What are the possible statuses for a construction company? Which legal status to choose for a craftsman? What are the legal forms that best suit a construction company? One of the first things to do when you want to establish yourself as a building craftsman is to choose a legal form for your business. However, many statuses exist in France: SARL, EURL, SA, SAS,… To untangle the threads of this legal maze and allow you to select the legal framework that best suits your situation, a point is necessary. Before starting the creation of a construction company, it is therefore essential to compare and choose the company’s status. Discover the guide and comparison of the legal status of construction companies.
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Summary of legal status
possible
The legal statuses of a company are a set of legal texts defining the tax status of companies. The tax rules applied to businesses differ depending on the legal form chosen at the time of creation. Therefore, the choice of legal status is crucial for business management and tax optimization. Several criteria must be taken into account: the presence of partners, the liability of managers, capital and social regime, profit taxation, VAT application, etc.
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Whether you have partners or not changes everything in terms of status possibilities. And within each of the two main families, sole proprietorship or business with one or more partners, you will always find subdivisions based on the size of your business, the expected turnover, and the guarantees on your personal assets. At a lower cost or with seizure, the legal form will impact the start of your business.
Here is a summary table, before diving into the heart of the matter, that gives you an overview of the different possible statuses. Your legal form will translate into your social status and the taxation to which your business will be subject. You must therefore read the different legal statuses in France and compare the advantages and disadvantages of each form to make the right choice.
| Sole proprietorship | Business with 2 or more partners |
| Auto-entrepreneur | SAS (Simplified Joint Stock Company) |
| EIRL (Individual Limited Liability Company) and EURL (Single Member Limited Liability Company) | SARL (Limited Liability Company) |
| SASU (Single Member Simplified Joint Stock Company) | SA (Public Limited Company) |
As you will understand, this table summarizes the legal status from the simplest to the most complex for each of the two main families. To help you choose the legal form that suits you, here is a detailed description of each of these laws. To go further and correctly choose the legal status of your craft construction company, it is advisable to seek advice from a certified accountant. You can also study the details of each status on this governmental table.
Legal status of a sole proprietorship
Are you alone and ready to start? Certain legal texts are suitable for opening a sole proprietorship. You will therefore need to choose between three distinct legal articles for a single partner company. Protection of your personal assets, ease of creation, simplified accounting,… all the criteria that will define your choice. You must also consider the credibility you wish to share with third parties and the expected income. Auto-entrepreneur, EIRL, EURL, or SASU, here are the legal statuses to be self-employed in construction.
Independent building craftsmanship
The auto-entrepreneur, or micro-enterprise, is the simplest legal form, ideal for starting a small personal business. In just a few clicks on the micro-entrepreneurs’ website, your company will receive a SIRET number, allowing you to start working. The absence of registration fees and an ultra-simplified procedure are the advantages of this legal form. But these are not the only ones.
Accounting is also very minimal. VAT is not charged and you only need to declare your turnover monthly or quarterly. Taxation and the calculation of social contributions are based on this declaration. Without payment, you will not have to pay social contributions to the independent social regime. This is therefore the perfect legal status for a sole entrepreneur with little liquidity.
However, you will have to pay the EFC each year, which is a fixed cost. Additionally, you will not be able to deduct expenses from your turnover. This is problematic for a construction entrepreneur who needs to acquire equipment: utility vehicles, equipment, and tools,… Be sure to differentiate between the legal status of a micro-enterprise and that of a sole proprietorship (IE), which is less advantageous.
Furthermore, the status of an auto-entrepreneur can be combined with salaried activity or even if you are unemployed. So, you do not take too many risks to start. It is the only status that allows these accumulations.
Of course, every status also has its downsides. The limits of the auto-entrepreneur are at the turnover ceiling, which is 70,000 euros for services and 170,000 euros for the sale of goods since January 1, 2018. Moreover, the income tax regime prohibits you from deducting your expenses.
