[COMPARISON TABLE] Types of One-Person Companies

Different one-person companies

Do you want to start your business alone, without a partner? Do you want for your business to stay that way? If so, one of the following one-person company types can be just what you need:

  • The sole proprietorship. It can have the classic regime, the micro-entrepreneur regime or the EIRL regime,
  • The company. It can be an EURL or a SASU

If you choose the sole proprietorship, and if you are subject to the tax regime of the micro-enterprise, you will automatically benefit from the simplified system of calculation and payment of social charges, and you will be a micro-entrepreneur.

You can also opt for the regime of the Individual Entrepreneur with Limited Liability (EIRL) which will allow you to limit your liability, and if necessary, to opt for the corporate tax.

Summary

  1. Types of projects/activities
  2. Equity/Contributions
  3. Director
  4. Tax system
  5. Social system
  6. The way it functions
  7. Paperwork
  8. Transferring the business
  9. Advantages/disadvantages

1- Types of projects/activities

Sole proprietorshipEURLSASU
Classic RegimeMicro-EntrepreneurEIRL
The founder
The sole entrepreneurThe sole associate (“Natural person” or “Legal person”)The sole associate (“Natural person” or “Legal person”)
Types of projects
Perfect for small activities that don’t require much investmentPerfect for small activities and ancillary activities that don’t require much investment, and those functioning with the Micro-Company tax regimePerfect for small activities that don’t require much investment, but that require more formalism while creating and running the company than those with the Classic regimePerfect for all project, as long as the certain formalism while creating and running the company doesn’t bother too muchPerfect for all project, as long as the very restricting strict formalism while creating and running the company doesn’t bother too much
Activity/Company purpose
Every activityCommercial activity, artisanal activity, or liberal activity dealing with aging, or social regime

 

There are a few exceptions

Every activityEvery activity except:

·         Investment of savings

·         Tobacco shops

Every activity except:

•              Artist placement agencies

•              Tobacco shops

 2- Equity/Contributions

Sole proprietorshipEURLSASU
Classic RegimeMicro-EntrepreneurEIRL
Volume of equity
No notion of equityThe associates are free to determine the volume of equity in the company by-laws
Contributions

·         Contributions in Cash

·         Contributions in Kind

·         Contributions in Industry (putting one’s workforce or technical knowledge at the disposal of the company)
Contributions in Industry don’t participate towards the volume the equity

Payment of contributions

Contributions in kind:

Fully paid when the company is created

Contributions in cash:

Only 20% have to be paid when the company is created, but they must be fully paid before 5 years

Contributions in kind:

Fully paid when the company is created

Contributions in cash:

Only 50% have to be paid when the company is created, but they must be fully paid before 5 years

 3- Directors

                                       Sole proprietorshipEURLSASU
Classic RegimeMicro-EntrepreneurEIRL
Who runs the company?
The sole entrepreneurOne manager. He has to be a Natural Person (an individual)

Freedom to define it in the company by-laws.

There has to be at least one president. He can be a Natural or Legal person, an associate or not

Appointment/dismissing of directors – duration of functions

Either the methods are defined in the by-laws, or the sole associate decides.

If the duration isn’t defined in the by-laws, there is no limit on the duration.

Freedom to define it in the company by-laws.
Powers of directors
Unlimited. The entrepreneur runs his company alone.

Towards third parties: the director has full powers to act in the name and in the interest of the company.

For internal affairs: if the director is a third party, by-laws can limit his powers by making sure that certain actions need to be approved by the sole shareholder first.

Liability of the director

For the debts of the company: unlimited liability. Their personal assets can be seized, except for the main residence.

Personal property can be protected by a “declaration of non-seizability”

Civilly and legally liable up to their personal assets

For the debts of the company:

Liable up to professional assets (Personal property can be protected by a “declaration of non-seizability”)

 

Civilly and legally liable up to their personal assets

For the debts of the company:

No liability

Civilly and legally liable up to their personal assets

 4- Tax system 

Sole proprietorshipEURLSASU
Classic RegimeMicro-EntrepreneurEIRL
Taxes on company profits

Income tax

(BIC, BA or BNC Category)

Income tax

(BIC or BNC Category depending on the company)

 

Option of a “Discharge payment

Income tax

(BIC, BA or BNC Category)

 

Option to choose the Corporate tax under certain conditions. This decision cannot be changed.

Income tax

(BIC, BA or BNC Category) in the name of the sole associate.

If the manager is the sole associate, he can be taxed under the “Micro-company” regime.

 

Option to choose the Corporate tax under. This decision cannot be changed.

Corporate Tax.

Option of instead choosing the Income tax for SASUs less than 5 years-old.

