How do you choose your legal status?
Choosing the right legal status is a crucial step for all entrepreneurs. Although there is no such thing as the ideal legal status, it’s important to find the one that best suits your needs, the nature of your business and the size of your project. Here are the main criteria to consider when choosing the legal status best suited to your situation.
Criteria 1: Willingness to associate
The number of people involved in the project is a determining factor:
Do you want to go it alone?
Choose statutes adapted to individual entrepreneurs, such as :
- Sole proprietorship (EI)
- Sole proprietorship with limited liability (EIRL)
- Single-member limited liability company (EURL)
- Société par Actions Simplifiée Unipersonnelle (SASU – one-person simplified joint stock company)
These structures offer a high degree of autonomy and, in the case of the EURL or SASU, the possibility of adding partners at a later date without transforming the company.
Want to join forces?
The most common corporate forms are :
- Limited liability company (SARL)
- Simplified joint-stock company (SAS)
- Société Anonyme (SA)
- General partnership (SNC)
- Société d’Exercice Libéral (SEL)
Criteria 2: Protecting Your Heritage
If you want to protect your personal assets from the risks associated with your business, certain structures are better suited to your needs:
Proper name with specific protection:
- The EIRL, via an appropriated patrimony.
- EI with a declaration of unseizability.
Corporate form with limited liability:
- SARL/EURL
- SAS/SASU
- SA
Avoid structures such as SNCs, where partners are jointly and severally liable for the company’s debts.
Criteria 3: The scope of your project
Projects requiring substantial investment are generally directed towards structures adapted to fund-raising, such as :
- SAS: Flexibility under the articles of association, creation of specific shares (double voting rights, priority dividends, etc.).
- SA: Recommended for large or listed companies.
These structures can also be used to establish shareholders’ agreements to strengthen governance.
Criterion 4: The Manager’s Social Security Scheme
Legal status determines the manager’s social security benefits:
- Assimilé salarié: Directors of SA, SAS, SASU or minority managers of SARLs, with better social security coverage but higher costs.
- Travailleur non salarié (TNS): Majority managers of SARL/EURLs, heads of sole proprietorships or partners in SNCs, with lower contributions but more limited social protection.
Criteria 5: Company tax system
There are two main systems:
- Income tax (IR): Profits are taxed at the level of the partners. This system is preferred for structures such as EI, EURL (with IR option), or family SARLs.
- Corporation tax (IS): The company pays tax on its profits. Dividends distributed to shareholders are then taxed. This system applies to SARLs, SASs, SASUs and SAs.
Other criteria to consider
- Regulated activities: Some activities require a specific status (for example, tobacco shops must be operated as an SNC or EI).
- Credibility: Companies with substantial capital inspire greater confidence among partners (customers, banks).
Advantages and disadvantages of SAS
The Société par Actions Simplifiée (SAS) is a modern, flexible legal form offering great freedom of organization and operation. Autonomous from the Société Anonyme (SA), it is ideal for entrepreneurs seeking an adaptable legal framework.
Discover the advantages and disadvantages of SAS to better understand whether this status is right for you.
Avantages et Inconvénients de la SASCharacteristics of the SARL
