Advantages and disadvantages of a SARL/EURL

[Christian]

I have been registered as Proffessionale

Liberale for the past 5 years; I pay full cotisations and am registered for TVA.

 However my work is beginning to dry up,

so I need to make plans. 

I would like to set up a business in which

I can continue to do what I am doing now (furniture and product design), but

supplement it with other things.  i.e. 

• Cabinet Making
• Building
• Gardening
• Export

I hope to earn in excess of the limits set

for a micro-enterprise, so I am thinking of setting up either a SARL or an EURL.

 I have visited the APCE website, but I

still have some questions.

1. What is the simplest way to set up?
2. Apart from the initial administration costs, is it any more expensive
   or tax inefficient than being a Proffessionale Liberale?
3. Does anybody know the advantages/disadvantages of SARL/EURL’s? 
4. Do I set up as SARL/EURL and register it as doing as many
   different activities as I can think of?
5. I know that different departments treat this is slightly different
   ways, does anybody know about the Gers in particular.

 Many thanks,

Christian

[Nick Trollope]

You can't be a cabinet maker (or builder or gardener) as a PL, you would need to register with the Chambre de Metiers (and possibly the Chambre de Commerce, too), before you could set up any regime.

An SARL and a EURL are essentially the same thing - limited companies (ie., like a UK limited company, your personal liability is limited to that which you put into the company). EURLs are for individuals, and SARL are for more than 1 (director) - the EURL doesn't really exist in the UK.

1. Use an accountant (actually, a SA/EURL must have an accountant).

2. No, I think not. There may be minor differences, but the bottom line won't add up to much . The taxation type is different.

3. Humm.. As an individual (an enterprise individuelle), you are liable for all the debts of the business, you have no personal liabilty for commercial debts against an EU/SARL. However, getting credit for a new SARL will be impossible, without personal guarantees, which removes a major advanage.

4. You can. It will cost you more.

5. I don't think that this is true.

 

 

[mandycats]

hi, as i understand it (i'm sure there are others more knowledgeable than myself) an EARL is your best chance of earning reasonable income if you have a good turnover.  this is because you must draw a set wage every month (this amount may possibly be limited) but you can then draw dividends on your company every quater (ie pay yourself a lump sum) at a much more reasonable tax rate.  this is effective if you turnover about 100k. under a normal regime you would only be left with about 29% of your turnover (not very much ) with EARL you are free to earn the equivalent of upto 40-65% depending on individuals. an earl you can set up on your own with you being the sole shareholder and the only boss!

with a sarl you will need other directors - 2 or more and of course you may then start getting into shareholders etc. very complicated!

we have been advised to upgrade from a micro business to an earl when our turnover reaches the 76k limit - which doesnt actually take that long with high value goods (like yours are).  Try and find a local government business advisary service (tourist information or the marie are a good place to start asking - even the assistant social is a good source of information) they are usually free and give you honest unbaised advice - it is ours (and a few of our friends - who are french) experience that accountants are primarily concerned with their own affairs!  but a good one is obviously necessary - its just finding them!

as for the chambers you will have to register at the chamber of commerce -  i think ALL business have to be registered there first anyway then the chamber de metiers for other work.  it is expensive - costs are about 7k per annum but you may be paying some of that already.  It may well be worth the expense if you can get a couple of jobs lined up to pay for it in advance.  there is the work if you look for it  - its just how much you pay out before you get pay IN!

This information is as i understand it.  i hope this helps and the best of luck with your expansion.

[LesFlamands]

As far as I am aware, unlike a limited company in the UK the principal director (Gerant) of an SARL or EURL does not benefit from the limited liability but is responsible for all the debts of the company. In the case of the SARL the associate directors do benefit from the limited liability. You can protect your personal assets by other means - see your Notaire and don't forget your cheque book.

[Georgina]

Mandycats wrote

"with a sarl you will need other directors - 2 or more and of course you may then start getting into shareholders etc. very complicated!"

But husband and wife can be the only directors so that is not complicated, well, depending on your relationship [:D]

Georgina

[Nick Trollope]

[quote user="LesFlamands"]As far as I am aware, unlike a limited company in the UK the principal director (Gerant) of an SARL or EURL does not benefit from the limited liability but is responsible for all the debts of the company. In the case of the SARL the associate directors do benefit from the limited liability. You can protect your personal assets by other means - see your Notaire and don't forget your cheque book.[/quote]

No, the rules are much the same as the UK, except where fraud is concerned.

