The Steps to Starting a Business

Putting all the chances on your side and realizing your project under the best conditions is the primary ambition of every entrepreneur. Where to start, what are the different administrative steps, what are the legal obligations? All these questions deserve clarification. To do this, we will look in detail at the formalities for creating a business.

Prerequisites: the legal form of the business

After defining the activity, conducting market research, and establishing a business plan — which is not mandatory but highly recommended, especially for securing funding — it is time to choose from the possible legal statuses of the business. The choice of status is a crucial step as it will have a significant impact on the rights and obligations, social and tax system of the manager and the business, as well as on its social protection. In this approach, it is important to emphasize that not all companies are legal entities. This is the fundamental difference between a sole proprietorship and a company.

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Thus, we will distinguish:

The sole proprietorship and its variations

  • The sole proprietor is a natural person with the status of an independent worker.
  • There is no concept of share capital.
  • The business and the manager are one entity, and there is only one tax to pay, which is income tax.

Employment insurance is the perfect status choice if the activity presents a low risk and requires little financial investment. Its main disadvantage lies in the fact that the company’s assets and those of the manager are confused. As a result, the latter is indefinitely liable for the business’s professional debts across all of their personal assets, except for their primary residence.

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Limited liability for the sole proprietorship or EIRL

This can be an interesting alternative to avoid mixing personal and business assets from the start. With this particular form of sole proprietorship, it is possible to limit the manager’s liability by creating a specific asset pool for the professional activity. It is also possible to sign social protection contracts based on their needs. Another important advantage of the EIRL is the ability to subject the business to corporate tax rather than income tax.

What about the status of a micro-entrepreneur?

The micro-entrepreneur, formerly known as auto-entrepreneur, is not a legal status in itself. In fact, it is a choice offered to the sole proprietor regarding their social and tax systems. Their declarations and obligations are simpler than in conventional employment insurance. Among other things, the accounting obligations of the micro-entrepreneur are lower. Be careful, to benefit from the micro-enterprise regime, the annual turnover must be below a certain threshold:

  • €170,000 for a business or accommodation activity
  • €70,000 for liberal professions and service providers

Companies

A company is a legal entity governed by private law characterized by its name, registered office, and nationality (determined by the location of the registered office). Upon its creation, one or more partners (natural or legal persons) constitute a share capital. Among the most common legal forms are:

  • LLC or Limited Liability Company is a company formed of 2 to 100 partners, managed by one or more managers. The liability of the partners is limited to their contributions, unless the partner is a manager and there has been mismanagement.
  • The SA or public limited company is a company composed of at least 2 partners (7 if the SA is listed on the stock exchange). It is managed by a board of directors and its president. The SA is suitable for projects with a large number of shareholders and significant capital.
  • The SAS or Simplified Joint Stock Company is a company formed by one or more partners whose operating rules are dictated by the articles of association. The SAS has its president and must have a legal representative.

There is also the general partnership, the cooperative production company, or civil companies such as SCI, SCP, SCCV.

Companies with a single partner

The plurality of partners is not a prerequisite for founding a company. Indeed, it is possible to create a business with a single partner.

  • The EURL or Single Member Limited Liability Company is an LLC with a single partner who can be a natural or legal person.
  • The SASU is a SAS with a single partner.

Steps to follow regardless of the business status

Complete your business creation preparation course or SPI

This training of at least 30 hours is a must for future business leaders who wish to register in the Directory of Trades. It is primarily an opportunity to assess your project, its impact on your personal life, to understand the regulations, and of course, the basics of creating and managing a business. Most chambers of trades offer the SPI either in-person or online with very variable fees up to €260. Additionally, it is possible to receive financial support from the regional Chamber of Trades. Finally, under certain conditions, an exemption from the SPI course may be requested.

Check if the activity is regulated or not

Some activities require specific skills and sometimes specific approaches before they can be carried out. These are the so-called regulated activities and concern various sectors: real estate, health, legal, transport, etc. It is therefore essential to inquire before starting the business creation formalities and to meet the access or practice conditions. This may involve diplomas, professional experience, registration with an order, etc. However, other activities are subject to authorization. The best approach is to contact your relevant CFE directly.

Search for a name for your future business

Within the framework of a sole proprietorship, the name of the business is the name of the sole proprietor. Nevertheless, nothing prevents the assignment of a name or trade name to distinguish and promote the activity. No formalities are required, although it is necessary to check with the INPI that the chosen name is not already registered and protected. This is also an opportunity to choose the domain name for the future website of the company and to check its availability.

