Setting up a business in France

Setting up a business in France is definitely more complex than the equivalent in the UK, but with proper professional help the process is straight forward, and the rewards of running a business in France can be great.
The key issue is to register in advance - trading without the proper registration in France carries severe penalties.

Regrettably you don't be able to telephone us for a "shelf" company, and to have the statutory books and incorporation certificate the next day, as you can in the UK. The process in France can take a month or more, and it is essential to prepare the correct paperwork at the start of the whole process. Typically this would include proof of identity, any relevant diplomas related to your trade or profession, the relevant formation papers and proof of trading address...all in French ! We can help with translations of course !

The impact of the language barrier should not be overlooked - if you are not confident with your French you need to ensure that you have a proper understanding of the implications of setting up a business in France. Also, if you have never run your own business before, you need to be realistic about how much revenue you will be able to generate to cover your set up and other fixed costs. There is a new regime starting next year but the legislation is yet to be fully created. New provisions will apply from 1st january 2009

We would be delighted to assist you with all aspects of your business registration - from tax planning, and business budgeting, through the registration process itself and support for ongoing accounting needs. All of the documents will be explained to you in English, and we can also provide translations of key documents such as your company memorandum and articles of association.

Key regulation about french business

1. In France, since certain activities are regulated (for example itinerant tradesmen, estate agents, builders, driving instructors, training providers), you must check whether you satisfy the required conditions in terms of diplomas, and experience, since each business is registered strictly according to the type of activity you have chosen. Without the relevant diplomas or proof of experience, you may be unable to proceed with your chosen registration. Alternative activities may be another option, or perhaps a training programmes in France, or a period of French employment in your chosen field.

2. Every trading entity is issued with a SIRET number which confirms its registration with the relevant authorities. The nearest equivalents in the UK are a company number (as issued by Companies House), or a schedule D number for a self employed individual. In contrast to the schedule D number in the UK (which is basically a tax reference), the SIRET in France is used on all company documents, including sales invoices, and also doubles up as the VAT (TVA -Taxe Valeur Ajouteé ) registration number.

3. Social charges apply to all professional activities in France, and contributions apply from the start of trading even if you do not generate revenue immediately. We can of course provide estimates of these charges for your own particular type of business, and how the micro-social regime might help your business

Types of business in France

Sole trader
There are basically two routes for a sole trader to establish themselves with the authorities:

1. Entreprise individuelle
This is the equivalent to "self employment". The legal structure is suitable for small businesses, with few risks and requiring minimum investment. The business has no share capital. There is just one person in charge, the owner. He has full power to manage the business and takes decisions alone. The manager is responsible for all business debts from his personal assets.

2. EURL
An "Entreprise Unipersonnelle à Responsabilité Limitée " (EURL) is a private limited company with one shareholder. There is a minimum capital of 1 euro.
which may be paid in cash or by assets brought into the company (the value of these assets must be certified by an independent accountant- we can provide this service). The EURL is run by a manager who may be either the sole partner, or a third party. The manager's appointment and powers are detailed in the Articles of Incorporation.
The sole shareholder/manager is responsible for unpaid company debts only up to the amount of share capital still unpaid.

The Micro entreprise"
The micro regime is a special regime applicable to sole traders who fulfil certain conditions. Each trader still has to make an annual revenue declaration, but the bookkeeping and accounting requirements are generally less onerous. However, do bear in mind that from a commercial point of view you should in any event keep good business records, and in effect, you will still need to keep accurate records to ensure that you are within the turnover limits that determine the micro regime.The current maximum amount that you can earn to remain within the micro entreprise regime is 27000 Euros per annum for services, more where you have bought in goods or for furnished holiday rentals. These limits are being raised from 1st january 2009. The main advantages are the fact that you apply a fixed deduction of expenses from your revenue, to arrive at taxable income. This deduction may be as high as 71% depending upon the type of activity. You will also be exempt from VAT (TVA) registration.

Multiple ownership
There are many forms of multiple ownership companies in France, some with very specific usage such as the SCI for co-property ownership. The two most common forms for trading are as follows:

1. SARL
A "Société à Responsabilité Limitée" (SARL) is a limited liability company where there are several individuals who wish to trade together. It is best adapted to small and medium-sized businesses. There must be a minimum of 2 "business associates" and the maximum number is 50 (these may include a natural person or legal entity). There are special rules for calculating social charges where there are several "business associates" - especially where these are not members of the same family. There is no maximum amount of capital, and the minimum is 1 euro.

2. SA
Société Anonyme - this type of legal structure is suitable for larger projects. A minimum of 7 shareholders is required, and minimum share capital is 37 000 euros, at least half of the capital must be paid when forming the company, the rest within 5 years. The company is managed by the board of directors who must also be shareholders.

The minimum share capital requierment is being removed from 1st january 2009

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