Choosing the legal status of a company can be quite complex, especially when you do not have all the necessary information at hand. However, this represents a very important step in the creation of a company. To make your task less stressful, we have defined some criteria to take into account to make this choice.
Think about protecting your assets
You want to start a business and you wonder which legal status to choose so that your assets are safe? Indeed, it is important to ask yourself this question when you have a private heritage which must be distinguished from your professional activity. In this case, you have several possibilities, depending on other criteria to also take into account. In the case of an EIRL, for example, you can take care to cite the assets that are involved and those that are not.
Establish a declaration of unseizability in the case of an EI or Sole Proprietorship. There are indeed legal forms where liability is limited solely to the amount of your contributions. it’s about the SA, SARL or EURL, SAS or SASU. Also remember to prevent the partners from being liable for social debts.
The choice of legal status: the number of partners in the creation of a business
One of the main criteria to take into account to choose the legal status of a company, it is the number of people that there will be within this company. Even knowing the precise number of partners, you still have to choose the status that best meets your needs. In the event that the one who carries the project wish to work alone, several choices arise:
- NO or Sole Proprietorship,
- EIRL or Sole Proprietorship with Limited Liability,
- EURL or Sole Proprietorship with Limited Liability,
- SASU or Simplified Unipersonal Joint Stock Company.
One of the many peculiarities of the SASU or of the EURL is being able to bring in other partners later without the risk of transforming your company. For the EURL, there are two possibilities to add partners without having to transform the company. What must be remembered is that this is a SARL with a single partner. So you can either proceed to the transfer of part of the shares of the sole partneror increase the share capital of the company.
For the case of the SASUit is necessary either to sell shares or to increase the capital to allow entry of a new partner. Moreover, if from the creation the project leader wishes to have partners, here are the most suitable legal statuses:
- Limited Liability Company (SARL),
- Simplified Joint Stock Company (SAS),
- Public limited company (SA),
- General Partnership (SNC),
- Society of Liberal Exercise (SEL).
If you are looking for a legal status which benefits from flexibility unique, la SAS is the most suitable for your needs. For some unknown reason, the law leaves a lot of freedom in the drafting of this statute. Under these conditions, it is the partners who take care of the whole organization as they see fit.
It has many advantages such as the possibility of issuing shares conferring different rights. In its flexibility, it is the statutes that define the role of each. One or more organs have the opportunity to provide governance. There is an incredible facility to carry out the entries and exits of the actions.
Consider the size of the project
The choice of the legal status of a company must take into account the scope of the project in order to make the right decisions. In some cases, the chosen status may seem relevant at the time, but inappropriate in the long term. In the case where the initial investment is very important, remember to choose statuses like the SAS or SA.
In the case of SAS in particular, you will have a few advantages. These include the possibility of creating a multitude of share classes. In addition, it makes it possible to include certain important clauses in the statute, such as the inalienability, exclusion or approval clause.
Depending on the legal status chosen, there is a social regime precise for the manager. There is thus the possibility that he is non-salaried or assimilated salaried. In the case of a TOof a SASof a SASUor a SARL (manager, minority, egalitarian, non-partner), the manager is equivalent to an employee. In this case, he contributes in the same way and benefits from the same social protection as an employee.
For the majority manager of a EURL/SARLthe entrepreneur of a NOof a EIRL or in the case of the partners of a SNC, they are assimilated to self-employed workers. For the contribution, it is done at specific funds, in the case of craftsmen and traders. As for all employees, managers considered as employees benefit from a good social protection with regard to the various care and pension rights. Moreover, it weighs more on the company.
Choose the status according to your partner’s attributions
If from the creation of the company you know that your partner will be part of it, you should choose the legal status accordingly. Several cases are possible for this purpose:
- collaborating spouse : the statutes allowing your partner to be a collaborator in the company without however being associated are the SARL/EURL. In the case of the EURL, there must be at least 20 employees and the collaborating spouse must be active in the company,
- employed spouse : in this case, the spouse must be treated in the same way as all the employees of the company. He has an employment contract, an effective presence at his post during working hours, etc.,
- spouse partner : this status is open to the spouse of the manager of a company.
In order to ensure that your company complies with the rules, these various details must be taken into account when choosing the legal status of the company before engaging your partner.
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Choice of the legal status of the company: the tax regime
The tax system is specific to each legal status. In addition, you have the option of opting for a method of taxing profits different. In terms of taxation on profits precisely, two methods are applied.
income tax
In the case of a company subject to income tax, the partners are required to pay it personally. Depending on the type of activity, this may be agricultural profitscommercial industrial profits or even non-commercial profits. It is in these different categories that income tax will be levied.
The tax depends on the turnover in some cases. A sole proprietorship is a structure liable to pay income tax. The articles of association subject to this tax with the possibility of changing for corporation tax are the SNC, EURL and EIRL.
corporation tax
Unlike the company subject to income tax where it is the partner who must pay, the responsibility lies with the company in this case. In the case of the EURL, the partner must be a legal person. The SARL may be subject to income taxin the case where it is a family company, in general, it is subject to corporation tax. About the SAS, the SASU and the SAeach of these statuses can also temporarily opt for the tax regime for persons subject to conditions.
In short, to choose the legal status of your company wisely, you must take into account a large number of parameters. Thanks to this, you will be able to have a lot of facilities.