What is the best legal status for a start-up?
How is the status of the SAS interesting for a start-up?
A start-up is a young company with strong growth potential, whose development is supported by a favorable environment, both intellectually and materially and financially.
Due to its rapid growth, a start-up must constantly reconfigure itself:
- his organization evolves rapidly
- its economic model is readjusted frequently
- investors enter the capital
- associates can decide to go out at any time
- governance rules are subject to change
- The choice of legal status is therefore essential for a start-up, it must be consistent with the principle of speed of business.
The legal status must be secure, without hindering the evolutionary nature of the activity.
The criteria for a legal status adapted to a start-up.
A suitable legal status for a start-up is a status:
- which facilitates the entry and exit of partners or shareholders
- that protects the rights of partners or historical shareholders
- which allows for the implementation of tailored governance rules
- which is credible vis-à-vis partners and investors
- which is suitable for a small activity but likely to grow
- which protects the personal patrimony of the associates and leaders
- which provides adequate social protection for leaders
- which offers opportunities for tax optimization
- which entitles you to innovation aids (Young Innovative Enterprise, Research Tax Credit or Innovation Tax Credit).
Taking into account all these criteria, a legal status stands out: it is the SAS with variable capital (see below).
The best legal status for a start-up.
First, some legal statutes seem clearly inappropriate for a start-up:
- the self-enterprise / micro-enterprise: too little credible, closed to aid for innovation and especially limited in terms of turnover (see our article Launching its start-up under the regime of the auto-entrepreneur: realistic?)
- the classic sole proprietorship: it does not allow the entry of partners or investors, and presents a system of unfavorable taxation
- the association law 1901: unsuitable for a lucrative activity
- EURL and SARL: these are forms of companies that are in principle suitable for start-ups, but which have the disadvantage of significant legal rigidity. On the other hand leaders are subject to the Social Security regime for the Independents (former RSI).
- SA: a form of society unsuited to starting a small structure.
The legal statutes best suited to start-ups are in fact those of SAS and SASU (SAS with sole shareholder).
SAS and SASU have interesting features:
Freedom of drafting the articles of association: it is possible to include in the articles of association the elements of a shareholders’ agreement, regulating the relations between partners as well as the terms of entry and exit. The statutes can also incorporate specific governance rules that are well adapted to each situation.
No specific social protection scheme. The officers (associate Chairman and Chief Executive Officer) contribute to the general scheme and are assimilated to employees. They therefore benefit from the social protection of employees (except unemployment insurance). In SAS, the social security contributions are paid every three months on the basis of the wages actually paid: this avoids the mechanism of the installments, schedules and regularizations of the Social Security for the Independents (ex RSI) in force for the EI, EIRL, EURL or SARL.
No social contributions either on dividends. Dividends are simply taxed at 17.2% of social security contributions. The 45% social contributions on dividends do not apply.
Social security coverage is better than in SARL-EURL, particularly as regards daily allowances and retirement.
In case of sale of the SAS, the purchaser will pay only 0.1% registration fees, against 3% in SARL (excluding abatement).
Lastly, it is possible in SAS and SASU to provide for a capital variability clause: this amounts to creating a “variable capital SAS”. The variability of the capital makes it possible to avoid the formalism and the costs related to the entry or the exit of associates. Ideal for a start-up!
If you are alone, the variability of capital is not necessarily justified, so you can create a classic SASU.