Starting a business in France is a hot topic today. Let's take a closer look at how to open a small business in France.
In France, there are 2 main forms of running a small business:
- Individual entrepreneurs (EI, EIRL, Auto-entrepreneur).
- Commercial companies (SARL, EURL, SA, SAS, SASU, SCP, SCI, SNC, etc.).
For a number of regulated activities, it is necessary to obtain a special license and/or have a diploma.
Which status to choose for opening a small business in France
First, let's look at the differences between the Auto-entrepreneur, EI, SARL/EURL, SA status.
Entrepreneurs with the status of an individual
Micro-entrepreneur is a self-employed person with a simplified taxation and reporting system. But it is not suitable for regulated activities, such as lawyer, doctor, etc.
Annual turnover ceiling under this status in 2023 is 77,700 € for consultations, commercial and craft services and 188,700 € for the sale of goods/sale of food/rental housing.
EI (Entreprise Individual) is an individual enterprise.
Main characteristics:
- accounting is kept in a simplified manner;
- no Charter.
Legal entities
EURL or SARL – these are limited liability companies (legal entity). EURL has one founder, while SARL has two or more. The capital is divided into shares of each co-founder. A company member cannot sell his share without the consent of the other co-founders.
Video about the difference between EURL and SARL
SA and SAS, SASU – joint stock companies. The company's capital is divided into shares. The holder of shares can freely dispose of his share in the company, unless otherwise provided in the Charter.
Main characteristics:
- full accounting and management accounting;
- charter;
- authorized capital;
- constituent documents.
How to obtain a residence permit in France by starting a business
Opening a company in EURL or SARL status gives the right to apply for an “enterpreneurs visa”, and therefore a residence permit, but subject to sufficient profit.
The main argument for obtaining a residence permit is financial security.
If you have a D Visiteur visa, live in France and conduct business remotely in another country, then you must declare your income in France. However, this visa does not give the right to work and do business in France.
To obtain a residence permit with the right to conduct business, you can submit a petition for change of status. To do this you need:
- provide a ready-made business plan and business development plan;
- open a company in France, the only caveat is that you do not have a work permit and do business. You can do this as an investor partner and involve an employee who will be a director.
And as soon as the profit from the activity is enough to live in France, you can apply to change your residence permit with the right to work and do business.
The micro-entrepreneur status is not suitable for obtaining a residence permit. Since to obtain it you need to live in France and have a residence permit with the right to do business and/or work or be a citizen of the European Union.
What income must be declared to obtain a residence permit?
When considering the conditions for obtaining different residence permits, including the Visitor visa, it is necessary to declare at least SMIC (minimum wage). This is approximately 1800 euros brut per month, 20,900 euros per year.
But it is better to declare 2000 euros per month per person. If a family consists of two or three people, then we multiply this amount by the number of family members; the higher the income, the less grounds for refusal.
Do I need to declare income earned in another country?
While living in France, you can conduct business in another country and pay taxes there. In this case, every year it is necessary to fill out a declaration in France, indicating income received in another country. In most cases, there is a convention between countries for the avoidance of double taxation, which specifies the rules for declaring and paying taxes on income received in other countries.
For example, with the status of an Individual Entrepreneur in Russia, all taxes are paid in Russia. If you also have income in France, then your income in Russia will be added to the income received in France and must be reported in full on your tax return. At the same time, taxes paid in Russia will not be paid again in France.
What taxes and what tax benefits does Micro-entrepreneur have?
The turnover of a Micro-entrepreneur is fully subject to social business tax. With this type of activity, you cannot write off your expenses.
Depending on the type of activity, turnover is taxed at the following rates:
- purchase and sale – 13%;
- service sector – 22.5%.
In addition to paying social tax, an entrepreneur has to pay personal income tax at a progressive rate.
Here I talk about how to reduce income tax.
Entrepreneurs with Micro-entrepreneur status are given the choice of a flat income tax rate option version libératoire.
If you do not select this option, then in this case a fixed discount in the amount of 71%, 50% or 34% (depending on the nature of the activity) is applied to the total turnover. These deductions represent deductible professional expenses.
If an entrepreneur believes that his deductible expenses actually exceed 71%, 50% or 34% of his turnover, he should consider choosing a real tax system.
How and where to register your company
For Micro-entrepreneur status
You need to fill out a special form on the website https://www.inpi.fr/ and attach the necessary documents to it.
To open a legal entity company EURL/SARL/SAS, etc.
- Write a company charter (French Statuts), which defines the legal form, goals and rules of operation of the company. It must be in writing and signed by all partners.
- Appoint company leaders.
- Contribute authorized capital. Each partner must invest in the company to some extent. Investments can be a monetary or property contribution.
- Publish a notice of the establishment of a company in a legal newspaper. This formality is mandatory.
- Apply for registration of the company in the special register Registre du Commerce et des Societes (RCS) and receive a registration number (K-bis).
How can an entrepreneur protect himself and his family from financial risks?
To conduct business in France, some professions are required to have social responsibility insurance. This will avoid financial losses if problems arise with clients.
To protect against financial risks in the event of disability, there is Prévoyance insurance, which allows you to receive sick leave payments, disability pension, family compensation in case of death, etc.
An entrepreneur can also sign up for health insurance to reduce the costs of medical services associated with treatment, hospitalization and home care.
And of course, conclude an agreement on a funded pension, so as not to be left in old age without a means of subsistence.
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