What is a Sole Trader status?

It is a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business.

However, as the business becomes successful, the risks accompanying the business tend to grow. To minimize those risks, a sole trader has the option of forming a Limited Liability Company.

Why should I opt for Limited Company?

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The business will have its own assets, that are totally distinct from your assets: If the business runs into trouble, your personal assets will be protected from seizure by the business’s creditors.

Specificities of Limited Company Status

Since your incorporated business is a «new person» you must give it a company name, an address and make a minimum contribution to its initial assets that will enable it to cover its first capital and current expenditures (registered capital): “Le capital”
Whatever amount of capital you choose to start with, this figure must be included on all your official documentation, e.g. letterhead, invoices and orders.
The manager will not be acting on his or her own behalf, but in the name of and on behalf of a distinct legal entity.

There are many different types of company, the most the common are:

  • Entreprise unipersonnelle à responsabilité limitée (EURL)
  • Société par actions simplifiée (SAS) ou SASU with a single shareholder.

By Faten Amamou, Chartered Accountant
ESCEC INTERNATIONAL – WWW.ESCEC-INTERNATIONAL.COM
Member of the French Chartered Institute and founder ESCEC International. Faten has 15 years’ experience establishing and registering businesses in accounting, taxation and social matters. Faten provides entrepreneurs with professional advice and support for setting up a company.

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