What are the possible legal statuses available to a company in France? How should you choose your French company’s legal status? This article offers you a comparative table for legal statuses, from sole trader to simplified joint-stock company.

In France, finding the right legal status is not easy. For those who decide to create a company, it’s always a tricky question. In order to make the right choice, certain criteria must be taken into account.

Creating a company means:

• Exercising an activity (trade, craft, agricultural, liberal)
• Choosing a social status for the company’s director (do you want to be considered a salaried or self- employed person?)
• Choosing your tax regime (you can be taxed on your revenues or on your company)
• Choosing the responsibilities level of your company (limited or not)
• Choosing the legal structure of your company (sole proprietorship or company)

Overview of French Legal Status

Here is a table outlining the main legal statuses in France. In brackets you’ll find the French names of these different structures so you can identify them later when you register, for example !

What Is The Right Legal Status For My Company? Questions You Should Ask Yourself

1. What kind of activity is your company going to exercise?

   • If you are going to sell services as a secondary activity, you can set up as a sole trader (micro-entreprise)
   • If it is going to be your main activity, and if this activity includes concluding contracts like commercial leases or strong legal commitments, it’s better to work as a sole trader (EI, EIRL) or a company (société).
   • Note that some regulated activities need a specific status (agriculture, regulated liberal professions, artistic or copyright paid activities, real estate or sales agent, etc.)

2. Are you going to work with partners?

   • If the answer is yes, create a company (SARL or SAS)
   • If you and your partners want to run the company in a genuinely democratic manner, go with a cooperative and participative company (SCOP). This business structure goes by the same rules as a SARL, SAS or SA
   • If your partner is your spouse, there is a legal status for that called spouse-colleague (conjoint-collaborateur). It exists in all legal status except SAS/SASU

3. What is your personal situation?

   • If you have an estate or if you are married with full community of property, it’s better to protect your personal wealth by choosing a legal status with limited responsibility (EIRL or société)
   • If you are unemployed and you want to keep your monthly allowance, you should create a company (société). Only these legal statuses allow you to set your income to zero so that your Job Center (Pôle-Emploi) will maintain a full rate on your unemployment benefit

4. Are there important investments and / or loans?

   • If so, better to limit your liability. A legal status like sole trader (EIRL) or any type of company (société) will be best-suited.
   • The sole trader (micro-entreprise) status is a bad idea in this case because you can’t retrieve VAT on your initial investment
   • If you need to go to the bank and ask for an important loan, in order to stay credible, don’t become a sole trader (micro-entreprise)

5. Do you already have customers?

   • If so, and if you think your revenue is quickly going to increase, forget about sole trading (micro-entreprise) because it has maximum turnovers. Choose to be a sole trader (EIRL) or any kind of company (société)
   • On the contrary, if you doubt your ability to create a real customer base, it means you have to test your activity first: in that case, the status of work-entrepreneur (entrepreneur-salarié) in an activity cooperative (cooperative d’activité) could be an interesting choice

6. Does your activity include risks?

   • Personal or physical risks, work injury risk: create a simplified joint-stock company (SAS or SASU) to be under the general social security regime.
   • Important risks in the work environment or real estate: we advise you to create any kind of company (société)

7. Is your activity likely to evolve or be sold?

   • If you want your business to grow or change, you’ll probably need money or new associates. In that case, go with one of the company (société) statuses.
   • If your business is likely to be sold, go with a simplified joint-stock company (SAS or SASU) for taxation reasons

8. The entrepreneur psychology

   • If you’re not sure of where you’re going, test yourself by being a sole trader (micro-entreprise) first
   • You can also choose to integrate an incubator (couveuse) or an activity cooperative (cooperative d’activité), or even go with wage portage (portage salarial)

As you can see, there are numerous selection parameters. And to choose the right structure is no easy task. If you don’t do so carefully at the beginning, chances are you’ll quickly come across legal difficulties. So if you want to get off on the right foot with your business, the first thing you should do is download and fill in our free excel financial business plan template!

We also have other articles about french companies :

If you want to learn how to create a limited liability company in France.
If you want to learn how to become a freelance in France.