Entreprise Individuelle (EI) - Sole Proprietorship Registration in France

The Sole proprietorship in France

The Entreprise Individuelle or Sole proprietorship in France is also known as an enterprise that is operated under the owner’s name. The Entreprise Individuelle by definition is a business in which a single person manages and carries out his activities in his name, Thus the company doesn’t have any legal entity, unlike other companies.

In Entreprise Individuelle, the company's assets and personal assets are different, and the natural person can have only one sole proprietorship in France. It is not compulsory to provide share capital, and no statutes are to be drawn up with an Entreprise Individuelle.

The entrepreneur who chose to operate in his name has total responsibility. To reduce the risk related to personal assets, he will be provided funds that he can use whenever necessary or that he can add to his cash flow. The Entreprise Individuelle is not obliged to pay salary to himself. By making withdrawals he can use profits as he wishes and based on the declared profit both the tax and social security will be calculated. The entrepreneur can operate in his name and can make all the decisions.

The new status of the individual entrepreneur

The sole proprietorship status changed in 2022, and the main key decisions for the reform were concerned with the disappearance of the EIRL and the comprehensive separation of personal and professional assets.

One of the consequences of operating in your name without any legal entity as a sole proprietorship is the confusion between personal and professional assets. In the event of financial difficulties and the exercise of his activity, the creditors of the entrepreneur can be reimbursed for all the assets of the individual, both professional and personal, since they are combined.

Since the 2022 law for independent professional activities, you won’t be able to create any new EIRLs. In place of it, the new unique individual entrepreneur status, EI, became effective, which introduced all individual entrepreneurs to the benefits of the separation of personal and professional assets. This separation will automatically occur, and you won't need to complete any declaration steps as they were needed under the EIRL regime.

According to the definition in the commercial code, the sole proprietorship follows "that the goods, rights, obligations and securities which it holds and which are useful to activity or its independent professional activities constitute the assets professional of the individual entrepreneur. The elements of the individual entrepreneur's assets not included in the professional assets constitute his assets."

This means that the individual entrepreneur has professional assets that are different from personal assets, even if he has not formed a legal entity. The assets that are allocated to the professional activities that he uses for carrying out the activity form part of his professional assets, and the other assets will belong to his assets. Therefore, the personal assets are now protected from professional creditors.

The individual entrepreneur’s professional assets include the following:

• The capital of business, artisanal and agricultural, also including the Fonds de commerce
• The movable and tangible goods used for the activity, like the stock, goods, tools, etc
• All the intangible goods, such as immaterial assets with no physical existence, patents, licenses, trademarks, models, designs, customer data, and all intellectual property rights
• Amounts registered in the Individual Entrepreneur’s professional bank accounts and the cash on hand.

Advantages of the Sole Proprietorship in France

The sole proprietorship has some advantages for entrepreneurs, such as simplicity, freedom, and taxation. The following advantages are mentioned below:

Simple and fast formation

The formalities for creating a sole proprietorship in France are simple and fast. There are no particular formalities that are needed, which means there is no requirement to draw statutes or publish a legal notice. You can form your business as soon as possible online or by submitting the file to the single window for the business formalities website.

No share capital is needed.

In the sole proprietorship in France, there is no particular need of share capital. Therefore, the funds that are paid by the entrepreneur for the support of the business are known as operator contributions which can be taken back at any time.

Turnover limit

There is no turnover limit unless you opt for the tax and social regime of the micro-enterprise the EI will not impose any turnover limit. The individual entrepreneur will be then free to develop his activity as he wishes, without being worried about the ceiling.

Simple operations

One more advantage of the sole proprietorship in France is its operations, as there are no partners, no shareholders, no minutes to draw, and no general meetings. The entrepreneurs have the authority to make all the decisions and have the concern of business alone. Therefore, you will be the only contact between the company and third parties.

Real accounting

The sole proprietorship in France benefits from real business accounting. If more work is required then the use of the chartered accountant will be taken to produce an annual balance sheet and income statement which will generally give more leverage with investors and suppliers.

The Entreprise Individuelle will also allow you to recover Value Added Tax on your purchases and to deduct all expenses from your turnover unless you opted for the micro-enterprise regime.

Who can start a sole proprietorship in France?

The formalities for the creation of a sole proprietorship in France are quite flexible, and it is important that you follow certain conditions, which are as follows:

1. The individual entrepreneur should be of legal age, 18 years old, and should not be under any guardianship or curatorship. However, emancipated minors will have access to this type of business.
2. You should be part of a French nationality or have a residence permit that authorizes the creation of a business. There are also regulated activities to which the foreign national cannot have access
3. The person who has been placed under guardianship and curatorship will not have the capacity to benefit from commercial capacity
4. People who are sentenced to the criminal ban or the management won’t be able to form a sole proprietorship in France

Characteristics of the Sole Proprietorship in France

The characteristics of the sole proprietorship in France, which is important for you to know, are mentioned in the following:

1. In the sole proprietorship in France, the owner and the company are legally the same person, which means that the company will be registered under the owner's name. That is the reason why it is called an enterprise operated under the owner's name
2. Unlike the micro-enterprise status, the sole proprietorship in France has no maximum turnover
3. In a sole proprietorship in France, you can hire people
4. If your turnover exceeds 33100 € for the sale of services and for the sale of goods, it will be 82800 €; then you will have to register for the value-added tax.
5. The accounting records should be clear and complete by the sole proprietorship in France.
6. The business owner is known as the self-employed person and in most cases contribution to the self-employed social security will be done by him. The rates will be calculated by using the annual profits which can be either 32% of the gross result or 47% of the net result.

