How to start business in France

How to Start a Business in France

In recent years, starting a business has become a relatively easier task than years before, the French government has lowered its guard on the business restrictions and is promoting entrepreneurial mindsets all around the world.

Starting a business is undoubtedly one of the most difficult tasks a person accomplishes in his life and it takes a major toll on the person if he tries to launch his business internationally. If a budding entrepreneur is equipped with the right knowledge and guidance on how to go about opening a company, he/she would excel.

When compared to other G20 countries on the globe, France has a relatively hassle-free experience when it comes to starting a business in the country and it allows you to start your SMEs in less than a week’s time.

If you are trying to set up a business in France then this article is the perfect read for you. We have tried and incorporated all the major pointers one should keep in mind when launching a business in France.

Fundamentals of starting a business in France

There are a few basics that need to be taken care of before going for a business launch in France. It is compulsory for anybody looking to start a business in France to have a registered mailing address in France or be a legal citizen of the EU. One might be overburdened by the paperwork and documentation but with technology advancement, everything is happening online and that has acted as a great help to people looking to expand business internationally.

You should conduct thorough market research before setting everything up in France. Make future budget forecasts and that will help you have a steady future. Then go for registering your business and correctly select the legal status of your venture.

All the pointers being addressed in this article are just a general overview and one should consult a professional or an accountant in France to get answers to all their doubts.

Additionally, you can also check out how to start an LLC in the USA.

How to Start a Business in France

Here is the complete step on how to start a business in France with all the documents you required for the same.

Choose the perfect category for your business

In France, businesses are widely categorized into five major categories and one needs to decide on the most appropriate category their business falls under, let us brief you about these five categories.

French company distribution
  • Trades, this segment of the business is mainly for building trades and other businesses dealing with manual jobs and some of the manufacturing sector.
  • The commercial sector, businesses like shops selling commodities, factories making products, cafes, and many such activities come under this business category.
  • The agricultural sector, everything incorporating farming and agricultural needs comes under this business segment.
  • Freelancers and individual professionals who are working independently and act as service providers come under this category. For instance, professionals such as content writers, musicians, dentists fall under this sector.
  • The last category is that of agents, Commercial agents are the ones that negotiate and sell for any other firm.

Every business category mentioned above has its own terms of registration and has specific registration centers.

Create a viable business plan

Having an appropriate business plan in place is the key prerequisite to launching a business in any part of the world. Make sure that France fits in your criteria of ideal audience and has the market appropriate for your business to run. This will help you further clarify your vision and will help you gain investments in the future.

Make sure you have a clear idea of what you are getting into and do appropriate customer research. Try taking some external help to structure your business plan.

French business legal structures

The next thing you have to look after is the taxation policies that suit your business best. In France particularly, there are broadly two types of legal structures that your business can opt for, let us know more about these legal business structures.

French business legal structures
  • The company, known as Societe in french, can be further classified as EURL, SARL, SA, and SASA. 
  • Sole traders, known as enterprise individuelle in French.

The legal structure a company opts for totally depends on the type of venture they want to establish. They should look into several factors before finalizing their legal structure, some of the features to look into would be who is in charge of the company, tax filings, company’s turnover, and many more.

Sole trader legal framework 

If you fall under the category of sole traders then this is the accurate legal framework for you. This legal framework can be comfortably used to set up a micro-business or a small enterprise. This legal framework treats the business owner and the company as one unit by merging the company’s assets with the owner’s personal assets.

If you decide to go for sole trader status then you have the ability to pay taxes through your income tax return which you file personally according to your business category. One can also go for setting their company as an EIRL i.e. Entrepreneur of Individual Limited liability wherein you can have a demarcation between your personal assets and the company’s assets, if you choose to go for the EIRL status then you have the choice of paying the corporate tax.

Company legal framework 

If somebody chooses to opt for the company legal framework this means that the company and the person owning the company are two different entities and cannot be confused to be one. All your personal assets wouldn’t be covered under the company’s belongings.

In this structure, it is necessary for the company to have a proper address, name, and assets and the owner should act on behalf of the company. But the important fact to be noted here is that starting a company and starting as a sole trader are two very different procedures, the company structure requires a lot more documentation and legal issues. Starting a company would also require a press notice as it is a necessary rule in France.