Find a location to set up your activity

The rules are very flexible for sole proprietorships, but also for companies when it comes to the domiciliation of the registered office. When registering, it is sufficient for the manager to justify a location which can be their own home, a rental, a purchased property, a domiciliation, an incubator, etc.

Steps to follow to create a sole proprietorship

Get in touch with your CFE

The Centre des formalités commerciales or CFE is the one-stop shop where all administrative procedures related to the creation and modification of businesses are centralized. However, depending on the type of activity, one will depend on a specific CFE.

Go to

  • The Chamber of Commerce and Industry if the activity is commercial or industrial,
  • the Chamber of Crafts for a craft or commercial activity,
  • the Chamber of Agriculture if the activity is agricultural.
  • To Urssaf for liberal professions and artists,
  • to the commercial court registry for commercial agents (natural persons).

The CFE will provide all the necessary information and a list of useful documents for registering the sole proprietorship.

Make a declaration of unseizable assets

This approach is not mandatory but recommended. Indeed, the sole proprietor has the option to exclude from their unlimited liability certain constructed or unconstructed assets that are not used in the professional context. To do this, they must make a declaration of unseizable assets before a notary. Thus, in the event of the company’s bankruptcy, the declared personal assets are protected.

Please note that:

  • This is a formal procedure that is published at the mortgage office.
  • The declaration of unseizable assets results in a mention on the RCS (trader), on the Directory of Trades (artisans)
  • It requires publication in a legal announcements journal for liberal professions, farmers, and micro-entrepreneurs.

Establishment of costs

Expect a minimum of €584 including tax which includes:

  • €139.93 for the establishment tax
  • €419.79 for ancillary fees (research, certificates, extracts and copies of deeds, etc.)
  • €23.32 for publication requests

This cost can increase significantly if there are other necessary formalities that the notary must complete.

Declare the allocation of assets

A sole proprietor who has opted for the creation of an EIRL is required to make a declaration of the allocated assets to precisely determine what is used by the company. Although it is possible to do this during the company’s existence, it is preferable to make this declaration at the time of the company’s creation. The declaration of allocated assets must be filed with the CFE using a P EIRL form and at the same time as the registration of the EIRL.

Establishment of costs

  • There are no additional fees if the declaration is made at the time of the company’s registration.
  • Special cases: the filing costs €50.68 for liberal professions and micro-entrepreneurs.

Be careful: it is necessary to anticipate notary and publication fees if there is a professional transfer of real estate (or part of it).

Register with the CFE

One month before the start of activities, it is necessary to submit your business creation file to the CFE. This will include the following elements:

  • a duly completed P0 form;
  • a copy of the valid identity card or passport of the official;
  • a copy of the family record book;
  • a declaration of honor of non-conviction and parentage;
  • a declaration from the spouse if married;
  • proof of the location (certificate of domiciliation, lease, supply contract, sublease contract, etc.)

After submitting documents to the CFE, the sole proprietor will receive a business creation deposit receipt (DRDCE). The registration takes effect no later than one month after the date of deposit. The CFE will transmit the SIRET number of the sole proprietorship, its APE activity code, as well as the K extract for those registered with the SCN.

Cost

The cost of registering a sole proprietorship varies depending on the type of activity:

  • €25.34 for a commercial company registered with the RCS
  • about €130 for an artisan registered with the RM (amount varies depending on the department)
  • €25.19 for a commercial agent registered with the RSAC

Good to know

  • In the case of a mixed activity (craft and commercial), the costs of both operations must be paid

    • .

  • Registration with Urssaf is free for liberal professions.
  • Registration of individuals under the microsocial regime (micro-entrepreneur) is free

    • Formalities for creating a business

    Despite some subtleties, the steps to establish an LLC, an SA, or to form an SAS have many common points. We will detail below the different steps for creating businesses in the case of a company.

    To get closer to your CFE

    The Centre des Formalités des Entreprises remains the contact for administrative procedures, starting with business creation. To know which entity to depend on, it is necessary to refer to the type of activity of the company:

    • Chamber of Commerce and Industry (CCI)
    • Chamber of Trades and Crafts (CMA)
    • Chamber of Agriculture
    • Commercial Court Registry (to form an SCI, GIE, etc.)