 

[Turnip]

After reading these posts I am grateful to be a humble self employed plumber/builder as opposed to a business tycoon[:)]

[scarfish]

Digging up an old thread a bit I suppose....do apologise for that, but, It's right on the subject that happens to be bothering me at the moment.

I've read all the comments made, and it's very interesting.

But I'm left with a question about the correct move to make for someone who is currently "micro-bic" and needs to change registration because of a pre-viewed higher income.

As I understand, there is an option to move from the "micro-bic" to a "bic-real" status, or to form a societe EURL,( the SARL option does not actually concern my own case). The EURL set up has been fairly well explained already in this thread, but not the other option of resting with the "bic" but exceeding the income limit of the micro,and becoming as my accountant termed it, "bic-reel". 

The Question;  So in your opinions, what are the negative points of just remaining BIC, compared to going for the EURL?

(Shame life has to be so complicated really is'nt it....)

 

 

[Nick Trollope]

Sorry to add to the confusion, but you are not comparing like for like. Micro and reel are taxation regimes, EURL (EI, SARL etc) are company types. I suppose, you could be a micro SARL or (like me) an EI under systeme reel. (I haven't put the accent in because I can't remember where it goes....)

[scarfish]

Thanks for responding Nick..

Yes I understand that these two options are completley different... but as I'm expecting to surpass the limits of the micro-bic next year, and as explained to me by an accountant, I have the choice of going with the bic (reel) regime and just paying  taxes and contributions based on the new income, or starting a company(Eurl).

What I would like to know is what is the wiser move... what would be more benificial financially for me, i.e avoiding as much tax as possible? would I get clobbered for the tax if I don't go for a societe (eurl)?

I suppose it also depends on the nature of your business to a degree?

Bon Noel, by the way fella..

 

 

[LesFlamands]

Operate as a Entreprise Individuelle (regime reel simplifiee). As the Gerant (principal in qn SARL) you are still responsible fpr all the debts of the company not as in the UK where all directors benefit from limited liabilty. My French accountant tells me that the only people to benefit from individuals setting up EURL/SARLs are the advocats and notaires.

Merry Christmas everyone[B]

[lmc]

Hi

Just found this so sorry if it's a bit late and you've already made your choice.

As and EURL you have the choice as to how your tax and contributions are worked out whereas with a BIC réel you don't (it's always gross turnover - real expenses = taxable income) and with a SARL you don't (it's always salary and dividends drawn = taxable income and further, your SARL with pay company tax).

With an EURL you can choose whether you want to be taxable on your income, as with a BIC (this is option IR) or taxable on your company profits, as with a SARL (option IS).

Roughly speaking, it works out better to be IR if your gross profits are about 30K or less, and better to be IS if your gross profits are higher.  You can move from IR to IS but once you are at IS you can never go back to IR.

Hope that helps.

Lisa

[Hagar]

[quote user="LesFlamands"]

Operate as a Entreprise Individuelle (regime reel simplifiee). As the Gerant (principal in qn SARL) you are still responsible fpr all the debts of the company not as in the UK where all directors benefit from limited liabilty. My French accountant tells me that the only people to benefit from individuals setting up EURL/SARLs are the advocats and notaires.

Merry Christmas everyone[B]

[/quote]

Just caught up on this thread as well.

The above statement is simply not true. Suggest your accountant goes back to school.

The Gerant of a SARL/EURL can only be personally liable for the companies debts in very specific circumstances - notably fraud and/or where it can be shown that the company has not been run properly. It is basically the same in the UK.

rgds

Hagar

 

[Hagar]

Think I mentioned this on another thread , however, if you are not sure about what company stucture suits your particular circumstances (EI/EURL/SARL/SARL Familiale?) then you are probably better consulting with an avocat or a notaire rather than an accountant. You are choosing the "Regime Juridique" for your company which is the main about ownership, rights, obligations and liabilities. (with possible consequences for inheritance and marriage regimes.) This is their area of expertise.

When choosing your "Regime Fiscal" i.e (Micro/Reel/Reel Simplifie/IS/IR etc) then you should talk to an accountant as that is their area of expertise.

The two choices are of course interlinked as certain fiscal regimes are permitted only for certain company structures (e.g you cannot choose IR with a SARL but can with EURL), so you may need to go back and forward a couple of times to get it right.

hope that helps

Hagar