Doing Business in France - RSM International

The corporate veil of SA, SAS and SARL limit the liability of their shareholders to
the amount of their share holding except for instance in case of fraud.These entities
have a legal personality and can have a maximum duration of 99 years (renewable).
Before setting-up your legal structure, you need to know if you will be a sole partner,
have several partners or just need a representation in France.
2.2.1 Sole partner
If there is a sole partner, one of the following types of legal structure may be chosen.
2.2.1.1 One-Man Business
(“Entreprise individuelle”)
This structure is suitable for small businesses with a single individual.
This structure is simple as just one person is in charge of running the business. The
company manager has full power to manage the company and takes decisions alone.
He does not have to file management reports or publish yearly accounts but will have
to close each civil year accounts for tax purposes.
There is no notion of capital. The company assets are intermixed with those of the
company manager.
The company manager is responsible for all company debts on all of his own assets.
“Entreprise individuelle ” is one of the easiest business structure to start in France.
But its huge downside is that the entrepreneur is liable on his personal assets for all
debts generated by the business. So, there is no distinction between the business
and the entrepreneur.
Therefore, since 1st January 2011, the law has introduced a new form called EIRL
which is to protect entrepreneurs and avoid them going into personal bankruptcy.
The EIRL would enable to separate the business assets “patrimoine professionnel”
and personal assets “patrimoine personnel”.
Entrepreneurs would therefore be only liable on their business asset in the even of
financial difficulties.
8 | DOING BUSINESS IN FRANCE