    This first step allows you to know in particular:

    • whether the activity is regulated, and if necessary, to carry out the necessary formalities to meet the conditions
    • whether it is necessary to take an SPI course (for registrations in the Commercial Directory)
    • the list of documents to be provided for the company’s registration

    Drafting the articles of association

    This step is fundamental when creating a business (legal entity). In addition to stating in black and white the rules of operation of the company, drafting the articles of association also allows for:

    • declaring the company name which constitutes the identity of the legal personality, as well as the name if necessary

      • ,

    • declaring the registered office of the company, including supporting documents (lease, domiciliation, title, etc.)
    • designating the auditor, mandatory for certain legal forms from the outset: SA, SCA

    Cost

    In principle, drafting the articles of association incurs no cost, unless you decide to be assisted by a lawyer or accountant. In this case, the fees are very variable. Many legaltech websites offer this service at a lower cost. You can then have the articles of association of your company drafted online and receive assistance from specialists in this field.

    Additionally, in certain situations, the articles of association must be registered with the tax administration. This formality is essential when it comes to a notarial deed, a bailiff’s deed, a court decision… or when there are procedures such as the transfer of ownership of real estate, the transfer of shares, etc. that are subject to registration.

    Note also that it is advisable to conduct availability searches with the INPI and the SRC for the choice of the company name to avoid future conflicts with competing businesses. There is a cost.

    Appoint the director or president

    A company, whether it is an SCI, LLC, or SAS, must be managed by a president or director (or several) according to its form. The official must be designated directly in the articles of association or by a separate appointment act.

    Deposit the share capital

    At the time of creation, the partners and shareholders make available to the company goods or securities. The contributions commissioner assesses the value of the contributions in kind and determines the number of shares or stocks. Cash contributions must be deposited — in whole or in part, depending on the status — in a blocked account. In the event of dissolution, the contributions in kind must be fully released.

    Here are the essence of the formalities required to make this deposit of share capital:

    1. The depositor collects the funds from the partners and shareholders
    2. They deposit the cash contributions (within 8 days of receipt for LLCs and joint-stock companies) either in a blocked bank account, with the Caisse des Dépôts et des consignations, or afterwards with a notary
    3. . deposit to be attached to the business creation document at the CFE

    The payment must be accompanied by:

    • a deposit request,
    • the articles of association of the company,
    • the funds and a certificate indicating their origin,
    • the valid identification of the applicant and other creditors of the company; the list of subscribers;
    • the’
    • address of the registered office and the address of the company’s representative

    Cost

    Most banks (traditional banks and online banks) offer this service at very variable rates. It is always interesting to compare offers, as in general, the deposit of share capital is included in a business creation package. Additionally, the deposit of share capital at the Caisse des Dépôts et des consignations is completely free.

    Publish a legal announcement

    This is one of the mandatory steps to create a company whether it is an LLC, SA, SAS, etc. Indeed, a notice of incorporation must be published in a legal announcements journal in the department of the registered office of the company being created. There are several, and you can even publish your legal advertisement online. It must contain at least the following information:

    • legal status
    • name

      • of the registered office

    • duration of
    • the object

      • of office of

    • capital

      • of the company

    • name and address of the agents
    • RCS registration number

    Cost

    The price of a legal advertisement for business creation varies depending on the JAL and the departments. For example, expect around €200 for an LLC, €230 for an SAS.

    Submit the incorporation file to the CFE or Registry

    This is the final step in creating businesses in the case of a company.

    This document will include the following elements:

    • An original copy of the articles of association
    • Any appointment act of the director, president, or general manager (depending on the legal forms) if the latter is not statutory.
    • The duly completed and signed M0 form (with the original power of attorney of the legal representative if they have not personally signed the forms)
    • The certificate of issuance of the creation notice in a JAL certificate
    • of capital deposit for all legal forms requiring a minimum capital (Limited Liability Company, LLC, SAS, SASU, etc.)
    • The supporting documents for the registered office
    • Copies of the identity documents of the officers and various documents concerning them: declaration on honor of non-conviction, certificate of parentage.
    • If the activity is regulated, provide the required authorizations and supporting documents.
    • If an auditor has been appointed, provide proof of their registration on the official list of auditors and their acceptance letter for their appointment.

    Cost

    Several fees apply to determine the cost of registering a business:

    • €39.42 for registration with the Trade and Companies Register including the deposit of acts
    • About €130 for registration in the Directory of Trades knowing that each department sets its rate
    • €23.62 for the declaration of beneficial owners of the company

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    The Steps to Starting a Business