Building craftsmanship in EIRL or EURL
The EIRL or EURL statuses have the huge advantage of protecting your personal assets in case of bankruptcy, meaning that your creditors cannot seize your house in case of problems. To do this, you must declare your personal assets with a notary when creating your company in EURL.
The EIRL is certainly the most appropriate status for an independent craftsman. This status allows the entrepreneur in the work to determine the salary to be paid each month. This remuneration will then be used as a reference for calculating the amount of social security contributions to be paid.
For the formalities, you will need to establish the statutes of your EURL with the help of a lawyer, mentioning the list of your private assets deposited with a notary, and provide capital. This is left to your discretion and starts at €1. The money paid for the capital is not usable for current cash flows. Registration fees are also to be paid for a cost ranging from €250 to €1,000.
The EIRL has no turnover ceiling and you will be able to deduct your expenses for the tax base of income tax and social contributions from the RSI. It should be noted that the RSI will apply full rates (47%) while the independent entrepreneur will benefit from reduced rates (23%). On the other hand, accounting must be entrusted to a certified accountant and you will be subject to VAT.
Building craftsmanship in SASU
The great advantage of SASU is that you benefit from the employee regime. Therefore, you are not affiliated with the RSI but are covered by the social security system. However, the social coverage of independent entrepreneurs changed in 2018. The social contributions of a SASU construction company are high and reach 70%.
For the rest, SASU is similar to EURL. Registration formalities are required and your personal assets are covered. It will cost between €250 and €1,500 for all formalities. There is no turnover ceiling and you are subject to VAT. A certified accountant is required to keep your accounts. The expenses are deductible from your turnover and finally, your personal assets are covered in case of problems.
Many painters, electricians, or plumbers decide to start their business by choosing the SASU status. This is a legal regime particularly suited to the activity of a building craftsman, but it is more expensive than the EURL status.
Craftsman with partners, which status to choose?
Craftsmen wishing to develop a small individual business or partner with another craftsman must choose a more regulated status. Indeed, certain legal forms allow the registration of multiple partners and the hiring of employees, for example. Ideal for those who work together, as is often the case for construction and renovation sites. Again, different legal statuses are available to you, including SARL, SAS, and SA.
Create a construction company in SAS
SAS (Simplified Joint Stock Company) is similar to SASU, except that there are at least two partners. The SAS is managed by a president who is subject to the social system for employees. As in SASU, the tax system can be income tax (IR) or corporate tax (IS).
To create a construction company under the SAS status, the intervention of an accountant is necessary. Additionally, this professional will need to keep your accounts up to date, make VAT declarations, pay various taxes,… The partners of an SAS pay themselves either in the form of salary or in the form of dividends, the amount of which depends on the profits generated by the company at the end of the fiscal year. SAS is more flexible and less binding than a SA.
Create a construction company in SARL
The limited liability company (LLC) is certainly the most commonly used legal status when creating a construction company managed by two partners. Again, this is the two-partner version of EURL. SARL helps reassure future clients as it offers a more professional image than a simple craftsman with a micro-enterprise.
In this legal form, we talk about a manager or co-manager for the management of the company. Depending on whether there is a majority, equal, or minority management, you have several choices of social status. The non-managing partner can be an employee of the company as well as the manager. The SARL can be taxable at IR or IS. It all depends on your turnover and the legal arrangements advised by your certified accountant.
Create a construction company in SA (Public Limited Company)
SA is a large company in which shareholders have invested their capital. There must be at least 2 shareholders for a non-listed company and 7 for a listed company. It is managed by a Board of Directors with a Supervisory Board or a General Director with a Board of Directors. The administrative formalities and various obligations are very strict for a construction company. Therefore, it is more suitable for construction giants such as Bouygues Construction.
In conclusion, the choice of your legal status will depend on the forecast of income and your situation. Be aware that even if you start small, all legal forms are scalable and will adapt as your business grows. You can change the legal status of your business to move from a sole proprietorship to a business with partners, for example.
Once the legal form is chosen, you can move on to the second step: registering your construction company in order to subscribe to insurance to complete the projects and start the activity.
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