI)
A sole proprietorship is ideal for individuals working alone. Sole traders are taxed based on their income, and their personal assets are distinct from their business assets. This business structure does not require any capital contribution since there is no concept of share capital associated with it.
Simplified joint-stock company (SAS)
A société par actions simplifiée (SAS), or simplified joint-stock company, involves at least one partner (individual or legal entity) whose liability is limited to their contribution. There is no minimum capital requirement. Whether a statutory auditor needs to be appointed depends on the SAS's sales, balance sheet, and number of employees. Partners have the freedom to organize their operations as they wish, within the boundaries set by their articles of association.
Partnership limited by shares (SCA)
A partnership limited by shares comprises a minimum of four partners: one general partner and three limited partners. The minimum share capital is 37,000 euros or 225,000 euros, depending on the case. The managing partner is treated as an employee or self-employed worker. The limited partner is not remunerated and, therefore, has no social security benefits.
You'll find all the information you need about the legal status of companies on the official Public Service website. You can also use this site to find out about setting up, changing, or closing down a business.
Good to know:
The appointment of a statutory auditor is not always compulsory. It depends on several criteria, including sales excluding tax, the company's balance sheet total, and the number of employees during the financial year.
Creating a start-up in France
Starting a startup in France is becoming more common, allowing young entrepreneurs to realize their projects and scale quickly. Typically, these entrepreneurs choose between legal forms such as SAS, SA, or SARL, depending on their specific needs. Among these, SAS is the most popular legal structure in the startup ecosystem.
Summary of the business start-up process in France
Starting a business in France requires time and patience, but it's achievable. Once your company is established, you can start implementing your plans.
The initial step is to verify that your company's name is unique, ensuring that the name you want to use for your company is available. While there are no strict requirements for checking name uniqueness, this step helps prevent potential legal issues in the future if another company is already using the same name.
The Institut National de la Propriété Industrielle (INPI) is the French agency in charge of intellectual property. It allows you to check the uniqueness of your company's name on its website. This check is free of charge, but you will have to pay for any copies you wish to consult. You can also create and register your own trademark with INPI.
Next comes the deposit of the initial capital. Once you've raised funds for your business in France, you need to deposit the initial capital with a notary, bank, or Caisse des Dépôts et Consignations. The capital will be blocked during the registration procedures and then released once you have presented a KBIS extract. The KBIS extract certifies that the company exists as a legal entity and details its address, management, and other additional information.
Finally, it's time to publish the notice of incorporation. After registering the company, a notice of incorporation must be published in the Journal Officiel, which publishes all the laws and regulations of the French Republic. This notice should include details such as the company name, management information, invested capital, and registered office address.
An invoice will be issued with the publication date specified. The rates for publication fees in 2024 are detailed in the decree of December 14, 2023, and vary based on the company's legal structure and geographic location.
Additional formalities for setting up a business in France
The next step is to file the application for company registration with the Centre de formalités des entreprises (CFE). This entity handles all formalities relating to the commercial register, the National Statistics and Economics Center, the tax center, the Social Security Office (URSSAF), unemployment insurance, the Provident Center, and France Travail, among others. Note that these formalities also include registering the company with the tax authorities.
Your file must include the following items:
- the company's articles of association;
- company registration documents;
- proof of receipt of funds;
- documents relating to the manager;
- the required forms;
- proof of publication of the notice in the Journal Officiel.
The CFE will automatically transmit the information to the National Business Register (RNE), which will assign identification numbers such as SIRENE (System for Identification of Establishments), SIRET (System for Identification of Business Units), and NAF (French Classification of Activities). Fees may vary depending on your company's legal structure. The government publishes a list of applicable fees for these procedures.
Mandatory company registers
The final step in setting up a company is to purchase registers, many of which are mandatory.
Mandatory accounting records: the daybook (recording the chronology of all company activities) and the general ledger (recording entries in the daybook: purchases and expenses). Keeping an inventory book is not compulsory, but it is strongly recommended. In fact, the company is obliged to make an inventory of all its assets and liabilities.
Mandatory registers relating to the company's operations: these depend on the company's legal form.
Mandatory employee registers: Single personnel register (details of each employee, type of contract, etc.), DUERP (document unique d'évaluation des risques professionnels), safety and public health inspections, etc.
Company registers: Decisions made during company management meetings and shareholders' or partners' meetings are documented in minutes maintained in specialized registers. These registers must be authenticated by a judge from the commercial or district court or by the mayor of the municipality where the company is registered (also where the registers are stored).
Severe fines are imposed for non-compliance with these obligations or for neglecting to update the registers.
Please note that the provisions described above do not apply to all types of company legal status.
Doing business in France: micro-entrepreneur status
The status of micro-entrepreneur in France is a simplified system designed to facilitate the creation and management of small-scale individual businesses. It is not, however, a legal status: micro-entrepreneurs register as a sole proprietorship (EI) or as a one-man limited liability company (EURL).
Micro-entrepreneurs are tax-registered.
Micro-entrepreneurs don't need to keep complex accounts. They simply need to record their income and expenses. What's more, the simplified tax system and social security contributions are calculated as a percentage of sales. In fact, there are sales ceilings that must not be exceeded to qualify for micro-entrepreneur status. The procedure for registering as a micro-entrepreneur is online. To do so, go to the "guichet unique des formalités d'entreprises" (one-stop shop for business formalities).
Setting up a business in France as a foreigner
Foreigners can also establish businesses in France. However, before starting, it's crucial to verify if you are eligible to engage in professional activities in France. Access to certain professions is restricted to French nationals, citizens of EU and EEA member states, or individuals from countries with reciprocal agreements. Additionally, some professions may necessitate specific qualifications, professional experience, or administrative approval.
To do this, please refer to the regulated professions section of the Guichet Qualification website.
Citizens of the EU, EEA, or Switzerland can establish a business in France without needing a special residence permit, following the standard procedure for company formation. Non-EU or EEA nationals, however, must first obtain a long-stay visa and then a temporary residence permit marked "entrepreneur / liberal profession" to initiate the business setup process in France.
Types of business available to expatriate entrepreneurs in France
In principle, you are free to engage in any commercial, industrial, craft, artistic, liberal, or other self-employed activity as long as you meet the conditions set out above.
In 2021, 15% of entrepreneurs based in France were foreigners, and 11% of them were non-Europeans. They develop their businesses in various sectors: electricity, IT, consulting and auditing, law, cooking, home delivery, tourism, etc. You'll find all the information you need about setting up a business, depending on your status (European or non-European national), on the Public Service website.
What is the corporate tax rate in France?
Depending on their legal structure, companies may need to pay corporate income tax (IS). This tax is imposed on the company's profits throughout the fiscal year. However, profits generated abroad through branches are exempt from taxation.
There are two rates: the standard rate (25%), which applies to all taxable income, and the reduced rate (15%), which applies to certain companies.
Companies established in France fall into two categories: those for which tax is compulsory and those for which it is not.
Taxation is compulsory for:
- sociétés anonymes (SA);
- limited liability companies (SARL);
- sociétés par actions simplifiées (SAS);
- sociétés en commandite par actions (SCA);
- liberal practice companies (SEL, SELARL).
Taxation is optional for:
- the sole trader (EI) who has opted to be assimilated to an EURL;
- single-member limited liability company (EURL);
- general partnerships (SNC);
- joint ventures;
- non-trading companies with an industrial or commercial activity;
- de facto companies.
Good to know:
Nowadays, setting up a business is made easier with the Guichet Entreprise website, which guides you through each step and provides all the necessary information.
Useful links:
French National Institute of Industrial Property (INPI)
We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.