Is the remuneration of the director tax-deductible?
NoNo, unless the Corporate Tax is chosenYes, unless the Income Tax is chosen
How is the remuneration of the director taxed?
The taxation of company profits under the Income Tax already includes the taxation on the remuneration of the director.If the company is subject to the Income tax: This already includes taxation in the remuneration of the director.

If the manager is the sole associate, the Micro-Company regime is also possible.

 

 

If the company is subject to the Corporate Tax: their remuneration is subject to the Income tax in the “Wages and salaries” category

If the company is subject to the Income tax: This already includes taxation in the remuneration of the director

If the company is subject to the Corporate Tax: their remuneration is subject to the Income tax in the “Wages and salaries” category

 5- Social system 

Sole proprietorshipEURLSASU
Classic RegimeMicro-EntrepreneurEIRL
The social regime of the director
Non-Salaried WorkerNon-Salaried Worker

A simplified method of calculating social contributions (“Micro-company regime”)

Non-Salaried WorkerIf the manager is the sole associate:

Non-Salaried Worker

 

If the manager is a third-party:

Employee

Employee
Social security contribution base
Taxable profitTurnoverIf subject to Income tax:

Taxable profit

 

If subject to Corporate tax:

Net pay + proportion of dividends superior to 10% of equity (or 10% of net profits if it is superior to equity)

If subject to Income tax:

Taxable profit

 

If subject to Corporate tax:

Net pay + proportion of dividends superior to 10% of equity, share premiums and money transferred in current accounts

Net pay

 6- The way it functions 

Sole proprietorshipEURLSASU
Classic RegimeMicro-EntrepreneurEIRL
Imperatives for the company to function
The micro-company has to be created less than 12 months after a bank account for its activity is openedOpen one or more bank accounts for the activity defined by the “declaration of allocation”

 

Having an autonomous accounting for this activity

 

Publishing the account to the register where the declaration of allocation was deposited

Nomination of director(s) in the company by-laws (and defining their remuneration)

Keeping a register of the decisions of the sole associate

Publishing the annual accounts and the inventory to the Commercial Court

Keeping a management report (unless the company is exempt from doing it)

Auditors
NoNo, unless 2 out of 3 of these conditions are met:

– balance sheet >
1 550 000 €,

– Gross turnover >
3 100 000 euros,

– more than 50 employees

No, except under certain conditions

  7- Paperwork 

Sole proprietorshipEURLSASU
Classic RegimeMicro-EntrepreneurEIRL
The paperwork itself

Declaration the activity to the CFE and registering the company in either the RCS, RM or RSAC depending on the nature of the activity

No need to define by-laws

Declaration the activity to the CFE

 

Registering the company in either the RCS, RM, RSEIRL or RSAC depending on the nature of the activity

 

– No need to define by-laws

Defining by-laws

 

An optional by-laws model is given free of charge by the CFE

Defining by-laws

The associate has great freedom when defining by-laws

Cost and paperwork of creating the company

Registration to the RCS  for merchants: 34€

Registration to the RM  for artisans: 190€ (can vary)

Registration to the Urssac  for liberal professions: free

Registration to the RSAC  for commercial agents:  26€

Free of chargeTo declare the company: see Sole proprietorship

 

Declaration of assets:
Free for artisans and merchants if it is done at the same time as the declaration of the company

55.97€ for liberal professions

Fees to publish the news in a specialized newspaper: 190€

 

Registering to the RCS: 84€

Fees to publish the news in a specialized newspaper: 230€

Registering to the RCS: 50€

  8- Transferring the business 

Sole proprietorshipEURLSASU
Classic RegimeMicro-EntrepreneurEIRL
Transferring the business

Transferring of customer lists or goodwill

Transferring of the sole proprietor’s capital into company capital

Leasing

Transferring of customer lists or goodwill

Transferring of shares

  9- Advantages/Disadvantages 

Sole proprietorshipEURLSASU
Classic RegimeMicro-EntrepreneurEIRL
Advantages

Simple to create

Simple when operating

Being able to limit sizeable assets

 

Being able to opt for the corporate tax under certain conditions (though this decision cannot be changed)

 

Liable only up to the contributions (except if the liability of the director is incurred)

 

A structure able to evolve (for example, being able to have new employees)

 

Choosing the tax regime

 

Simple when operating

Liable only up to the contributions (except if the liability of the director is incurred)

A structure able to evolve (for example, being able to have new employees)

Choosing the tax regime

The social regime of employees for directors

Disadvantages

Unlimited liability (except for the main residence)

The “declaration of non-seizability” still possible for property

A lot of paperwork

 

High cost of creating and maintaining the company

High cost and paperwork when creating the company