Due to its side mat, the SARL is suitable for many projects, but imposes a degree of rigor of operation. Definition, advantages and disadvantages.
The limited liability company has long been the form of preferred company of French entrepreneurs but for the past few years, this legal form decreases. In 2018, they constituted more than 36 % of the company creation, after 48 % in 2015 and 57 % in 2014.
1. SARL : what is it
This status presents many advantages : no minimum capital, of the articles of association types, procedures-lined and inexpensive, the ability to partner with and raise funds from outside investors. In short, a natural choice, almost any path.
But this status also needed to organize and define the roles of each. In effect, it is necessary to distinguish between the partners who provide the start-up capital (or) manager(s) who runs it(nt), a partner may also be manager. In question: decision-making and the sustainability of the power.
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2. Has reserved the status of SARL
It is suitable for almost everyone: from the small bakery of the neighborhood in the internet start-up. Nevertheless, it should be two partners at a minimum to create an LLC and be certain to be able to get out of the time to hold general meetings. It was during one of these sessions, the annual that approved major decisions.
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This type of company is suitable for companies with a good potential for development and growth. It is particularly suitable for entrepreneurs who need to invest in inventory and equipment, and who plan to hire.
3. The benefits of the limited liability company
• A capital freely set and releasable. The amount of the share capital is freely determined by the partners based on the size, activity, and capital needs of the company.
Careful not to see too just : if the amount of capital is not consistent with the economic requirements of the project, the personal liability of the manager and/or the founding partners can be engaged. It is therefore illusory to create an LLC with 10 euros of capital even if in theory it is possible. Even when the contributions are made in cash, cheque, or cash, (they can also be in-kind), they can be freed of at least a fifth of their value at the time of the constitution of the company. The balance to be released in five years.
The good solution? Create with for example 7500 euros of capital to have a minimum of credibility, and not to pay 1500 euros in his pocket at the date of creation. The 6000 euros remaining will be made at any time in the following five years. This choice is important because when the constitution of the company, the amount of capital will be public (visible on societe.com or infogreffe, for example). The higher it is, the more it will inspire confidence.
• A separation of patrimonies. the liability of The partners of the limited liability company is limited to the amounts of their contributions. No risk therefore of having to repay debts incurred by the company on its personal property. However, they need for this refrain from taking part in the management of the company, under the penalty of being the recognized leaders in fact. Because the managers are themselves responsible for their errors of management. In the case of cessation of payment, they may be condemned to pay the debt, if a fault is recognized.
• ability to accommodate investors. The LLC can proceed with capital increases by transferring some of their shares to outside investors. They can raise funds from business angels or investment funds, and guarantee the financing of their development.
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• An option for the IR (income tax)
The limited liability company is subject to corporate tax. However, the SARL of less than five years of age may,under certain conditions, to opt for taxation in the IR : employ fewer than 50 employees,realize a turnover or a balance sheet total of less than 10million euros, the voting rights must be held to the tune of 50% at least by individuals and up to 34% at least by the(or the) leader (s) of the company and the members of his (their) foyerfiscal).
This option must be approved by all the partners, and is valid for five years.
The result of the company, gain or deficit, is then directly transferred to the statement of income. This device is recognised directly on the income of the household tax losses generated during the first months and first years (which is common in start-up phase), and thus to reduce its tax. This option is interesting for the creators of companies that do not pay dividends and that have the benefit of austres sources of income : wages from a spouse or income from immovable property.
4. The disadvantages of the limited liability company
• the stiffness of operation. The company is managed by one or several managers, natural persons must be appointed from among the partners or outside of them. In the absence of statutory limitations, the directors have all powers to act in the name and for the account of the company. Their appointment and their powers are fixed, either in the statutes or in a separate document.
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Several moments govern the life of an LLC. The shareholders meet at least once per year in ordinary general assembly (AGO) for the approval of the accounts. Ordinary decisions are taken in the general assembly by a simple majority (50 % + 1 vote). Any decision resulting in a change of the articles of association is taken in the extraordinary general meeting (EGM).
• associations at risk. The limited liability company allows you to join and create multiple (up to 100 people !). To choose good partners is capital, and it is always recommended to avoid associations with 50/50. At the beginning of the adventure, everything is nice and pink but the wind can quickly turn. It is therefore imperative that all formalize, in writing, from the start. The allocation of roles, definition of a common strategy, amount of remuneration…
Everything must be stated in the articles of association of the company and eventually entered into a pact of shareholders. It is also recommended to provide in this document the way in which any conflict will be resolved : the appointment of one or more arbitrators fully impartial, not interested, directly or indirectly, by the activity of the company, with terms of arbitration…
• A choice between managing the minority / equality manager or a majority. A manager is a majority if it holds more than 50 % of the share capital of the company. It is alorsaffilié to the social Security of self-employed persons for their social protection.
The manager of the minority under the social regime of the “assimilated workers”. It thus benefits from the social security system and employees ‘ retirement, but no unemployment insurance.
It has often been said that the plan for non-salaried workers (TNS) was less protective, but both plans provide complete coverage (sickness, maternity, family allowance, death, or basic pension). The only difference relates to the supplementary pension schemes, whose benefits are smaller for NER. However, they have the possibility to contract a complement to the supplementary pension.
5. The LLC in a nutshell
Constitution of the company
1. Number of associates. Two partners minimum, hundred maximum.
2. Amount of minimum registered capital. share Capital is freely determined by the partners. 20% of the funds must be paid at the time of creation, the rest in the following five years.
Rules of operation
3. Direction. One or several managers (natural persons), business associates, or third parties designated by the partners.
4. Decision-making. The manager takes the management decisions common but some important decisions are taken by the general assembly.
5. Responsibility of the leader. It is limited to the amount of his contributions, except in civil and criminal liability in case of fault of management.
tax and social
6. Tax regime of corporate taxation of profits. The company is subject to corporate tax. An option for IR is also possible, under certain conditions, for the company less than five years.
7. Compensation of the chief executive. It is deductible against profits.
Read our complete file
LLC: limited liability company limited liability
Creation of a business: six criteria to choose the correct status COMPARISON TABLE. The five legal forms of business to the magnifying glass GRAPHIC. The legal status of the company
8. Social regime of the leader. It is subject to the regime of non-employees it is the manager in the majority or in the plan of the employees he is managing a minority or egalitarian.
The information in this article have been verified the 29/04/2019. VF