Starting a business in France: steps to success!

Starting a business is a great way to fulfill your dreams. However, it requires discipline, consistency, an investment of time and money, and a few other important things that you should consider along the way.

You should plan your journey to improve your chances to accomplish your business goals. We break down the process into steps to help you take the guesswork out of the process.

STEP 2 – DETERMINE WHAT YOUR MARKET IS AND WHO ARE YOUR COMPETITORS.

It is important that you get to know what your potential customers want through data collection. You may develop questionnaires to collect helpful data. You may also survey or interview your specific target. Use existing sources of information such as census data to validate your business idea. Figure out how the product or service that you’re considering might perform if you take them to market.

STEP 3 – PREPARE YOUR BUSINESS PLAN.

Working on the business plan will force you to prepare a formal outline of your business strategy and to outline a roadmap for establishing and developing your business. It will help you identify potential problems. It should be succinct:

• The description of your company;
• The organization, and the structure that you want to put in place;
• The market analysis, the organization’s mission and goals;
• The products or services that you’re offering;
• A summary of the consumption trends that could affect your business or industry;
• Your marketing plan to distribute your product or service
• Your budget for the next five years.

STEP 4 – CHOOSE YOUR BUSINESS STRUCTURE.

It is important that you carefully choose your business structure because this choice affects how you file your business tax returns, the type of tax returns that you must file, your accounting requirements, the protection of your personal and business assets.

In addition, your choice of French type of business structure depends on whether you would like to be the only owner of the business or you’re considering having co-owners.

Starting your buisiness as the only owner

You may choose to start your business as an Entreprise Individuelle (Sole proprietorship) or as a single member of your company.

• Entreprise individuelle (EI): the EI is a flexible form of entity: it is simple to form and to maintain. You’re not required to contribute any capital. The micro-entreprise is a type of EI. Learn more.
• Entreprise unipersonnelle à responsabilité limitée (EURL): you have limited liability protection, except if you’re the manager and have been convicted of mismanagement. You may manage the company or have someone else manage it.
• Société par actions simplifiée unipersonnelle (SASU): you have flexibility in organizing how the company will be managed. Your liability is limited to the amount of capital that you decide to contribute. Your SASU will be taxed as a C corporation. But you may elect to be taxed as a flow through entity. Certain professional services companies are not eligible for the SASU form of entity.

Starting your buisiness with co-owners

If you’d like to have co-owners, several other forms of business structure may work for you.

• Société à responsabilité limitée (SARL): this is the most common form of entity in France. There must be at least two co-owners. You have limited liability protection except if you’re a manager and have been convicted of mismanagement. You decide the amount of equity that you want to contribute. The company is taxed as a c corporation except if you elect to be taxed as a pass-through entity.
• Société par actions simplifiée (SAS): you must be at least two co-owners to create an SAS. You determine freely how the company’s stocks can be transferred, the capital requirements. The company is managed by a President. If the President is a company, it must designate a legal representative.
• Société anonyme (SA): the SA is the best form of entity for you if you’re thinking big. You may have a high number of co-owners. The owners’ responsibility is limited to their capital contribution. You must contribute at least EUR37,000 of capital. You should plan on having a Board of at least 3 directors, a President who must also be a director. The directors must be shareholders. The board members are not compensated for their service as a board member, except for the President.
• Société en nom collectif (SNC): you must be at least two co-owners and you’ll be considered as “commerçants”. You’re jointly and severally liable for the company’s debt. The company’s creditors may seize your personal assets to satisfy their debt. There are no minimum capital requirements. The SNC is taxed as a passthrough entity: each owner will report on their tax return their share of the SNC profit or loss. The SNC may choose to be taxed as a C Corporation. The SNC may be managed by the members or nonmembers.
• Société coopérative de production (SCOP): this is a company that is controlled by the employees: they own more than 50% of the stocks. The SCOP may take the legal form of a Société anonyme, société par actions simplifiée (SAS) or société à responsabilité limitée (SARL). You need to be at least 2 co-owners if the SCOP is an SAS or SARL and 7 co-owners if it is an SA. You must contribute a capital of EUR30 minimum if you’re considering setting up a SCOP SARL or SAS and EUR18,500 for a SCOP SA. You have limited liability protection. Your SCOP will be taxed as a C Corporation, but it may be exempt from income tax under certain circumstances.
• Société en commandite par actions (SCA): the SCAs are not as popular as the other type of legal business structures in France. If you’re considering creating an SCA, you should look for 3 other co-owners. This is because you must have at least 4 co-owners: a general partner (commandité) and 3 limited partners (commanditaires). The commandités have unlimited liability, jointly and severally. The commanditaires have limited liability. The SCA should be managed by a general partner designated by the other general partners. You must contribute capital of at least EUR37,000.
• Société en commandite simple (SCS): the SCSs are not as popular as the other type of legal business structures in France. If you’re considering creating an SCS, you should look for a co-owner. This is because you must have at least 2 co-owners: a general partner (commandité) and a limited partner (commanditaire). The commandités have unlimited liability, jointly and severally. The commanditaires have limited liability. The SCS should be managed by one or several general partners designated by the other general partners. You’re not required to contribute a minimum amount of capital.

STEP 5 – CHOOSE YOUR BUSINESS NAME.

Your business name should be memorable and in alignment with your brand identity.
The registration officer will let you know whether you can use the name that you chose or not.

You should consider applying for a “Doing Business As” or DBA if you cannot incorporate or form a company or if you want to do business under a name other than your legal name.

STEP 6 – REGISTER YOUR BUSINESS.

You should register your business. The application for registration should be filed online with the “Guichet des formalités des entreprises”. Your application package must contain documents such as an affidavit of the publication of the formation of the company in an approved journal, a Déclaration sur l’honneur de non-condamnation and other documents.

STEP 7 – CHOOSE COMPETENT PROFESSIONALS TO SUPPORT YOU.

We recommend you work with professionals who can help you navigate the intricacy of the French immigration system, the tax system, the business environment. These professionals include:

Expert-comptable

This is the Certified Public Accountant designation in France. You should consult with an Expert-comptable first, so they help you determine the form of entity that works best for you.

An Attorney

We recommend you seek support from an Attorney. For instance, they can help draft the company creation documents, prepare and file the application for registration, obtain a SIRET. If you cannot legally work in France, you may need an immigration Attorney’s assistance to get the proper work permit.

Professional organizations

Consider being part of professional organizations specialized in your industry to network with peers, to learn and grow.