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Open a Startup in France
Updated on Wednesday 02nd December 2020 Rate this article
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In the last few years, a new term has started being assigned to new companies, and that term is ‘startup’. As the number of such businesses increased, the startup was defined as a company created by one or more entrepreneurs seeking to develop a product or service which implies significantly high costs and for which capital is sought with various sources. France is one of the leading countries in Europe when it comes to the launch of startup companies, as their number has soared in the past few years. In this article, our company formation specialists in France explain the main steps of setting up a startup and how to raise capital for it.
If you consider creating a startup company in France is the right option for you, feel free to ask for support from our agents to register it.
The main features of a French startup
Many people consider that a startup company is not different from any other business, and from several points of view this is accurate. However, the startup also has a few characteristics of its own, among which the following:
- - it usually operates in sectors that are new,
- - because of this aspect, they are risky businesses,
- - it will rely on a different approach compared to traditional companies,
- - it is often created by young entrepreneurs with little experience.
If you decide to open a startup in France, you can benefit from support from our local specialists who can provide you with all the details related to operating such a business.
The best legal entity for a startup in France
When deciding to open a startup in France there are various aspects to consider from a legal point of view. One of the most important is the legal entity used to set up the operations. Under the French Company Law, the options are multiple, however, not all of them are suitable for a business that will start as a small company in the beginning.
Among the choices foreign and local entrepreneurs have are the sole proprietorship, the partnership and the private limited liability company. Given the fact that the first two entities do not have corporate forms and the liability rests entirely on the founder, they are not the most appropriate choices for a business with a high risk of not succeeding from the first attempt.
The private limited liability company, on the other hand, is the best structure from several points of view, and among them, we can mention the following:
- - it can be set up by several founders,
- - the liability for the obligations of the business does fall on the stakeholders,
- - it requires a minimum share capital which can be increased later.
Also, another good part about creating a French startup as a limited liability company is that the share capital can be raised through crowdfunding which has been associated with this type of venture in the past few years.
If you need assistance in registering a limited liability company, our company formation advisors in France will be more than glad to help.
Registration requirements for a startup in France
From an incorporation point of view, there is no difference between a regular business and the startup. The latter must respect the same French company formation steps which imply:
- choosing the legal entity, which in most cases is the private limited liability company;
- selecting and reserving the trading name and prepare the statutory documents which are filed with the Trade Register;
- setting up the company’s bank account with a local financial institution;
- registering for taxation and obtaining the necessary business licenses for its operations.
The private limited liability company is chosen because of the low share capital requirements which fall in line with the characteristics of the startup in France.
Starting with 2019, France also has an agency offering support to those who want to open startup companies in France.
Costs to be considered when setting up a startup in France
The creation of a startup company implies calculating various costs before launching the business. From this point of view, the most important one is related to the incorporation of the business with the Trade Register.
Among the costs to consider are:
- - the creation and notarization of the incorporation documents (Articles of Association),
- - the business registration fees,
- - the licensing fees (where such permits are required).
The share capital could also be considered as a cost of the startup, however, when operating as a limited liability company, the legal requirement for the capital is set at 1 euro. Even so, the shareholders will need a larger amount of money in order to start the operations.
The important aspect to consider is that when establishing the share capital, at least 20% of it must be deposited upon incorporation.
For accurate costs related to the registration of a French company, we invite you to discuss with our local agents.
Key aspects to consider when opening a startup in France
There are no restrictions to the ownership of a startup in France, therefore, a foreign entrepreneur can set up this type of business without any worries here. The most important aspect to consider is the creation of a business model, but also of a business plan before registering and launching the company.
There is an important difference between the two terms. While the business model will provide information on how the French startup will generate money, the business plan explains how the project came to life, or better said, the main idea behind the company, but with specific details on the studies completed in order to have the entire picture of the future business.
The business model will present the service or product intended to sell, the type of customers it addresses, the purpose of the company, and how the money will be generated.
It is important to note that the business model and the business plan are not required upon the registration of the startup, however, they are of key importance when seeking funding.
As mentioned above, the agency providing support for those who want to open a startup in France is BpiFrance Creation.
If you want to open a company in France as a startup, you can rely on our consultants for assistance during the entire registration procedure.
Funding for startups in France
Another key element when opening a startup in France is finding financial support. This is one of the most important characteristics of this type of entity, as there are several ways in which funding can be obtained. These are:
- - crowdfunding platforms where the startup can present the business model and plan;
- - venture capital where the business owner pitches the idea to investors;
- - government support (France has many agencies, programs and incentives to support this type of venture);
- - family and friends can also act as investors in startups.
Most startup companies in France operate in innovative sectors, such as fintech, ridesharing, cryptocurrencies, pharmaceuticals, and information technology and communications.
If you are interested in opening a startup in France, our company registration representatives can help you.
Governmental support for French startups
Those who decide to open a startup in France will benefit from various support schemes from the government. In 2020, the central authorities announced a 4 billion euros plan dedicated to these companies.
Startups seeking to raise new funds for their activities can access the new program created by Bpifrance which put 80 billion euros at their disposal, while private investors also pledged another 80 billion euros. Moreover, startups can also obtain government-guaranteed loans based on certain criteria. These loans imply that companies can borrow a sum of money representing two years of employees’ salaries or 25% of their annual revenues (the higher amount will be considered).
Tax and VAT returns will be given back to startups faster compared to other companies.
We also offer accounting services for companies operating in France, including startups.
Why open a startup in France?
France is one of the largest economies in Europe and in the world, which represents one of the best guarantees for starting a business. Also, there are plenty of regions in France where numerous startup ecosystems have developed, therefore businesspersons can choose not only Paris, but also Bordeaux which is set up become France’s Silicon Valley.
If you want to open a startup in France and need assistance, our consultants are at your service with advice and guidance in registering such a venture.
The startup sector in France
In France, Paris represents the largest startup hub in the country, as many companies operate here. These companies benefit from various incentives offered by the government, and among these, we can mention the Tax Credit for Competitiveness and Employment, the tax credit for innovation and the tax credit for research.
Between 2014 and 2018, statistics on the registration of startups in France indicate that:
- - in 2014 when these companies first appeared, their number was of 243;
- - in the next year, it almost doubled, as it reached 416 companies;
- - in 2016 and 2017, there were 641, respectively 803 startups;
- - in 2018, the number of these companies slightly decreased to 675.
If you want to open a startup in France and need assistance, please contact us.
Meet us in Paris
Call us now at +33 9 73 22 01 51 to set up an appointment with our lawyers in Paris, France. Alternatively you can incorporate your company without traveling to France.
As a BridgeWest client, you will beneficiate from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in France.
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