You will almost certainly have seen the acronym ‘SARL’ on the side of work vans or as you drive through French towns.
It stands for Société à Responsabilité Limitée – a company with limited liability.
The business has its own legal entity and remains separate from any individual employee or manager. Regardless of what happens to the business, the people involved can only be held liable for the amount they have contributed to the company’s capital. It’s roughly equivalent to a limited company in Britain or a limited liability company in America.
Who does it apply to?
All SARLs are a commercial activity. This structure can be chosen by tradespeople, shopkeepers and self-employed professionals, although it can’t be used for regulated trades such as finance or insurance.
It’s best for small- to medium-sized businesses and it’s often used for family-run businesses.
If you want to start a company with someone you’re not related to and you don’t want to employ them, a SARL is one of your best options.
How does it work?
This is one of the simpler types of business in France and it requires a minimum working capital of just €1. A SARL must have a minimum of two shareholders, and someone must be appointed as the general manager or gérant; the manager can also benefit from social security cover like an employee, if you wish.
When forming your SARL, certain official steps are compulsory, such as creating a written set of statutes to govern how the company runs and who has the authority to make decisions on its behalf.
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You must also hold an annual general meeting for all shareholders, at which accounts and major decisions are approved by a majority vote.
What’s unusual about a SARL?
Unlike most companies, shareholders of a SARL can include children and associations. It’s even possible for a family to create a SARL to purchase a property, and if you are renting out property, the SARL gives certain benefits on social security contributions.
