The French labour market and business environment are well regulated and structured. For foreigners not used to bureaucracy or rigid procedures, France might seem to be somewhat off-putting. There are a wealth of entities which can help you jump the hurdles of starting a business in France, but depending on the specific activities you wish to carry out, it might be useful to consult specialists, especially when it comes to issues such as taxation.
Your title or status (Statut)
France defines different titles for different types of businesses (referred to as “Statut” in French). Examples of titles include “Commerçant” (traders), “Micro-entrepreneur” (Micro-entrepreneur) or “Entreprise individuelle à responsabilité limitée” (Limited Liability Company), to name a few. It is crucial that you identify the right type of designation you wish to adopt, since this will impact the type of activities you can carry out, the legal protection you can enjoy, as well as other issues such as taxation and the number of employees you can recruit. Since regulations tend to change, it is always better to refer to the original texts and guidelines set out by the French administration. These are accessible through the public service website, which offers the most recent information. The website also has information on the different type of titles.
Types of companies in France
Limited Liability Company
The Limited Liability Company (LLC), known in French as “Société à Responsabilité Limitée” or SARL is the most common structure. It has the benefit of being simple and each associate's liabilities are limited to their respective contributions. The capital must be divided between at least two associates and there is no minimum capital requirement. The LLC can be managed by one or several directors, whether or not they are associates.
Uni-personal Limited Liability Company
The Uni-personal Limited liability Company has a single associate. It is a special form of LLC but bears almost similar operational rules. The major difference is that profits generated by the company are taxed as income tax on behalf of the associate, but there is an option to revert corporate tax as well.
Professional Partnership with Limited Liability
The Professional Partnership with Limited Liability applies to liberal professions (such as lawyers). Its operational rules are like those of the LLC. However, it includes clauses regarding the specific profession for which it has been set up.
Public Limited Company
The Public Limited Company involves at least seven partners, each making a minimum contribution of 37,000 Euros. This company must be managed by a President and a Director General (both roles can be held by a single person). However, the Board of Directors must comprise at least three persons and an Accounts Commissioner needs to be appointed. It is ideal if the company is of a certain size and if the shareholders do not take part in the activities of the company but have some powers within the Board of Directors. Finally, the shareholders' liabilities are limited based on their contribution.
Joint Stock Company
The Joint Stock Company is ideal for companies comprising several persons. It does not require a minimum capital. It is not necessary to appoint an Accounts Commissioner unless the company is of a certain size or shares capital with other companies. It requires at least two associates whose liabilities are limited to their contribution. Partners have the possibility to organise operations freely in the statutes.
Simplified Uni-personal Stock Company
The simplified uni-personal stock Company is suitable for small structures with a single associate.
The General Partnership is a type of company which has the disadvantage of not providing protection for the assets of its associates, and the latter are jointly and severally liable for the debts of their personal property. The company requires no minimum capital, but involves at least two associates having the status of traders. It can have one or more managers. Moreover, tax applies to its associates in terms of income tax, but have the option of switching to corporate tax.
The Professional Partnership allows several independent professionals to carry out the same activity commonly and is generally suited to the service industry (e.g. consultants). The partners will be liable to social debts, and no minimum capital is required. However, each associate is required to pay income tax on the revenue generated from the activities of the partnership.
Setting up: an overview of the process
In many cases, the most optimal structure for your business will be a limited liability company (“Société à Responsabilité Limitée, SARL).
Checking the uniqueness of the name of your business
The first step consists of verifying that the name you intend to give your company is available. Whilst there are no specific requirements to check the uniqueness of the name, this step can avoid a range of legal complications in the future, if you find out that a business had already been previously set up with the same name. The “Institut National de la Propriété Industrielle” (INPI) is the French agency in charge of intellectual property and allows you to check for the uniqueness of the name of your business on its website. The check itself is free, but you will have to pay for copies of any trademarks you wish to consult.
Depositing the initial capital
Once you collect the funds for your business, you need to deposit the initial capital with either a notary, a bank, or the “Caisse des Dépots et Consignations” (Deposit and consignment office). The capital will be locked during the registration procedures, and will then be released once you present a KBIS extract. The KBIS extract certifies that the company you have created exists as a legal entity, giving details of its address, management as well as other additional information.
The notice of incorporation
Once you have registered the company, a notice of incorporation needs to be published in a newspaper authorised to publish legal notices (Journal Officiel). The notice needs to include details such as the company name, management details, invested capital and the address of the head office. A bill will then be issued, indicating the publishing date. Fees applied amount to 5.48 euros (excluding tax) for each line of 40 characters.
Additional registration formalities
The next step involves depositing the company registration request at the Centre de Formalités des Entreprises (CFE). This entity takes care of all formalities relating to the register of commerce (“Registre du Commerce”), the National Centre for Statistics and Economics (“Institut National de la Statistique et des Études Économiques”), the tax center, the social security office (URSAFF), the unemployment insurance office, the pensions center, Pôle Emploi (the French public job agency), among others. Note that these formalities also include registration at the tax authorities. Your file must include the following:
- The company's articles and statutes
- The company's lease documents
- Proof of receipt of funds
- Documents relating to the manager
- Requested forms
- Proof of the publishing of the notice in the Journal Officiel.
The CFE automatically transfers information to the National Companies Register (Registre National des Entreprises, which generates identification numbers from the RNE, including the SIRENE (Système Informatique pour le Répertoire des Entreprises), the SIRET (Système Informatique pour le Répertoire des Établissements) and the NAF (Nomenclature des Activités Françaises). Fees of some 90 euros apply.
The final step involves purchasing special accounting books from the court or specialised stores. Previously, inventory books were required, but this is no longer the case. However, the company needs to purchase the minutes of the records as well as a ledger and have the latter initialed by the clerk of the Commercial Court. The three books will cost around 45 euros, and stamp fees (less than 4 euros).