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Setting up a sole trader in France

Setting up a sole trader in France

Updated on Monday 18th April 2016

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setting_up_a_sole_trader_france.jpgSetting up a sole trader in France can be the optimal choice for entrepreneurs who wish to open a business in France and their activities have a low risk level and require small capital investments.

If they choose to operate as sole traders (“entreprise individuelle” in French), investors don’t need to establish a separate legal entity through which they can run their business. Thus, capital is not needed in this type of business. However, the entrepreneurs have full responsibility for their business and they are liable for the debts.

How to set up a sole trader

The sole trader is an appealing form of business in France, mainly because it is very easy to set up. The entrepreneur needs to register the business at the Chamber of Commerce or at the Chamber of Trades and Craft, if the activity is commercial or a craft. If the chosen activity is liberal, the business owner must make a statement to the French URSSAF. The statement of activity can also be made online.

The entrepreneur has full powers over its business. He makes decisions alone and has the full power to manage the business. Also, the sole trader does not have to publish annual accounts.

Taxation

The sole trader has to pay a personal income tax. In this case, the income of the business and the income of the owner are the same.

The profits of the business will undergo different taxation methods depending on the type of business. If the activity is commercial, industrial or trade-based, the taxes regime will be that of a Benefice Industrial Commercial (BIC). If the activity has a professional nature, it will have a Benefice Non Commercial (BNC) tax regime. Both methods of taxation are personal (not company) taxation methods.

Limited Liability Sole Trader

Since 2011, sole traders have the option to establish an “Entreprise individuelle à responsabilité limitée (EIRL)”. It is a way to keep the business income separate from personal income and thus reduce the risks that come with a simple sole trader status.

Micro-Enterprise and Auto-Entrepreneur

A micro-enterprise or auto-entrepreneur is not a legal form of business, but a taxation regime for an “entreprise individuelle” (EI – in French). The sole traders who choose to be taxed under this regime benefit from simple tax and accounting rules. This is one of the main advantages when operating as a micro-enterprise. Another important characteristic is that the tax status for the micro-enterprise is only available if the business does not exceed certain sales limits. These limits depend on the type of activity.

The types of businesses that cannot benefit from a micro-enterprise/auto-entrepreneur status are those who buy and sell property, estate agents, developers, finance companies.

Our French lawyers can help you create a sole trader in France. Contact us for more information.

 

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