Establish French Sole Proprietorship

If you are the only investor in your business enterprise, it would be advisable to establish a French sole proprietorship because this type of entity is for those people who don’t want to invest large amounts of money, have a small business and are professionals in that business. A lot of individual businessmen have entered this kind of undertaking because it requires minimal capital and entails a relatively low risk as compared to other types of companies. When you open a company in France as a sole proprietorship, also known as enterprise individuelle, you will be held liable for all debts arising from the operation of the business. The established French sole proprietorship must be registered with the clerk of the Commercial Court where the principal place of business is located.

No separate legal entity for French sole proprietorship

To set up a company in France as a sole proprietorship means that you and your business will be treated as one entity. Your personal assets and that of the business will be merged into one. As a consequence of your French sole proprietorship, you will be personally liable for all the obligations of your business. That is why the French government created a new form of sole trader enterprise which limits the liability of the businessman. It is called enterprise individuelle a responsibilite limitee or limited liability sole proprietorship. Under this structure, the French sole trader only has to allocate a certain amount of his personal assets as part of the business and his liability will only be up to such allocation.

Our accountants in France are at your disposal with complete services for the company you own. Payroll services, bookkeeping, debt monitoring, and preparation of annual financial statements are some of the processes necessary for the smooth functioning of operations. We recommend outsourcing these services because they have advantageous prices and are offered by specialists in the field.

Taxation of sole traders

French sole proprietors are taxed under the progressive personal income tax. Since there is no separate legal entity, the income of the business is also considered the income of the proprietor. Under the personal tax system, sole proprietors are either subject to a regime called Benefice Industrial Commercial, if the business is commercial, trade based, or industrial, and Benefice Non Commercial if the sole proprietorship is of a professional nature.

Registration requirements

The kind of business of your French sole proprietorship will determine where you will have to register it. For skilled craftsmen, registration is to be done at the Chamber of Trades. For traders, businesses must be registered at the Chamber of Commerce and for farmers, the registration is at the Chamber of Agriculture.

If you have further question on sole proprietorship, just get in touch with our specialists in company formation in France. We will guide you through the process. We can also help you if you want to open a sole trader in other countries, such as Finland.