Starting a business in France – what you need to know
France is rapidly becoming a premier destination for British expatriates looking to start a new business in continental Europe.
This has not always been the case; for a long time, bureaucracy and red tape made starting up a business in France barely worth the hassle. However, in recent years there have been huge reforms to encourage foreign investors and entrepreneurs to enter the French market.
President Emmanuel Macron has been actively seeking to change the country’s reputation and make it a nation full of exciting start-ups.
With changes to taxation, more available venture capital and the removal of various hurdles on the path to incorporation, now is the time to start a business in France.
Paris, Marseilles, Nantes and Lyon are all paving the way, embracing a wave of start-up businesses in their cities. There are, of course, a number of considerations and administrative tasks that need to be followed.
Type of business and regulated activity
Business activity is broadly split into a number of categories, which are registered through different offices. The first step, therefore, during your market research is to determine which category your venture falls into and whether it is considered a regulated activity.
These categories encompass trades, which includes the key building trades, other manual professions and some manufacturing; Professionals, which are generally freelance or private practice occupations such as lawyer, dentist, doctor, teacher and the like; Commercial and Industrial, such as shops, hotels, restaurants and factories; Commercial Agent, acting as a representative for others; Agriculture; and Artistic Professions.
As well as categorising your new business, you will also need to be aware as to whether your principal business activity needs to be authorised and regulated. There are certain criteria for regulation that you will need to meet to proceed.
There are then decisions to be made with regard to the type of business structure you wish to set up. Unless you are looking to set up as a sole trader, the two most common designations are Société à Responsibilité Limitée (SARL) and Societé Par Actions Simplifieé (SAS). SARL is broadly the same as a Limited Liability Company in the UK, which is aimed at small- to medium-sized operations, with an appointed manager (gérant) to legally run the company. An SAS is a Simplified Stock Company, which is a joint-venture partnership between a foreign investor and a French-based company.
Other options include Societé Anonyme (SA), which is aimed at businesses that wish to be on the public stock exchange with no maximum limit on the number of shareholders; and a Micro-Entrerprises (ME), which was previously called ‘auto-entrepreneur’ and is aimed at small businesses with generous tax incentives, but with limitations on turnover. For those who are wanting to operate as a sole trader, there is the option to set up as a Entreprise Unipersonelle à Responsibilité Limitée (EURL), a limited company owned by a single person.
There is a really good, in-depth guide to French business structures on the EuroStart Enterprises website.
The first step of the process is getting a new business registered with the appropriate authorities. This is fairly straightforward for sole traders and micro-enterprises, and far more complex for larger limited companies. At this point, you should engage the services of an accountant, notaire or avocat to ensure that your new business is structured correctly and legally. They can also advise you on things like business insurance and relevant taxes. The actual registration process takes place at a business regulation centre, of which there are different types depending on the category of business you are setting up. These are called Centre de Formalités des Entreprises (CFE).
Various documentation will be required for the registration process. You may also need to have certain structures in place, such as an appointed manager or CEO, appropriate funds, draft statutes for the company and the publication of a formal notice of incorporation. The CFE will process your request and log documentation with the relevant governmental bodies, depending on the type of business and how many employees you will be recruiting.
When setting up a separate company structure, you will need to get a business bank account and make a deposit of a minimum amount of capital, which is determined by the type of business that you are looking to set up. This capital is held until the formal certificate for your new business is received by the bank. The process of setting up a bank account for your new venture can take a lot more time than expected.
If your business requires the recruitment of employees, you will need to become familiar with the country’s strict employment laws. It is quite costly to take on employees and it is certainly worth receiving professional advice to ensure you are in compliance with legal conditions.
There are legal limits to working hours, for example, which are capped at 35 hours a week, with a working day no longer than 10 hours. By mutual agreement, the working day may be extended, and hence the number of hours worked per week. There are also legal minimum break times and rest periods per week. Overtime is paid at a set value, of 25% extra per hour for the first eight hours of overtime over and above 35 hours, and 50% extra per hour for any hour after that.
You will also need to be aware of the legal guidance around annual leave and other statutory leave periods. It’s essential to get a professional involved to draw up contracts to ensure that they comply with the employment laws.
The process of setting up a business in France is no more complex than in any other European country, though it does have its own quirks. Becoming familiar with these and seeking professional advice will see you well on your way to a successful new venture.
If you’re moving to France with a view to setting up a new business, contact us today to find out how we can aid you with the shipping and transportation of both your household and business-related items.