EU: +31 20 2611451
US: (415) 429-1068

Articles

Starting your first business in France? Here are the steps, and some great tips!

by on | 20 Comments

Starting a business in France is an adventure. Ever heard the horror stories of Italian bureaucracy? Well – France has it too! When you go through this adventure you will encounter stamp-fetishism, physical paper obsessions, snooty bank employees, and stamp-wielding government employees.

Company creation – the statuts

When you start a company in France, you must write what are called ‘Statuts’ – the basic laws of your company. For some company forms, like the SARL, these are standardized documents of 2-3 pages long. If you’re more adventurous and choose the SAS form, you are looking at at 40-50 pages of text.

What’s in them? Some sensible stuff – the equity structure (who owns how many percent of the company), the company address (more about that later), and some rules that are important in obscure cases – can a minority shareholder block a sale? Can shareholders re-invest when the company gets more funding? If you happen to be a high-potential startup, these things matter tremendously. If you’re the grocery shop on the corner, probably not so much. For startups, you are making some decisions that will impact your future. For the equity mix – that’s already a complicated and divisive subject. But some of the ‘small print’ will matter for future investors, and if you don’t do them right, they’ll force you to re-incorporate, a money-bleeding and time-wasting process that you should try to avoid.

So how does one obtain these statuts? There aren’t any magic answers here – there are some online, there are people you can pay to do it for you, like consultants (a friend of mine is one, contact me if you want to talk to him), or a lawyer. If you are a startup, the ONLY choices that makes any sense to you are either doing the standardized two page SARL (easy to find online), or pay a lawyer to customize one. But careful – don’t take any lawyer, take one that has worked with startups before. I would suggest you contact a successful startup here in Paris and ask them for the lawyer they used.

Choosing the address – choose wisely!

In France, each business has a ‘siege social’ – their official company address. This matters, because changing that address costs 200 euros in fees, plus a complete refile of your statuts.

You can use your home address – if you rent, you’ll have to inform your owner, but they cannot say no. If you’re a home owner, it’s never an issue. If you have office space or already know where you will get space, you can use that, but think about how long you will stay there. Startups often move offices a lot in their first years, so using the home address of one of the founders may make more sense, provided there is one with a stable home address. Choose the most stable option. Alternatives are companies that will rent you a mailbox, and will provide the proof-of-address paperwork for the company creation. They are called ‘domiliciation’ companies, and there are numerous ones in Paris. They charge up to 30 euros a month for the privilege of having a tiny mailbox, so again, not a perfect choice, but a stable one. Plus, you either have to go there frequently to pick up the mail, or you pay to have the mail forwarded.

The social capital – what money the founders put in

The social capital is part of the company creation – it’s what all the shareholders put in as the starting capital of the company. This must be done proportional to the equity mix (so if you have €10,000 social capital, the CEO that has 60% of the company must put in €6,000, etc). For this reason, the social capital is often kept low.

Step one: find a bank!

The first actual step in the creation process is to set up a special bank account that holds the social capital. For this, you must find a bank that is willing to take you as an enterprise client. Yes – you read it right, you must ask them nicely if they will take you as a client! This part of the process is extremely painful. French banks are the worst banks I've ever encountered. They are stuck in the sixties, where every transaction as done at the bank branch, and everyone knew each other by name. When you are a bank client in France, you will have an assigned branch, and a ‘conseiller’ – one of the branch's employees. What is this mythical creature? He’s the ONLY person that will process transactions for you in the entire bank system. It doesn't matter that every French bank has nationwide branches – no no, you must go to your own branch! But wait – why would I ever go to ANY branch, I have internet banking, right? Wrong! Yes – some of the basics are online now, but if you want to do a bank transfer, the Internet interface will only let you do small amounts, and only to pre-entered recipients. Who enters those recipients? You guessed it – your conseiller! On top of that, this loathsome creature must ‘approve’ your application to become a client of the bank. Why? Are they taking any risks? No – they will charge you 30-40 euros a month(!) for the basic banking services, will not give you a single euro of credit, and chain you to the horror that is the personal conseiller. For that, you have to beg them when you set up the company. The process is as follows: you call the bank, to make an appointment with a bank employee for the creation of a company. You show up, with three printed copies of your statuts, the founders’ passports, and proof-of-address for each, the social capital (cash or cheque), and a desire to be humiliated. They will then excruciatingly ask about your education, if you understand the basics of accounting, and any other question that they deem enjoyable enough to subject you to. If you go through this without killing the employee, you’re in, is my experience. Then, they take the social capital, create a blocked bank account that the money is deposited in, take one copy of the statuts, and stamp the other two copies, plus they print a letter stating you have the blocked bank account with the social capital. Congratulations, you have just passed step one!

