The French economy ranks among the largest not only in Europe but the world. Indeed, France stands alongside Germany as one of the powerhouses and founding members of the European Union. This makes French a useful language to learn for your career, and it positions France as an enticing country in which to invest and build new businesses.
But starting a business in France demands consideration and research. You will need to weigh the pros and cons and make a few important decisions, such as which French city to settle in and which type of company to form. To support you in this essential preliminary stage, we’ve put together a useful guide on how to start a business in France.
- Opening a business in France: The overall picture
- Which type of company to choose when starting a business in France
- How to open a business in France
Opening a business in France: The overall picture
The strong unions, the 35-hour work week, the long holiday… You may already be aware of several stereotypes about work life in France. While some of these stereotypes may be true, they represent only part of the picture.
Official reports, such as the OECD Productivity Insights from 2019, reveal the high productivity of French workers compared to workers in other EU or OECD countries. Indeed, from life sciences to e-commerce, it looks like business is booming across a variety of French industries. This is helped by national initiatives such as La French Tech, which aims to support new business ventures through investment from global businesses. According to figures collected within the Entrepreneurship Database project, 218,000 new companies were registered in France in 2020 alone.
But the outlook is not all rosy. The French economy is also hindered by several structural hurdles. In particular, the rigid labor market and the complex tax system may make it harder to set up a new business and run it successfully. On top of a solid business plan, you’ll need to be fully aware of the steps required for starting a business in France, especially if you plan to do so as a foreigner.
Which type of company to choose when starting a business in France
This is the crucial preliminary step before starting the process of setting up your new business in France. Depending on your industry and activity, as well as the personal assets you may want to protect, you’ll have the choice between several legal structures and associated tax regimes.
Formerly known as l’auto-entreprise, la micro-entreprise is actually not a business structure. It’s a tax status, with only a few accounting requirements. Freelancers usually favor this structure, as it’s the simplest way for them to set up their activity. However, in this configuration, your personal and professional assets are not fully distinguished from one another, as you and your business are a single legal entity.
L’Entrepreneur Individuel à Responsabilité Limitée (EIRL)
The “Sole Trader with Limited Responsibility” is a good alternative to the micro-entreprise for those sole traders who prefer not to commit their personal assets to the fate of their business. It’s also quick and easy to set up.
L’Entreprise Unipersonnelle à Responsabilité Limitée (EURL)
Like the EIRL, the “One-Person Enterprise with Limited Responsibility” allows sole traders to separate their personal and professional assets in terms of liability. You may find it a better structure than the EIRL if you expect to hire people in the near future. However, it’s also a more complex and expensive entity to set up.
La Société À Responsabilité Limitée (SARL)
If your EURL is successful, then it may just grow into a “Company with Limited Liability,” the French equivalent of a limited company. There’s no minimum capital required for the set up and liability is limited to the capital investment.
The main difference from the EURL is that a SARL includes between two and 100 partners, instead of being restricted to just one shareholder.
La Société par Actions Simplifiée (SAS)
Compared to the types of companies mentioned before, the “Simplified Stock Company” allows for greater legal freedom at the time of the set-up. This is why it’s such a popular option among startups. It’s also ideal for foreign investors who do not wish to move to France.
How to open a business in France
Once you have decided which type of company best suits your needs, it’s time to start the process of setting up your business. Here are the general steps:
1. Make sure you fulfill all the requirements
To be able to open a business in France, you’ll need to be at least 18 years old and have a residence permit or be an EU citizen. You’ll also need a numéro de Securité sociale (social security number) and a French address for your business.
Moneywise, you’ll need to open a bank account and deposit a certain amount of capital in that account. We recommend hiring a French accountant or financial expert, who can help you set up your business and manage complicated tax matters further down the line.
2. Choose a name for your business
You can go on the website of the Institut national de la propriété industrielle (National Institute of Industrial Property) to check if the name you have in mind is already taken. If it’s not, you may register it as a dépôt de marque (trademark) to make it legally your own.
3. Register your business
Depending on the nature of your business, you may register your business through the appropriate center in your area. The Centre de Formalités des Entreprises (Center of Formalities for Enterprises) specializes in commercial and industrial businesses such as factories, shops, restaurants, importers and exporters. Refer to the Chambre des Métiers et de l’Artisanat (Chamber for Trades and Crafts) for building and manual trades as well as for trades in the arts and crafts. The Chambre d’Agriculture (Chamber for Agriculture) is the destination for farmers and those in agricultural trades.
You’ll find useful guidelines and links to the relevant forms on the ministère de l’Économie (Ministry of Economy) website. Once you’ve completed the process, you’ll receive an extrait Kbis, the official document confirming the registration of your company. It will include the Siren and Siret numbers to identify your business, as well as the APE or NAF code to identify the activity of your business.
You’ll also need to fill in application forms and provide documentation to various administrations, such as the Centre des Impôts (tax office), the Tribunal du Commerce (the commercial court) and the Institut National des Statistiques et des Études Économiques (the National Institute of Statistics and Economic Studies), better known as the INSEE. This documentation will ensure that your company is registered with the national business directory.
Once all of your paperwork is submitted and approved, you can celebrate your new adventure with an odd French tradition: Announce your newborn business officially in an authorized newspaper, like Les Echos.
The know-how to start a business in France
Creating a new business is daunting enough, let alone in a foreign country. But our article is here to help you navigate the process of starting a business in France, from choosing the right type of company for your activity to ensuring that you follow all the necessary legal and administrative steps.