How to choose the legal status of your business?

You’ve decided to start your entrepreneurial adventure, congratulations! However, before your project becomes a reality, a crucial step awaits you: the choice of legal status. The latter will have a significant impact on the regulation, tax obligations and legal obligations of your business. Let’s take a look at the different options.

What is the legal status of a company?

The legal status the legal form your activity will take. It regulates the operating rules of the company, the tax regime and the responsibility of the entrepreneur. There are two main families of status: individual businesses and companies such as the simplified joint stock company (SAS) or the limited liability company (SARL), etc.

In sole proprietorship, the entrepreneur works in his own name, with simpler formalities, especially under the micro-enterprise regime. On the other hand, the creation of a company gives the company a separate legal personality, with its own rights and obligations.

What are the different legal standards?

You can first choose the same owner, considered for its simplicity of administration. Its broadest version, the microenterprise, offers a lighter tax and social system, which is ideal for self-starting entrepreneurs.

If you prefer a more formal structure, turn to SAS or the SASUhis solo version. Both these types of companies are very flexible in terms of management and governance and make it easy to welcome investors. This standard is ideal for growing projects.

For a more structured approach, the SARL or the EURL (SARL with one member) are opportunities, especially for new entrepreneurs. These two legal forms offer additional legal security thanks to their operating rules defined by law.

Finally, if your project is a real estate, the SCI (real estate company) is a common choice for property management, often within the family. Be careful, though: the liability of SCI participants is unlimited. This means that if the SCI fails, the company’s creditors can demand payment from any partner. Finally, for commercial real estate projects, the real estate SASU will be more appropriate.

How do you choose your legal status?

The choice of standard depends on several criteria. The first question you ask yourself is: are you starting alone or with others? If you are alone, the microenterprise, the SASU or the EURL are options to consider for their simpler formalities and liability limited to contributions. With several people, choose the SARL or SAS, offering flexibility and protection of personal assets thanks to the limitation of liability to contributions.

Other elements, such as the type of activity, the projected turnover, and the tax and social regimes, play an important role in this choice.

In addition, future growth, the management structure you want as well as the appropriate level of risk are essential in choosing your structure. So, have you made your choice?