Step two – more stamps, this time from the tax office

Now, based on your company address, there’s a corporate tax office that you will be assigned to. In Paris, there are about 40 – two per arrondissement. This is job creation at its finest – the employees each have a fixed number of companies assigned to them, and deal with the paperwork (corporate taxes, quarterly VAT payments, payroll taxes, etc) mostly manually. On the one hand, you can call them and get a sensible answer if you have any questions, on the other hand, your tax euros are being spent here quite lavishly – one big computer system can replace those 40 offices effortlessly.

The transaction here is easy – they will keep one copy of your statuts, stamp your copy, give you a letter stating that you jumped this hoop, and off you go!

Step three – the real deal

Now we’re all set for the real deal – creating the actual company. For this, in Paris, you go to the beautiful historical building called the ‘Ancien Bourse’ (one of two, former stock exchange building), next to Les Halles. Now, you have a choice – you can deal with the raw machinery of the bureaucrats yourself (at your own peril), or you can pay someone €200 to ‘accelerate your application’. They basically check all your paperwork, correct any issues, and submit it for you. This stamp of approval saves two weeks of waiting, and I would say is well worth the money. These friendly people are called ‘Chambre de Commerce’, and you make an appointment in advance. You give them your paperwork - doubly stamped statuts, founder passports, proof-of-addresses, bank letter, cheque for the fee, and they will scrutinize it and either accept, or ask for more documentation. When that’s done, you are DONE! All you do now is sit back and wait for the paperwork to process – 3-5 days if it’s not too busy. You will get lots of letters now, so make sure your mailing address has the company name on the mailbox and the door, or the mailman will get mighty confused.

Post-creation cleanup tasks

Now that you are started, there are a few other things you may want to get out of the way immediately. If your bank didn’t already do it, make sure you have a bank card plus checkbook. Also, get the internet banking set up, this usually requires a lot of nagging – your conseiller likes to see you in person, so will subtly sabotage your online banking. Part of the paperwork you got is a stack of blue papers called ‘Kbis’ – this is the proof of existence of your company, and you need recent ones for a bunch of stuff. One thing that will happen is that some companies will send you registered letters. Because they will be addressed to the company, the post office will refuse to deliver them unless a company owner is pre-registered(!) at that particular post office. This, of course, can only be done with a recent Kbis – so now that you have them fresh off the press, locate the post office that delivers mail for the company address, go there with your passport and the Kbis, and register as a company owner. This will also get you a nice ‘Pro’ card for La Poste, allowing you to use the (faster) Pro desk! It’s amazing how useless bureaucratic milestones suddenly feel like an accomplishment.

Also, if you’re doing business internationally, you may want to get a company stamp created. In countries more backward than France, the holy stamp still reigns supreme. In France, you can get any stamp you want created at your local Office Depot for €30, making the whole concept useless. But some clients, suppliers, and customs authorities still require it! Office Depot doesn’t care about your Kbis, but bring it anyway, because you will need your company number (‘RCS’) on the stamp, and it’s on the Kbis. Also put your VAT number (‘numero TVA’) and the company name and address on the stamp – you’ll please big French corporations with it on your invoices.

Final step – find an accountant

Accountants in France are problematic too. They are monopolistic overchargers. I’ve been lucky once, but she went off and did something more fun with her life (I don't blame her). Since then I’ve gone through a series of hotheaded overpromising underdeliverers. I finally ended up with a Dutch accountant, who is patient and diligent, and is efficient (he files electronically!). Find one that won’t overcharge, and you probably are better off with a small office, not a big one, and one located close by– you’ll probably have to go there 2-3 times a year to deal with paperwork.

Conclusion

Even though the bureaucratic process of starting a company in France is painful, humiliating, and an utter waste of time, the good news is that once you've gone through it, it all gets a lot easier. Creation is a one-time process, so it's ok if it's not optimized. The daily grind of doing business in France is more important - the bank, your accountant, your tax office, those are the people you work with all the time. Make sure you have partners that work for you - if you have a bad bank or accountant, don't hesitate to dump them immediately.

Written by Wessel Kooyman

The author, Wessel Kooyman, is the CEO of Cole Street, an internet industry veteran, web developer and startup expert. He does a lot of startup mentoring at accelerator programs like Seedcamp and Le Camping, and is the organizer of Startup Weekend Paris.

  • julien

    Be sure to have a serious accountant. This will save time and money.

  • http://twitter.com/D_Roch Roch Delsalle

    wtf is your bank ?

  • Thibaut Barrère

    Some banks are entrepreneur-adverse, and some are very welcoming, in reverse. Make sure to pick a bank that is a good match! For us (2 person consultancy in Charente Maritime), once we switched to Crédit Agricole, we pay no more than 15€/mo, have email answers within a day etc. Other banks will add commissions when money comes in AND money comes out (here this is not the case) etc. So: pick well and do not hesitate to move.