Tax Regimes for the Sole Proprietorship in France

In the context of the Enterprise Individuelle, the entrepreneur by default is subject to the income tax in the category which is mentioned as follows:

• For commercial and artisanal activities, the Industrial and commercial profits (BIC) The administration will then offer you the simplified real regime for the turnover that is between €188,700 and €840,000, or it can be a normal real regime with a turnover greater than €840,000
• For liberal activities the Non-commercial profits (BNC) in this administration offers you the simplified real regime for turnover which is between €77,700and €254,000 or it can be a normal real regime where the turnover is greater than €254,000.

Also, in the VAT, there will be three choices of the regime, which will depend on the nature of the activity carried out. Where the turnover is less than or equal to €810,000 regime of simplified diet, and when turnover is above €810,000, then the applicable regime is Normal real diet.

Social Regime of the Sole Proprietorship in France

The sole proprietors are an independent worker who has the status of self-employed workers (TNS). Also, the formation of a sole proprietorship in France led to the affiliation with the social security of the self-employed (SSI). The entrepreneur pays Urssaf for social security contributions. The amount will depend on the income generated, and generally, they represent around 45% of the declared income of the activity.

If there is the absence of turnover then the individual entrepreneur should pay the minimum contributions for continuing benefit from the social protection. The contribution can also be made to supplementary pension and old-age or death insurance.

Accounting Obligations of the Sole Proprietorship in France

Whether you submit the classic regime or the micro-enterprise regime, there are very few accounting obligations. When doing the classic regime then, the entrepreneurs should maintain the following:

• Maintain records
• Invoicing
• Accounting, which includes the balance sheet, income statement
• Simplified annual inventory
• Maintain ledger

Documents for the Sole proprietorship in France

If you are interested in doing the Sole proprietorship registration in France, then you have to send the following documents:

1. Copy of the identity documents of the third-party signatory if you haven’t signed your business creation declaration by yourself
2. Domiciliation proof of your company with a clear, identifiable address
3. Non-conviction sworn declaration and the certificate of parentage that is dated and signed by you
4. Identity document copy
5. Business project support contract copy
6. Authentic copy of declaration if you have made the declaration that your property cannot be seized
7. Copy of the contract and certificate of the publication in the medium authorized for receiving legal notices in the case of the rental management

Steps for Sole Proprietorship Registration in France

Sole proprietorship registration in France involves several steps. Here is the general outline of the registration process, which is mentioned as follows:

Step 1 – Pick a Legal structure

The first step for starting the business is to choose a business structure and, in this case, it is Entreprise Individuelle which means that you will be operating the individual without the separate legal entity formation.

Step 2- Choose a business name

For the Sole Proprietorship Registration in France if you want to operate under any specific name then choose your business name and if you are using your name then no additional steps will be needed. However, if you want to use the trade name then you should check the availability and make sure that it will comply with the French regulations of naming.

Step 3- Choose your tax regime

Before registering for sole proprietorship in France, you should choose the tax regime. In principle, the Enterprise Individuelle opens the choice between the two different regimes for profits of taxation:

• The actual tax regime
• The micro-fiscal regime that offers you simplified accounting and tax obligations
• The actual regime is compulsory as soon as the annual turnover exceeds the threshold of:
• €77,700 for the services that non-commercial profits – BNC
• €188,700 for the traders and the artisans - BIC

Step 4- Register with INPI

For sole proprietorship registration in France, you should register it with the administration to give it legal existence. Since 2023, the registration process of all companies, which includes the Entreprise Individuelle, has been exclusively done online on the one-stop-shop that is managed by the INPI. This has replaced the CFEs that existed previously.

To register your sole proprietorship in France on the one-stop website, you should complete the activity declaration form and provide the identification information. After processing your request, the INPI will formalize the creation of the company and forward information given by you to the various reference organizations, which are Insee, Urssaf, tax centre, and at the end of processing, your company will receive its Siren and Siret numbers which are important for the operations and the billing of the customers.

Step 5- Open a Bank account in France

For the Sole proprietorship, it is mandatory to open a bank account in France that will be dedicated to your professional activities once your turnover exceeds €10,000 for two following years. It is suggested that you open your bank account as soon as the sole proprietorship in France is created to simplify management from the start of the activity.

Start your Sole Proprietorship Registration in France with Enterslice

We are the leading management consultancy firm, Enterslice, and we offer you comprehensive services for Enterprise Individuelle. Our team will provide you with assistance in the Sole Proprietorship Registration in France after the opening of the bank account for your sole proprietorship in France and the post-registration compliance.

Our team will formulate a strategic plan for your establishment of the (sole proprietorship) Company incorporation in France and operating business, which will depend on your business needs. We will make a budget and help you in developing a cash flow for your Enterprise Individuelle in France. The legal experts at Enterslice provide you with legal advice on business operations, finances, IP protection, etc. We will draft the necessary legal papers for your business and also review and do a compilation of the needed paperwork.

Enterslice provides you with bookkeeping services and makes sure that there is proper maintenance of the different accounting records, which involve keeping organized financial records, which are like cash books, general ledger payable sub-ledgers, etc. With our tax experts, you will be able to efficiently manage the tax obligations and identify opportunities to lower your tax expenses.

Knowledge of our experts will aid you in overcoming the associated difficulties which are with international taxes and the strengthening of worldwide tax positions. Enterslice is your trusted partner for establishing your sole proprietorship registration in France and growing your venture there. Take advantage of our services today and start your Sole Proprietorship Registration in France with us.