Description: Choosing a legal structure is the first real decision when starting a business in France, and it gets made badly more often than almost any other, usually because someone repeated what worked for them without asking what you are actually doing. There is no universally best option. There are four or five common ones with genuinely different trade-offs. Micro-entreprise The simplest. A sole trader regime with reduced accounting and social obligations. How you are taxed: social contributions are a flat percentage of turnover, varying by activity type. Income tax on turnover after a fixed allowance, or a flat withholding if you elect for it and qualify. Turnover ceilings: roughly €83,600 for services and €203,100 for commercial activity. Cross those for two consecutive years and you leave the regime. The trap everyone hits: the VAT threshold is separate and much lower. €37,500 for services, €85,000 for goods in 2026. You can be comfortably inside the micro regime and still liable for VAT. The real limitation: you cannot deduct expenses. Contributions are calculated on turnover, not profit. If you have significant costs, materials, subcontractors, equipment, this becomes expensive fast. A consultant with a laptop does well. A business with €40,000 of purchases does not. Liability: since the 2022 reform, an entrepreneur individuel's personal assets are separated from business assets by default, which removed the biggest historic drawback. Right for: low-cost service businesses, side activities, testing an idea, anything under about €50,000 with minimal expenses. Entreprise individuelle at the réel regime Same legal form as micro, different tax treatment. You keep proper accounts and are taxed on actual profit, deducting real expenses. Right for: sole traders whose expenses are high enough that being taxed on turnover stops making sense, but who do not need a company structure. EURL A single-shareholder SARL. A company with legal personality separate from you. Social regime: the managing partner is a travailleur non salarié. Contributions are lower as a percentage than the salaried regime, roughly 40 to 45 percent of remuneration, but so is the cover, particularly on pension and unemployment. Tax: income tax by default, with an option for corporation tax. The corporation tax option is often the point, since it lets you separate what the company earns from what you take out. Dividends: here is the catch that surprises people. In an EURL subject to corporation tax, dividends above a threshold linked to the capital are subject to social contributions, not just the flat tax. This substantially limits dividend optimisation. Right for: established sole operators with meaningful revenue who want limited liability and lower contribution rates. SASU A single-shareholder SAS. The structure most new French startups choose. Social regime: the president is assimilé salarié. Contributions are considerably higher, roughly 70 to 80 percent of net remuneration, and the cover is correspondingly better, closer to an employee's, though still without unemployment insurance. Tax: corporation tax by default. Dividends: taxed at the flat rate, commonly called the flat tax, with no social contributions. This is the structural advantage over the EURL and the reason many people choose it. Flexibility: SAS statutes are largely freely drafted. This matters enormously if you plan to bring in investors or partners, because you can structure share classes and governance as you like. SARL rules are more rigid. The cost: if you pay yourself nothing, you pay almost no contributions, but you also accrue no pension rights and have no health cover through the company. People forget this in year one and notice in year five. Right for: businesses expecting investment, multiple founders, or those planning to take income primarily as dividends. SARL and SAS The multi-shareholder versions of the above. Same trade-offs, plus the governance question. SARL is rule-bound and predictable, SAS is flexible and requires competent drafting. Most investors prefer SAS. How to actually decide Four questions get you most of the way. How much will you spend to earn? High expenses rule out micro immediately. How will you take money out? Mostly salary points toward EURL. Mostly dividends points toward SASU. Do you need social cover? If this business is your only income and you have no other cover, the assimilé salarié regime under SASU is genuinely better protection despite the cost. Will you raise money or add partners? If yes, SAS or SASU. Converting later is possible but costs time and money. What people get wrong Optimising for the first year. Micro looks best when revenue is small. If you expect to pass the ceilings within eighteen months, starting there means changing structure at the worst possible moment. Ignoring contribution differences until the first bill. The gap between TNS and assimilé salarié rates is large enough to change what you can pay yourself. Copying a friend's structure. Their expense profile, income plans and risk tolerance are not yours. Forgetting that changing is possible. Structures are not permanent. Starting simple and converting when the numbers justify it is a legitimate strategy, and cheaper than over-engineering on day one. Where to get an answer This is a decision worth an hour with an accountant, and it is one of the few areas where that hour reliably pays for itself. Go in prepared: your expected revenue, your expected costs, how you want to be paid, and whether you plan to raise money. For working through the options before that conversation, a tool scoped to French business questions gets you further than a general assistant, which will frequently answer with rules from another country. Mirage Cloud includes agents covering French accounting and business law, which is useful for understanding the landscape and framing better questions. Use it to prepare. Do not use it to decide. The structure affects your tax position for years, and this is one of the places where professional advice is genuinely worth paying for.
Category: Technology
Tag: