When an entrepreneur starts, the choice of legal status is a crucial step. It impacts taxation, liability, social protection and business management. Here is a Comparison of the different legal statuses to help you choose the one that fits your project.
1. The Sole Proprietorship (EI)
Advantages:
- Easy to create and manage : no minimum capital required, ideal for a consultant or a craftsman.
- Simple tax regime : income tax, practical for an activity with low expenses and to launch your project on the market while limiting risks.
Disadvantages:
- Unlimited liability : if the entrepreneur contracts a debt, he engages his personal assets (example: a freelancer who is facing a legal dispute and must pay compensation).
- Difficulty raising funds : an entrepreneur who wants to buy expensive equipment will have a hard time convincing banks. He will then have to turn to alternative solutions such as Buy Now Pay Later (BNPL).
2. The Micro-Enterprise (Auto-Entrepreneur)
Advantages:
- Ultra simplified tax regime : no balance sheet, ideal for testing a business idea.
- Exemption from VAT under certain thresholds, advantageous for a service provider.
- Proportional social charges to turnover: if you don't charge anything, you don't pay anything.
Disadvantages:
- Limited turnover limit : The turnover cannot exceed €77,700, otherwise it must change status.
- No deduction of actual expenses : a merchant cannot write off his stock.
3. The Single-Person Company with Limited Liability (EURL)
Advantages:
- Limited liability : if the company goes bankrupt, the liability of the entrepreneur is only his contribution.
- Corporate tax option : can be advantageous if the activity generates significant profits.
Disadvantages:
- Heavier formalities : requires the drafting of statutes, which is more complex than a micro-enterprise.
- High social security contributions : an entrepreneur must pay expenses even in the absence of turnover.
4. The Unipersonal Simplified Joint Stock Company (SASU)
Advantages:
- Limited liability to contributions, reassuring for entrepreneurs who want to protect their assets.
- Social insurance scheme assimilated to employees : allows access to better social protection (example: unemployment compensation for a manager).
Disadvantages:
- Higher social charges : cost greater than EURL.
- Complex formalities : customizable statuses but more expensive to write.
5. The Limited Liability Company (SARL)
Advantages:
- Responsibility limited to contributions : an entrepreneur does not commit his personal assets.
- Adapted to family businesses : ideal for a group activity (example: a couple opening a business).
Disadvantages:
- Rigid statuses : less freedom than in a SAS.
- Heavier management : stricter accounting requirements.
6. Simplified Joint Stock Company (SAS)
Advantages:
- Great flexibility of the statutes : interesting for startups looking to raise funds.
- Social insurance scheme assimilated to employees for the manager, therefore better health and pension coverage.
Disadvantages:
- Higher management cost : no more accounting fees.
- Significant social charges : the higher the wages, the higher the contributions are also.
As you will have understood, the choice of legal status depends on several criteria: responsibility, tax regime, management flexibility and development prospects.
Here is the overall summary:
- For a simple and risk-free activity, the micro business is ideal.
- For a Expected growth, theEURL Or the SASU offer more options.
- For a collective project, the SARL Or the SAS are the best alternatives.
In addition to the information in this article, we invite you to consult a chartered accountant who can guide you in the right choice of the status that corresponds to your activity and recover the future accounts of your structure.
Image by Steve Buissinne From Pixabay
