Setting up a company in your own country can be fraught with difficulties, let alone tackling another country’s administrative system. Language problems, mounds of paperwork, legal obstacles and banking issues can all trip up would-be international entrepreneurs.
Luckily, there’s an easy way to expand your business globally, especially in France. You just need to know all the facts and the full requirements to prevent any mishaps.
As any French person will tell you, France used to have a reputation for dragging its heels when it came to business. French residents who tried to become small business entrepreneurs were forced to peck around for crumbs in the land of the baguette. But if you’re a foreign investor you now stand a much better chance. The French government has made an effort in recent years to aggressively attract foreign investment, so it’s good news for all you international business people out there.
There are lots of business options you can choose from. You can open a small representative office – a bureau de liaison – or set up a new business from scratch. Many clothing and accessory lines want to project a French image as part of their marketing strategy – let’s face it, being able to legally put the word ‘Paris’ on your fashion label does lend a certain exclusivity – and setting up in France is an easy way to achieve that Paris brand. But before you start dreaming up a whole new marketing concept you have to get to grips with the French incorporation system first.
The Legal & Administrative System in France: “Do you have a license for your minkey?”
Quoting from Inspector Clouseau there, France loves its licenses and laws and has a well-developed regulatory system. There are three main kinds of business entity in France: for small businesses, there’s a limited company option known as a SARL; for joint ventures between a French company and a foreign partner (very popular with US business people who want to set up subsidiaries in France) there’s a simplified stock corporation known as an SAS; and for bigger businesses there’s a Societé Anonyme (SA).
There are hardly any restrictions on setting up companies, except in certain areas such as banking and insurance, and there is no restriction on imports or capital from abroad. Also, thanks to strict regulation by banking administrators France still clings on with manicured nails to a strong position in the world's economy.
As a result, the system for opening companies in France is like a well-oiled and smooth running machine. But a word of warning – make sure your financial paperwork is in good shape right from the start because you don’t want to get into a battle with the dreaded tax man in France. Just like the fights between Inspector Clouseau and his karate expert butler Cato, it always ends up messy. But disaster is easy to avoid if you just follow the rules like all good French citizens.
The French Banking System: “There is a time to laugh and a time not to laugh, and this is not one of them.”
Getting an actual business account set up in France is a very serious affair. Unlike the UK, you can’t just open a business bank account with a pound, and you can’t even register your company in France without having a bank account first.
The previous share capital for opening a business account used to be €7,500 for a SARL but luckily that’s now been reduced. They prefer you to make a “working capital” deposit of around €4,000 but it’s not mandatory and can be negotiated. And remember, after your account is set up these funds can be taken out of the account for use at any time so that should take any sting out of the tail for any initial deposit with the bank.
As French administrations go, the banking system is pretty rigorous and it can sometimes feel like certain banks go out of their way to make this procedure difficult. But instead of getting into an Inspector Clouseau style panic, just make sure you choose your bank carefully. The French have a world-class banking network and there’s a wide range of financial institutions with expertise in arranging international financial transactions and transfers. On top of commercial bank loans, there’s also plenty of tax and subsidy incentives for new and innovative companies so be sure to check if you qualify for those.
For EU residents, the process after opening a bank account is usually all plain sailing, but for non EU residents there is one extra requirement that can cause a pratfall.
The criminal record extract: “Yes, well, life is not all shoot-shoot, bang-bang, you know”
The French have a naturally cautious nature so they like to know exactly who they’re doing business with outside the European Union before they let you get your foot in the door.
That means that any resident outside the EU who wants to open a company in France needs to provide a government authorization and an extract of their criminal record which needs to be not less than three months old. And once you get that, it all needs to be officially translated into French by a certified French translator.
Recruiting staff in France: “You have received a beump on the head.”
Although recruitment itself is reasonably straightforward in France, coming up against the French labour system is like hitting your head on an ancient brick wall, then finding that the brick crumbles away to reveal an indestructible steel structure. The laws governing employment are very complex, much more so than in most other EU countries. Unlike the UK where many companies only offer short-term contracts, in France employment contracts for a fixed term are only allowed in a limited number of situations. Collective agreements negotiated at national level are automatically applicable to commercial and industrial sectors. But all these collective agreements cover all workers, whether or not unionized. Is that ‘beump’ on your head getting bigger? Don’t worry, a simple meeting with a legal advisor can sort out employment contracts which will also have the benefit of protecting your company too.
How can I get more information?
Download our free guide on opening a business in France
Learn the ins and outs of company formation in one of the world’s biggest and most prestigious markets