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CALONNE & ADOUE-DUGAST
French law firm, Toulouse
 

The life of a business in France

Article written by CALONNE & ADOUE-DUGAST avocats in partnership with French Business Advice

 

 

With knowledge of a product, the market, having found an innovative idea, the right concept ... you may think that it is enough to start a business and that this is simple!

The answer is no, but if you wish to get started, dive into the adventure to create your business and improve your living environment..... It is doable with the assistance of professionals.

 

STEP 1 - CREATE YOUR BUSINESS

Please note that shortly, creating your business will be simplified (with the PACTE bill), to reduce delays and complexity.

CFE will be removed and a digital platform will be put at your disposal instead.

Nevertheless, despite the speed and simplification, it will always be essential to obtain the prior opinion of a legal professional and / or of an accountant on the legal form of your business:

    -Microenterprise,

    -Work as a sole trader,

    -Company (S.A.R.L/LLC,  S.A.S./ simplified stock company , S.A.S.U. etc…) 

    For more information you can consult the following articles on Augefi’s website:

   - Setting up a small business in France,

   - The Micro-Company,

   - Investing in business in France.    

This choice is not without consequence, it deserves all your vigilance because it will determine:    

 -Your tax and social obligations:

Example: A micro-entrepreneur benefits from an exemption from VAT, ie he/she does not have to pay or invoice for it, whereas the other legal forms require the payment of VAT from first billed service.

But also, he/she will not be able to recover the VAT paid on his/her expenses and his/her investments.

For more information you can read on Augefi’s website:

-What tax regime to choose for an individual entrepreneur,

-Compulsory social contributions for independent workers,

-Tax deadlines of companies in France,

-Deadline for the declaration and payment of the social contributions of companies in France.

    

-Your accounting obligations:

Example: A company trading, has the obligation to publish its annual accounts and to hold a general meeting, which increases the costs for the company, unlike microentrepreneurs and sole traders. However, for a rationalized and optimized management, it is strongly advised to keep an accounting with the help of a professional.

For more information you can read on Augefi’s website:

-The profit and loss account in French standards translated into English,

-The balance-sheet in French standard translated into English,

-Annual General Meetings in S.A.R.L.

   

- The extent of your liability and risks taken:

Example: A customer accuses you of having failed in the execution of your work. You do not agree with this and contest! Dissatisfied, he/she goes to court which condemns you to the payment of a large sum of money,

-If you are in a company or in E.I.R.L: The customer can only solicit money to your company (or E.I.R.L.) and in case of non-payment, the bailiff can only recover the money from your company;

-If you are a sole trader or a microentrepreneur: There is no distinction between you and your business. Thus, the bailiff may seize money on your professional bank accounts, but also on your personal account or on your account with your spouse. Worse, if the sums are large and you possess real estate; they can be repossessed, unless you made a declaration of elusive to a Notary.

Precision: Non-seizability is the fact that properties cannot be foreclosed. It may relate to any immovable property, built or not, which is not used for professional purposes (holiday home, land, rental property, etc.) other than the principal residence of the entrepreneur who is unseizable by right.

For more information you can read on Augefi’s website:

-The main legal forms that can be adopted to do a business in France,

-Formalities to be completed for the installation of an enterprise in France.

    

STEP 2 - DEVELOPING AND MATURING YOUR BUSINESS

Once your k-bis extract (companies house extract in France) in hand or your INSEE form you can start working ... .and develop your business.... finally!!

But soon you will find that the smooth running of your business will require collaboration with three major players:

- The accountant: keeping the annual accounts, VAT, declaration of employment and payroll...

- The lawyer (avocat): management of unpaid bills, mandatory general meetings, legal advice, lawsuits…

- The banker: to obtain funds for investment and innovation...

Development of your business will require working in partnership with these different professionals, to make it prosper.

Development will also sometimes involve changing the business structure initially chosen:

Examples:

-The auto-entrepreneur regime will no longer be interesting, if your expenses are significantly higher than the standard deduction made on the turnover. The question of switching your activity in the context of a company or opting for a real regime tax system will be sobering.

-From a tax and a social charges point of view, it could sometimes be interesting to turn your S.A.R.L. into S.A.S. Etc ..      

For more information you can read on Augefi’s website:

    -Le recouvrement de créances transfrontalières at the bottom of the page

    -Some informations to help leaders to choose their social status

    

These stages of transformation will involve the intervention of a lawyer to draft the necessary deeds and carry out the formalities with the commercial court.

    

STEP 3: COMPANY TRANSFER

If you want to give your business another dimension and open it up to other investors, you can sell some of your shares and increase the value of your business

If you estimate your objectives achieved and wish to sail to other horizons, you can either sell the goodwill and develop another business; or sell all of your shares.

Accountants will be your asset to financially value the transfer and the lawyer (avocat) will formalize the legal documents or deeds.

    

 STEP 4: THE END OF THE BUSINESS

 In addition to voluntarily ending your business, you may be forced to do so because of significant economic difficulties.

As soon as you experience the first economic difficulties, do not remain isolated, approach your accountant and your lawyer who will help you to reorganize your business, to save money, to review your market objectives.

The sooner you act, the less likely you will go bankrupt or in liquidation, always painful steps in the life of a business leader who invests financially but even more humanly.

    

In short, businesses’ life in France is far from an easy task, but with optimism, motivation and serious accompaniment, you will achieve your goal!

 

 

 

 

 

 
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