There are many different legal forms in France. What are the various types of companies? How do you choose the legal structure best suited to your business? What forms are available to those who want to start up independently? In this article, we’ll help you answer these questions, providing tables that compare the different legal forms in France.

What’s in this article?

• What is the legal form of a company?
  
• How do you choose your legal form?
  
• Legal forms for starting up on your own
  
• Legal forms for joint ventures
  

What is the legal form of a company?

A business in France can take one of two legal forms: a sole proprietorship or a partnership. These business structures give rise to various legal forms, including microbusinesses, simplified joint stock companies, and public liability companies.

The legal form (or corporate form) of a business corresponds to its legal structure. It defines the business’s operating rules and main characteristics.

How do you choose your legal form?

When setting up a business, there are several factors to consider: the number of partners (single or multiple), the minimum share capital required for registration, the partners’ liability, the company’s tax system, the manager’s social security status, and the advantages of each legal structure.

If you want to start your own business in France, you can choose from the following options:

• Sole proprietorship (EI, or “entreprise individuelle”), a legal status that includes microbusinesses
  
• Single-member limited liability company (EURL, or “entreprise unipersonnelle à responsabilité limitée”)
  
• Single-shareholder simplified joint-stock company (SASU, or “société par actions simplifiée unipersonnelle”)
  

Alternatively, if you want to start a business with several people, you need to choose a multi-person legal form, such as:

• Limited liability company (SARL, or “société à responsabilité limitée”)
  
• Simplified joint-stock company (SAS, or “société par actions simplifiée”)
  
• Public limited company (SA, or “société anonyme”)
  
• General partnership (SNC, or “société en nom collectif”)
  
• Partnership limited by shares (SCA, or “société en commandite par actions”)
  
• Limited partnership (SCS, or “société en commandite spéciale”)
  

Legal forms for starting up on your own

An EI, such as a microbusiness, is the simplest legal form. The entrepreneur represents the business and conducts activities in their name. It’s straightforward to set up and manage, with no need for articles of association or share capital. Apart from regulated activities, most commercial, craft, and liberal professions can be carried out within an EI. Sole proprietors enjoy independent management, quick and sole decision-making, and simplified tax reporting.

The EURL is another legal form for solo entrepreneurs. Unlike the EI, the EURL is regulated by the French Commercial Code. The sole shareholder, whether an individual or a legal entity, benefits from a secure legal framework. Decisions are made independently; this legal form is suitable for most commercial, craft, and professional activities. The EURL can easily take on new partners and be converted into a multi-person company, the SARL, without needing business transformation.

The SASU is another legal form suited to the needs of sole traders. Like the EURL, the SASU can be easily converted into a SAS with new partners and increased share capital. However, the sole shareholder, whether an individual or a legal entity, enjoys greater flexibility in business organization and management, especially in drafting the articles of association. Most commercial, craft, liberal, and industrial activities can be carried out within a SASU.

What are the differences between EI, EURL, and SASU?

This comparison table summarizes the main differences between the EI, EURL, and SASU:

Legal forms for joint ventures

The SARL is a legal form suitable for most commercial, craft, and industrial activities, as well as unregulated liberal professions and family projects. Like the EURL, its operations are strictly defined by law (Article L223-3 of the French Commercial Code), providing partners with security but less management flexibility.

The SAS is a capital company known for its flexibility in operations, development, and creation. The partners in a SAS can establish the bylaws that define the company’s management and organizational rules. As a company, the SAS is suitable for commercial, craft, liberal, and industrial activities. In 2022, it was France’s most popular legal form, according to Insee.

Unlike the SARL and SAS, the SA is a joint-stock company that can issue shares to the public. This legal form is ideal for large companies seeking a stock market listing or international expansion. Most commercial, craft, professional, and industrial activities can be carried out within an SA. Shareholders benefit from the ease of transferring shares and dividing powers among various management bodies.

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What are the differences between a SARL, SAS, and SA?

This table summarizes the differences between a SARL, SAS, and SA:

SNC, SCA, and SCS

Less common multi-person legal forms include the SNC, the SCA, and the SCS.

The SNC, or general partnership, is a legal structure in which all partners act as managers. The partners are personally liable for the company’s debts, and profits are taxed in the name of each partner. Almost all activities, except those in regulated sectors, can be conducted within an SNC.

Partnership limited by shares and limited partnerships have a specific structure with two types of partners: general and limited. General partners actively manage the company, while limited partners provide financing as investors. This hybrid structure allows investors to participate in management while limiting their liability to the amount of their contribution. In contrast, general partners have unlimited financial liability, which is shared jointly and severally, similar to an SNC.

Note that the SCA is a limited liability company that can publicly offer shares. The SCS, however, is a partnership. Both legal forms are appropriate for artisans, shopkeepers, industrialists, and self-employed individuals. For more information on the differences between partnerships and corporations, refer to the article in the legal gazette (JAL, or “journal d’annonces légales”).