Setting up a Sole Trader in France

Updated on Tuesday 10th September 2019

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Setting 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, a minimum share capital is not imposed for this type of business. However, the entrepreneurs have full responsibility for their business and they are liable for the debts. Legal advice for establishing a sole trader in France can be provided by our team of lawyers in France.

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 his/her business. He or she makes decisions alone and has the full power to manage the business. Also, the sole trader does not have to publish annual accounts.

What are the features of a sole proprietorship in France?

Sole proprietorships in France are preferred business entities due to the simplified registration formalities and business control. Below is information about other aspects related to the sole trader in France:

• there is no maximum turnover for sole proprietorships in France and owners can hire staff;
• the registration for VAT is imposed for turnovers exceeding EUR 33,100 for the sale of services and EUR 82,800 for the sale of products;
• the self-employed must register for social contribution purposes in France;
• artisans, liberal professionals and show owners can decide on this business structure.

Sole traders in France benefit from the lack of hard formalities in matters of accounting and related aspects, nevertheless, the support of an experienced accountant is needed right from the beginning of the activities. Besides the support of our local lawyers in France, you can ask for the assistance of our team of accountants in France.

How is the taxation for sole proprietorship in France

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). Also, a micro-enterprise is the sole-trading business that allows anyone to work as a freelancer in France, or anywhere in the world. 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. One should note that a micro-enterprise has a simplified structure, there are no complications in matters of documents, and the registration for tax purposes is much simpler compared to other types of companies available in France. Working under the rules of a micro-enterprise in France should request the attention of foreign investors in matters of taxation, respecting the maximum turnover of EUR 70,000 for liberal professionals and the sale of services. The same thing is available for the sale of goods not exceeding EUR 170,000.

As for the legal duties of a micro-entrepreneur in France, it is important to keep the records of the receipts and bills in the firm, have a separate business bank account, and place the indication of VAT exemption on the firm’s invoices. Freelancers in France have unlimited liability in the firm, however, a business insurance will protect them from potential risks that might occur. The support of our French lawyers by your side consists of legal advice when registering with the Trade Register, the Chamber of Commerce and other important institutions.

We mention that 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.

Other information about sole traders in France

A mandatory request for artisans in France refers to the 5-day training course which is organized by the Chamber of Commerce and Crafts. The same institution provides optional courses, in exchange for a certain fee, for entrepreneurs or business persons interested in having activities in the industrial sector in France. The proper qualifications and experience in the chosen business field are needed at the time the sole trader is registered in France. Some activities might be subject to specific licenses or permits, so it is recommended to have the support and guidance of an experienced lawyer in France. Below you can find information about the economy, the business and the investments direction in France, if you are an international entrepreneur wanting to have a business in this country:

• USD 37,294 million is the FDI inward flow registered in 2018 in France;
• France ranks 32nd out of 190 worldwide economies, according to the “2019 Doing Business Report”;
• the main investors in France are Switzerland, UK, the Netherlands and Luxembourg;
• France signed around 91 double tax treaties for the avoidance of the taxation twice on incomes;
• 21% of the country’s GDP in 2018 was sustained by foreign investments.

Whether you are interested in establishing a limited liability company or perform the activities as a sole trader in France, it is recommended to have the legal support of a team of lawyers in France. You can also skip the possible misunderstandings that might occur during the registration process and also in matters of regulations for different kind of entities.

The advantages of sole proprietorships in France

First of all, a sole proprietorship can be easily registered in France, due to fewer bureaucracies involved. There is no need to draft the Articles of Association and there is no need for having annual general meetings in the firm. This is the simplest business structure available in France and there are numerous foreign investors looking for this kind of form, mentioning that once the business expands, the sole trader can transform into a limited liability company in France. All the legal aspects involving the company formation in France can be solicited from our French attorneys.

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