One might need a registered company formation agent to steer them away from all the complications that arise through the company formation process, a lawyer can be a great help too but again your business specifications also have a say in the type of lawyer you’ll need.

There are two major categories of companies as mentioned below

  • The first one is a SARL i.e. Société à Responsibilité Limitée. SARL is an LLC (limited liability company) who’s liability is limited to the investment in the company. The SARL can have a minimum of 1 partner and a maximum of 100 partners.
  • The second type is an EURL or Entreprise Unipersonelle à Responsabilité Limitée, it is a type of company that is owned by just one person and runs as a LLC(limited liability company) under the supervision of a managing director also known as a gérant in french. It isn’t obligatory for the gérant to the business owner, he/she can be any hired person too.

Find a perfect company name that is available for use

The first thing to keep in mind when naming your business is to check if the name’s available for use or not because in many cases the names are already in use and that prohibits you from choosing that name. To check for the name availability visit the online website of Institut National de la Propriété Industrielle (INPI). To check for name availability in the case of websites visit the registry for domains i.e. AFNIC.

It is advised to trademark your business name and logo as soon as possible to avoid duplication and prevent any legal issues in the future.

Open a french business bank account

Setting up a business account is a must if you want to carry on your business in France. Opening up a bank account in France is not a very complicated procedure, it just requires you to submit all the basic details of your business to the bank manager and then answer some simple questions related to your company and give a thorough introduction of your business plan.

Open a french business bank account

France has very strict banking laws to prevent any sort of money laundering so it becomes easier for the bank manager to steer you through the process if they have a clear idea of your business plan.

After successfully setting up a business bank account, you need to deposit some capital into that account to start it. It is believed that the traditional capital to keep in your bank account is 7,500 euros but your business account can keep going with a minimum capital of 4,000 euros. This amount is working capital and can be utilized at any point of time in the future.

As soon as you receive a certificate of your new company, your share capital is ready to use and if unfortunately, your company formation does not take place, your capital will be refunded.

Documentation and legalities

First things first, the French government requires all new companies to announce their start to the press i.e. publishing your business in any of the renowned newspapers in France or by making a business publishing so that your business is formally launched in the business world. Newspapers like Les Echos and Le Parisien can be an appropriate choice to publish your business in.

Now, after your business is introduced to the business environment in France, the next step is documentation and evidence. This is the step after which your company will be incorporated.

Start with filling an application form.

Provide identity proof, most commonly the shareholders of the company have to provide passport proofs and then address proofs. For address proofs, you’re required to present utility bills of up to 3 months. Then the authorized organizations in France go through these documents and proceed with the business registry in the national business directory. The documents travel through several institutes like the taxation office, the national institute of statistics, and also the commercial court.

The documents also travel through the social security office to make sure nobody’s rights are being infringed and labor laws are adequately being followed. Once your documents have been looked into thoroughly and no discrepancies were found in them then the government departments authorize your French business corporation.

This sounds like a cumbersome process but there is always an option to hire a company formation agent to help you through the process. The agent will efficiently handle all conversations with government officials so you don’t have to worry about the language barrier and going back and forth to government departments.

It is estimated that it takes an average of two weeks to successfully be stamped as incorporation since the inception of the bank account.

After your business has been designated as a corporation and has successfully received the certificate for the same called the Extrait Kbis, you are provided with an important company ID number which is  14 digit number very crucial for your business in France as it has to be necessarily present on every business document. This business Id number is a sequence of a SIRET 9-digit number followed by a 5 digit unique code.

Once the Kbis certificate arrives, your bank account starts running and you will also receive your VAT number shortly.

So to summarise the basic documents needed, one should keep their address proof, ID proof handy to eliminate any complications throughout the process.

Get some external help to eliminate confusion

Being a foreigner trying to set up a full-fledged business in France, one might experience a lot of complications and that might lead to people stepping back from their business idea. There is no doubt that french accountancy can be tricky for a foreigner and that is where expert compatible or the French accountant comes into place.

The accountant takes care of all the tax laws and informs you about all the deadlines so you don’t have to suffer in a new environment. He/she will take full responsibility for your accounts and can also take care of returns and VAT.

As it is famously said Prevention is better than cure, so having a professional through the process is a boon for the company.

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