What is a SARL in France?
There are various company types in France, from Auto-Entrepreneur for an artisan to Société Anonyme for a future large public company. For anything in between, most business owners will opt for the French equivalent of a UK Limited Company, a SARL.
There are nearly 1.5 million SARLs making up two thirds of all commercial organisations in France. This leads us to the title of this article, what is a SARL in France?
Why use a SARL and what is it?
A SARL (société a responsabilité limitée) is a type of company which has a legal identity of its own, called personne morale. This means that the business has its own entity, distinct from the owner, director or manager.
The purpose of a SARL is to conduct commercial and business activities. The SARL is particularly suited for small and medium size enterprises.
SARLs are considered more stable than auto-entrepreneurs as they must comply with full accountancy rules. A SARL has a minimum of two shareholders and up to 100 and can be registered with a minimal working capital of just one euro.
Limited liability with shares
One of the key benefits of a SARL in France is its limited liability status, just like a British registered limited company. The company’s owners cannot be held liable for more than they have contributed to the company’s capital.
Proprietary interests in a SARL are represented in shares. They are not freely transferable unless the recipient is a spouse, descendant, or close relative. Any transfer of shares requires the agreement of the majority of all shareholders.
Minimum Capital for a SARL?
The minimum amount for a SARL is just 1 euro, but few businesses use this capital amount in practice. A starting working capital of 1,000 euros or 2,000 euros is deemed to be acceptable to begin with. Many small businesses planning to grow prefer to show higher levels of investment to reassure clients, investors, and financial partners, for example, 5000€ or €7000. Having an incorporated business in France (SARL, EURL or SAS) is seen as more stable for partners and customers.
What is a EURL in France?
If you are alone and want to start a limited company, look into registering an Entreprise Unipersonnelle a Responsabilité Limitée (EURL). In essence, an EURL is the same as a SARL but with only a single partner, providing Sole Proprietorship with Limited Liability.
As with a SARL, the EURL has a share capital of at least 1 euro; there’s no maximum amount. The EURL is ideal for small enterprises of lifestyle businesses with limited potential and growth. It would be possible to change to a different type of company later when the business grows, and shareholders become involved.
What is an SAS?
Société par actions simplifiée (SAS, for simplified joint-stock company) is another business entity in France, similar to an LLC in the USA. The SAS is the first hybrid entity based on common law principles rather than civil. An SAS is ideal for creating a joint venture between a French company and a foreign partner or investor.
A SAS has its annual statements audited by an independent body before publication. The SAS does not have a board of directors; the SAS is run by its president, who is responsible for the business; he may appoint a DG (managing director). The président can be a physical person or another company if there is only one shareholder. An SAS with only one shareholder is known as a société par actions simplifiée unipersonnelle (SASU).
What is SA?
In France, a Société Anonyme (S.A.) is the equivalent of a corporation in the USA or a UK PLC. An SA consists of a minimum of two shareholders (seven if the business is listed on the stock exchange). The minimum shared capital amount is 37,000 €uros. They are for companies planning to list on the stock exchange or with many shareholders, there is no maximum limit.
Note that a ‘carte de commerçant étranger’ is required for anyone holding directorships in a French company, based in France or not.
To publish a legal notice of incorporation, visit the “Entreprendre” section of the Register National des Entreprises (RNE) online. You do not have to complete this formality if you are a micro-entrepreneur or an individual entrepreneur.
What is Micro-Entreprise or Auto-Entrepreneur?
For artisans and small business operations, there’s a simple business status called Micro-Entreprise or Auto-Entrepreneur. This business status is popular because the registration can be made online while the tax and accounting rules are simplified.
This explains why an auto-entrepreneur is obliged to respect a maximum turnover amount to benefit from the advantages of this regime. These turnover thresholds are revised every three years.
The best way to check if this is for you is to visit the Auto-Entrepreneur website. MEs and auto-entrepreneurs (AEs) don’t need a corporate business bank account. However, they must have a separate bank account solely dedicated to their business dealings and appropriate professional insurance.