France: Create a Simplified Joint-Stock Company (SAS)
In France, a simplified joint-stock company (Société par actions simplifiée or SAS in French) is a business entity created in 1994 that has been hugely successful for two main reasons: it is very flexible, and it allows you to avoid Social security for self-employed (Sécurité sociale indépendants).
Here is all you need to know about a simplified joint-stock company (SAS).
Characteristics of a Simplified Joint-Stock Company in France.
Listed below are the main characteristics of the French SAS status:
- Unlike a limited liability company (SARL) that works on social shares, a SAS works with joint stocks. When looking at how taxation works for this business entity, you’ll see it makes a huge difference!
- Business partners are ‘shareholders’ (actionnaires)
- The simplified joint-stock company status leaves partners free to define their powers and the links between them. For example, specific clauses like a shareholders agreement can be written up in the Articles of association (statuts de la société)
- The minimum share capital is 1€. The same amount applies to a limited liability company (SARL)
- By default, this kind of company is subject to company tax (impôt sur les sociétés)
- The CEO is named “President” of the simplified joint-stock company. A director general and a deputy director can also be put on the board, whether they’re business partners or not.
Note : it’s also possible to create a simplified joint-stock company as a cooperative company (Société coopérative or Scop in french)
Advantages of a Simplified Joint-Stock Company
Let’s take a look at the advantages of this business entity:
- The Articles of association are simple to write and to amend. It can facilitate adding new partners or removing them, for example. It’s often really useful if your company is evolving fast: perfect for start-ups.
- No self-employed social security (Sécurité sociale indépendants). The leaders of the company (partners, President and director general) contribute to the general social security regime. This particular status is called related-employed (assimilé-salarié) and people under it benefit from the same social protection as a regular employee, except they don’t contribute to unemployment benefits.
- The social protection is better than in a limited liability company (SARL), in particular regarding sick pay.
- The executives receive a salary and a legally viable paycheck.
- There are no self-employed contributions taken on dividends either. Tax on dividends for social charges are just 17,2% and includes general social contribution (Contribution Sociale Généralisée or CSG), contribution to the refunding of the social debt (Contribution au Remboursement de la Dette Sociale or CRDS), solidarity contribution (cotisation de solidarité), social levy (prélèvement social) and additional contribution (contribution additionnelle). The 45% contribution for Self-employed social security charges on dividends don’t apply.
- If you decide to sell your shares, your buyer will only pay a 0.1% commission for registering. In a limited liability company (Société à responsabilité limité or SARL) it would be 3%. Good to know if you think you may want to sell your business one day.
Disadvantages of a French Simplified Joint-Stock Company
This last list presents the disadvantages you might face with a simplified joint-stock company:
- The rate for social charges on the President’s income is around 70%. That’s way more than the 45% rate for social charges in a limited liability company (SARL). These 70% include the following shares:
- Wage share: 22%
- Employer’s share: 48%
- If your company has many partners that all want to have the same powers, the simplified joint-stock company status is not the best one. With a limited liability company (SARL), it is possible to have a collective leadership (direction collégiale) with co-directors with perfect power equality while the SAS status compels you to distinguish the President from the director general.
- Accounting will cost you approximatively 20% to 25% more than with a limited liability company (SARL) because your accountant will have to produce payroll statements.
How Can I Decide Between SAS and SARL?
With this article, we hope you know where to look when considering the right business entity under which to establish your company in France.
Now you may be wondering how to get information about your project. Don’t worry, we can also help you there!
Wondering how? First, check out our article on business plans in which you’ll find a free and ready to download Excel business plan template, along with some helpful guidelines.
Then, we also have other articles about French companies that may be useful to read in order to compare different French business structures :
If you want to know more about choosing the right legal status in France.
Learn how to become a freelancer in France.
If you want to compare this article about simplified joint-stock (SAS) with the one about limited liability company (SARL)