Create a business with EURL status
The creation of a company with the status of EURL is something very common in France. It is a legal form that mainly appeals to SMEs wishing to embark on the entrepreneurial adventure while benefiting from the protection of their personal assets. Find out in detail what characterizes EURL as well as the steps to start your own business with EURL status.
What is a company with EURL status?
The acronym EURL stands for Sole Proprietorship with Limited Liability . This legal form is actually very similar to an LLC. An SARL is a limited liability company which is formed with a minimum of 2 partners, while an EURL is made up of a single partner. In other words, this status allows an entrepreneur to create his own business, while benefiting from the legal protection of the LLC, in particular with regard to the protection of his personal assets.
What are the specific characteristics of a EURL?
This legal form is very popular, particularly by small businesses, such as: a restaurant, a hairdressing salon, or a carpentry shop.
A single partner
A EURL is made up of a single partner (natural or legal person). Therefore, the entire share capital of the company is made up of the contributions of this partner. The main advantage is that it is free to make decisions on its own , unlike an LLC where the opinion of all the partners is taken into account through a vote at the general meeting.
The manager of a EURL may be the partner, or in certain cases, another person designated in the articles of association of the company. It is the manager who takes care of the daily management of the company and who takes all the necessary decisions to ensure the sustainability of the company.
The social regime of the manager of a EURL
When the manager is also the sole partner of EURL, he is automatically affiliated to the Social Security for the Self-Employed (SSI) as a Self-Employed Worker (TNS).
If the manager is a third party, the social system varies according to whether he receives remuneration or not. If he is remunerated, he is considered as an assimilated employee and attached to the social security system, like a traditional employee. If he does not receive any remuneration, no special regime applies.
The taxation of a EURL
If the sole shareholder of EURL is a natural person, he can choose between income tax (IR) or corporation tax (IS).
Income tax is the tax regime in which the profits generated by the EURL correspond to the remuneration of the manager. This is the system that applies by default to EURL. The calculation of social charges and tax is therefore based on the company’s profits. This can be interesting for the manager, especially during the first years of activity of the company when the profits are lower, because the losses of the company will allow to drastically reduce the tax rate of the manager.
The sole shareholder can opt for corporation tax within a maximum period of 5 years from the creation of the EURL. In practice, the company will be subject to the corporate tax system with its profits as the tax base, while the manager will be subject to the income tax system with the remuneration he paid as a tax base. .
Please note : if the manager opts for the corporate tax regime, he must explicitly renounce this regime with the tax authorities within 5 years of the creation of the company. If he does not do so, the EURL will be irrevocably subject to IS.
In the event that the sole shareholder of the company is a legal person, the EURL is automatically subject to corporate tax.
What are the steps to follow to create your business with EURL status?
To create your business with EURL status, several steps must be taken.
Drafting of the statutes
The first step is to write the statutes of your EURL . Unlike other legal forms for which the law imposes only few rules, the statutes of an EURL are strictly framed by law. Therefore, you have little leeway if you want to customize the statuses. In order to ensure that these are well drafted and comply with the law in force, it is recommended to have them drafted by a professional or to have recourse to the support of an online service.
Deposit the capital in the company’s account
In order to set up your business, you must deposit the share capital in the bank account of your EURL, or rather, the contributions in cash (money). The minimum share capital required for the creation of a EURL is € 1. Naturally, most entrepreneurs plan a larger sum in order to ensure better stability for their business. As for an LLC, you must deposit at least 20% of the share capital at the time of the creation of the company and can deposit the remaining 80% during the following 5 years.
If you plan to make contributions in kind to build up the share capital of your business, you must have these assessed. In theory, you should appoint a contribution auditor who will assess the value of the various contributions in kind. If all of your contributions in kind is less than half of the company’s share capital and if none of the contributions in kind exceeds € 30,000, you are not required to appoint a contribution auditor.
The publication of a notice of constitution of a EURL
After signing the final articles of association of your EURL, you must proceed to the publication of a notice of incorporation of your company in a newspaper of legal notices which covers the department where the head office of your company is located. The objective of this process is to prevent third parties from setting up your business.
Certain mandatory information must appear on the notice of incorporation, including in particular:
- the corporate name;
- the corporate form of your company;
- the corporate purpose;
- the address of the registered office;
- the identity of the manager;
- the period of incorporation of the company;
- the amount of share capital;
- mention of the registry of the commercial court which is responsible for registering the company.
Submit the company’s registration file to the CFE
To finalize the registration of your business, you must compile a file that includes various supporting documents and an M0 EURL form, and send it to the clerk of the competent commercial court.
For your registration file to be validated by the competent CFE, you must provide the following documents:
- a copy of the final and signed articles of association of your EURL;
- a copy of the identity document of the manager of the company (ID card, passport, driving license, etc.);
- a certificate of the publication of the act of incorporation in a newspaper of legal announcements;
- a certificate of deposit of funds with the bank;
- a supporting document proving the occupation of the premises which serve as the head office;
- a declaration of non-conviction and parentage of the manager.
If you had to appoint a contribution auditor to carry out the valuation of your contributions in kind, you must also attach the valuation report.
After having sent your registration file to the competent registry, all you have to do is wait for it to register. Once this is done, you will receive your K-bis.
Don’t forget to check the availability of the company name
Before embarking on the various steps to constitute a EURL, it is important to develop a relevant commercial and marketing strategy for your company. This includes, in particular, the choice of the name of your company. During your reflection, it is necessary to check the availability of the company name in order to be sure that it is not already used by another company.