What's the difference between a SARL, SAS, SA, EURL, Micro-Entreprise & Auto-Entrepreneur? 

If the company only has one director or shareholder or if the director holds more than 50% of the shares of the company, the burden of social security payments is incurred from the first day the company is formed.

A majority manager (alone or together with the other managers holding more than 50%) is self-employed (TNS). A minority or equal manager, or a non-partner manager, is treated like an employee for social security (assimilé salarié). The salary is a deductible expense from company profits. You can also choose to have some of it paid as dividends instead. Any profits gained by the SARL will be assessed for corporation tax through company taxation - 15% up to €42,500 of profit for eligible SMEs, 25% above that figure.

When opening a business bank account for a SARL company you need to deposit around €4,000. The legal minimum is €1, but in practice banks often expect around €4,000.

Whatever amount of capital you choose to start with, this figure must be included on all your official documentation, for instance letterheads, invoices and order forms. The deposited amount is "working capital" and a percentage of that can be taken out of the account once the company has been formally registered. Traditional banks usually require a meeting but now several online banks allow remote opening and capital deposit.

SAS - Société par Actions Simplifiée

An SAS is a Simplified Stock Company which is perfect for creating a joint venture between a French company and a foreign partner. Previously, French companies had found it difficult to enter into joint-venture relationships with foreign companies because of the rigidity of French corporate law but SAS companies are increasingly finding favour with foreign investors who wish to set up subsidiaries in France.

In an SAS, a president and one shareholder is required. They can be the same person in which case the company will be incorporated as a SASU - Société par Actions Simplifiées Unipersonnelle.

The only person authorized to act on behalf of an SAS company is its President. An SAS may not have two Presidents, however, a Director General (“directeur général”) may be appointed and granted powers similar to those of the President. The President is affiliated to the general social security scheme like an employee (assimilé salarié), but without unemployment insurance.

The legal minimum for opening a bank account for an SAS is €1, but in practice banks often expect around €4,000 capital to be deposited.

An auditor is required for the following: if there is a €5m balance sheet, a €10m turnover excl. VAT or 50 employees; There are group rules for parent companies.

SA - Société Anonyme

An SA is normally used by businesses that want to go public on the stock exchange or have lots of shareholders as there is no maximum amount of shareholders with this type of business structure.

An SA is designed to help fundraising by encouraging new investors to contribute to the share capital. So any businesses with strong potential for expansion, investment and profit are likely to go for this structure.

There must be least 2 shareholders if it is a non-listed SA  or seven shareholders if it is a listed SA. There are two governance models (board of directors, or management board + supervisory board) and the Chairman and CEO roles can be separated.

The board of directors is called a conseil d’administration and has a président directeur-général (PDG) which is equivalent to a chief executive. (But be warned, the PDG can be fired at any time by the board.)

The minimum share capital with an SA is much larger at €37,000 and is probably the most difficult sort of company to start because the registration requirements are elaborate due to the fact that an SA can sell shares on the public stock exchange.

An auditor called a commissaire aux comptes has to audit your accounts every year. And with regards to tax and social security, the senior management are considered as regular salaried employees of the company.

EURL - Entreprise Unipersonnelle à Responsabilité Limitée

An EURL is a SARL with a single partner (an individual or a company).

The owner's liability for debts is limited to the value of their investment (it can be opened with as little as €1 but again there’s not many banks that would approve of such a small investment).

Capital can be entered by way of cash or assets, and no contributions auditor is needed if no single in-kind contribution exceeds €30,000 and in-kind contributions do not exceed half the capital.

Regarding taxes, an EURL can choose whether to be taxed through the personal income tax system (so no distinction between profits of business and income of the owner), or to pay company tax on the profits in which case your pay is a deductible expense from the company’s profits, or else you can be paid in dividends. But however you choose to take a salary, social security contributions as a self-employed person will need to be met and a non-partner manager is assimilé salarié.

ME - Micro-Entreprises or AE Auto-Entrepreneur

There’s a simple business status available to those who just want to establish a small business in France which is called a Micro-Entreprise. It is also known as auto-entrepreneur status and is popular because the registration can be done online and the tax and accounting rules are simplified. Registration is made via formalites.entreprises.gouv.fr and all official information can be found on autoentrepreneur.urssaf.fr. 

However, you have to be able to either read or speak French in order to do this, so make sure you understand everything before you fill in the forms as mistakes will delay the process, and things can get a little complicated if your business is very unusual or crosses over into multiple business categories.

There are also turnover limits for MEs and auto-entrepreneurs, depending on what type of service or product you offer. The best way to check your status is to visit the Auto-Entrepreneur website. MEs and auto-entrepreneurs don’t need to have a corporate business bank account as such, but they do need to have a separate account which is used only for their business dealings, and a dedicated account is compulsory once turnover exceeds €10,000 for two consecutive calendar years.

For MEs and auto-entrepreneurs, there is no corporation tax to pay and if you don't earn enough to pay tax then tax is zero, but social charges still need to be paid no matter how much you earn. The tax rate applied assumes a fixed rate of expenses depending on your activity type and if an ME earns above €85,000 on goods or €37,500 on services then VAT must be charged and can then be recovered.

One of the big advantages is that an ME or auto-entrepreneur doesn’t need to pay for an accountant. However, a chronological record of receipts is needed, along with a purchases register if you sell goods. These could be kept electronically. Also please note that electronic invoicing has been introduced by the government for VAT registered companies so consult our article about electronic invoicing to make sure you are compliant. 

Although a chartered accountant is not necessary for an ME, it may be worth spending a bit of money on one if you’re nervous or confused about tax, and also to save you from the headache of dealing with French paperwork.

So now we’ve covered the main French business structures for you, if you need any further help, just download our free detailed guide below on how to start your French company.

Alternatively, go to our page opening your business in France, where you can also find details on opening a bank account or finding an accountant. Or you can email your questions to us through our contact page, or call us on 0033 (0)1 53 57 49 10. We'll be happy to help!