  • Max

    step one: don’t do it in France

    • http://twitter.com/gcpursley Chase Pursley

      Exactly. Honk Kong. Singapore. Switzerland. Estonia. Anything but France for corporate domicile.

    • http://twitter.com/hopeseekr Theodore Smith

      Steps for Nevada, U.S. corporation:

      1. Pay online legal service approx. $70 + $230 state fees ($300 total) to form corporation w/ standard bylaws. Only things you need are 1) business address, 2) officers names, addresses, and social security numbers.

      2. Wait 1-3 business days (typically 1) for company to form + another few days for Articles of Incorporation to be mailed.

      3. Apply for Federal Employer Tax ID online for free. Took me less than 10 minutes.

      4. Apply for Nevada Business License online for free. Took me about 30 minutes.

      5. Submit your List of Officers (hidden charge!) online to state before the month ends: $325. Took less than 10 minutes.

      6. Go to a bank, any bank, with your drivers license, original Articles of Incorporation seal-signed paper, and a 1-page typed resolution to open a bank account, signed by your board (tons of templates online). You will need, probably, $500 minimum for seed money. This took me about an hour.

      7. Hire a CPA. I found one that does everything, including conversations, remotely, who lives in Iowa and is dirt cheap. Nevada has no corporate income tax, so only federal CPA is needed.

      Success! Total process takes just about 10 hours.

  • Corentin

    Hi there,

    I’d like to precise about the ‘siege social’ : if you want to choose your home adress, you’ll have to make sure you do NOT have any stock of the goods you’re selling in your home. You can have a few products as you need them for the demo etc, but you can’t have any stock. Don’t know if it’s important for everyone, but was in my case !

    However, to the fellow entrepreneurs who wants to establish a branch in France, please, feel free to pay a visit to http://www.jaimelesstartups.fr/ once you’re ready ;)

    • Lawrence Lucier

      Can you explain why inventory in a home-based siege social is forbidden?

  • http://twitter.com/jvilledieu Jean Villedieu

    Pretty thorough, funny to read that from an American :)
    In my experience the bank part is sad but true. It really is a shame.

  • http://twitter.com/mcansky mcansky

    very interesting post ! thanks for sharing !

    The bank thing is quite a big problem in France, it’s difficult to get proper service. I was lucky with the bank, I do have a ‘conseiller’ but she doesn’t mind if anyone else in the agency take care of my calls and questions. Also the whole bank branch doesn’t mind if you enter one agency at the other side of the country to drop money for your account either. Yet it’s not something common in France I agree.
    If a bank is still using regional branches it’s a sure sign of bloated hierarchy in the bank, better move to another one.

    I will not suggest the bank Thibaut Barrère suggests as I had very bad commercial support from them. As he says it’s good practice to change if needed; I would also suggest to just enter agencies at random to check how they are handling people. Things tend to change from one agency to other except with some banks (high end usually).

    Note : it might be worth it to go for “high end” banks as they (still) have a very good track record regarding how they welcome and treat people (as long as you have money). I’m paying a bit more than at La Poste for my accounts but I have answers in few hours, I can enter any agency and have my operations handled fast, an email can also be enough to get things going.

    I agree with Julien, having a good accountant is a must, it will save you money, especially as taxes laws fluctuate a lot lately.

    “don’t do it in France” : totally agree but if you are a french resident you don’t have much choices except if you want to pay more taxes as most of european countries have dual taxes treaties in place … Also with the current trend creating a company in countries like Luxembourg is kind of buying a ticket for trouble. I’ve looked into creating my company in UK to work from France, I would have to pay taxes in France too.

    A lawyer is also a good thing to have in France (as in any country I suppose) to ensure your contract are in order and to have someone to send your clients to if they don’t pay. French companies, especially the big ones, tend to be slow to pay bills and you need to hammer their phones to get paid properly, having a contract helps. (can’t recommend enough the “F** you pay me” talk/video on that topic).

    Note : the accountants I know will take care of most of the paperwork leaving you with just a couple of papers to sign at their offices including, yes, a fat cheque/check.

  • http://twitter.com/mikebz Mike Borozdin

    France is the wrong place. Next phase- dealing with labor will make you want to close your business in a hurry.

