France vs the US: where is company formation easier?

Forming a company in France vs USA

Obviously the US, right? That’s the answer anyone would come up with when first asked this question. It makes sense; the US government has the reputation of being so liberal that companies can be created in a matter of minutes, while the French administration has the reputation of being so tax-heavy that it’s barely even worth creating a business. But still, we at Companow thought it would be worth looking more deeply into things.

The legal environment:

Paperwork in France is a pain. But it should be noted that in some cases, because the US is a federal country, figuring out the legal environment can be even more complicated than in France. Indeed, you need to add states law on top of federal law, which makes it very easy to get confused.

Labor Laws:

They’re actually somewhat equivalent. The minimum wage is 7.58€ in France, versus 7.25$ in the US (though it does depend on the country), the French have 35 working hours a week while the US has 40… The biggest difference is that the French always have the right to go on strike.

Tax rate:

The French corporate tax is high, going up to 33%. It’s a bit harder to find in the US, since again, it’s a federal country, but overall, the tax rate is lower. Though, not only will the French tax go down to 25% by 2022, but the costs involved in creating a company tend to be higher in the US. Indeed, the complicated legislation makes it necessary to hire a lawyer; something you don’t have to do here.

Finding funds:

In both countries, banks are reluctant to offer loans to new companies. However, it’s easier to find Business Angels or Capital Venture funds in the US. Granted, France offers lots of subsidies or grants to entrepreneurs, but the US has similar programs.

As such, overall, the two countries are surprisingly even matched in a lot of categories. Perhaps the biggest difference, then resides in the culture: only 45% of people in France would advise their children to create their business, while in the US, this goes up to 61%.