  • Francois

    For all of you saying that France is not a good place for a start-up, thing again considering how much money you can save (I build my start-up three years ago, so it’s actually what we get for real):

    - first, if you worked for at least 2 years, you have gain full insurance against unemployment. With a recent (4year old) law named “rupture conventionnelle”, you can quit your current job and get that insurance from “Pole Emploi” – roughtly 80% of your salary for 24 month. The good part is that you can get it even if you start a business (but only for 15 month). You are 3 cofounders, Pole Emploi give you something like 1800€ a month => that’s more than 80 000€ not spent in a serie A funding, and 15 month to test and build your idea (ok, I do expect that it’s more like 2/4 month for the business plan and a first proto, and then some time to pivot/raise money/find clients/etc, but well, you get the idea: you have time to try/test/learn/correct)

    - next, if you are doing a start-up, you are really likelly to be elligible for a special status, “Jeune Entreprise Innovante” (young innovating companie). That more or less makes you don’t pay taxes for 7 years (no taxes for 3 years, then a decressive reduction for the next 4 years)

    - then, you are likelly to be able to get the “CIR” – Credit Impot Recherche, which is a negative taxe (France give you back money) for the salaries given to people doing R&D. That pays ~30% of the time spent in R&D (plus things like patents, technical surveys – yes, going to Devoxx is a technical survey, etc)

    - then, you have a *really easy* (less than one or two week of work) subvention that you can get, called “AIMA” (Aide à la maturation de projet innovant – help for maturing inovative projects) that get 25k€ (available several time, once a time by 18 month is ok)

    And that’s only the most obvious and simple things you can get (what basically every technical start-up should go and get without any wonder), there is a lot of others stuff (that may require much more work, or more specialized business domain, like ecological one, nanotech, etc).

    All in all, if you are a start-up, OK you will have some administrative tasks to do – but you also get 15 months of risk-free test, plus tens of thousand of euros from France. After the seventh year your life will be harder (full taxes, etc), but by that time, you should already be sold or have a running business, so… Well, France is just a really good place to start a start-up.

    Cheers,

  • pouzy

    I’ve been in the US for the past 2 years and I still don’t understand why France is doing all this. That’s basically “forcing” this so called “Brain-drain”: Everything is so much easier on the other side of the Atlantic (and usually makes more money), so it’s hard not to think about doing it. The hassle of getting an entrepreneurship visa seems to be as hard as starting a company in France, but all the rest is so much easier (Including raising money)

    • informatimago

      It was worse before. This is a big improvement!

  • Ben

    As a french entrepreneur, I can attest that pretty much everything there is correct. Banks generally suck and are expensive (although you seem to have landed on a pretty bad one, BNP online banking lets you add new recipient for transfert without meeting with anyone before).

    But that post doesn’t cover the really ugly side of French entrepreneurship : hiring people. Good luck with that.

  • Romain Menetrier

    HSBC business direct eliminate the “conseiller” and offer a small business friendly package for 22€/month. They are slow but it works, and all operations can be done online.

  • Steve

    In retrospect – the country simply is not ready for doing business. Although the ‘investinfrance’ web site promotes everything in English. There it stops. I would never again incorporate in France. The liabilities you lay your self open to are enormous. Each contract you perform the tax authorities can ask you to translate into French which for (m)any start up with promise it is invariably on the international market and what other language will be used than English? – the very language the French Republic promotes itself in internationally. Usually though this can be averted by getting the tax inspector onto his favourite subject: “when he will retire”.

    Much worse still is the un-functioning social security system. Five years in the Manager of the company earns nothing. The bills are 20,000 EUR per year, personally liable and with no explanation. So embarrassed was their own advocate that she explained to the judge how to throw the case out. The matter may stay unresolved forever.

    Making use of the words of Mark Twain. “France is like the weather. Sometimes there are good days, sometimes there are bad days. Everyone complains about it and nobody ever does anything to change it.”

  • Cécile Dekeuwer

    Good to read an article in English about how to set up a startup (SAS form) in France. Several tips and information are not accurate though.

    Like in US, when you want to set up a company, especially the flexible form of SAS, you rather ask a French lawyer experienced with foreign start-ups to draft the documents and help you pass through the formalities. I assist lots of entrepreneurs, from all over
    the world, setting up their business and running it in France. As a lawyer with
    an international background, I can tell that France has plenty of assets and is
    not worse than many other countries. Great entrepreneurs have succeeded in
    France, if they are open minded and ready to deal with the local specificities,
    like anywhere else.

    France ranked 12th, rises 4 places this year. Also 9th
    direct recipient of Foreign direct investments. France has the most business
    friendly R&D tax treatment. In short, France is a tax heaven .. for
    innovative companies like start up ones.

  • Martin

    Sorry to jump in on this thread – but if you do look for banks that can help in English or even Lawyers and Accountants in France- give our website a go:

    http://www.rootstockads.com/Businesses/home/

  • patrickhannedouche

    Let’s stop the french bashing, folks ! I can tell you it is really possible to create a beautiful success story in our country like I did with http://www.justeatemps.com