While it may be very tempting for some entrepreneurs to start a business in France head on – and rely on figuring out the details along the way, as an accounting professional, I recommend pausing for a few moments. There are some key considerations that you may want to think through before starting (and choosing you legal set up). In some cases, the difference may well be the key to business survival.
Inform yourself #
Read some basic information about:
- legal forms available
- VAT
- personal taxation in France
Understanding the basics of the system you will be operating within will help you make informed decisions.
Main activity #
Many activities in France are regulated, and require either qualifications (ie beauty industry), or certain legal form (ie tobacco shops) or both (ie accountants, architechts). Some activities require special insurances. Premises open to public need to meet certain criteria. The list is long, so please do your research.
Additionally, all activites in France are divided unto several large groups, and knowing which one you belong to is also important – especially for micro entrepreneurs.
Partnership, financing and investment #
Will you business need serious investment in the beginning (purchase of space or tools? research and development?)? Even if it will be only you investing, when the amounts are large (upper 5-digit and 6-digit figures), you may want to consider setting up a company to be able to reimburse yourself.
If you will need external financing (bank credits, private loans, investors), this is another sign to look at starting a company.
Finally if you plan on having partners – now or in the future, it is once again a strong indicator for choosing a company over other legal forms.
Who are your clients? #
While from the marketing point of view the question is very important and requires a detailed approach, it also is important to have some idea about your target market from the admin and tax point of view, as rules are not the same for private and business customers, and for customers from France, EU and outside of EU. This affects VAT rules, electronic invoicing, GDPR and premises requirements, to name a few. This is especially important if you’re selling online. Customer rights and protection varies as well for different groups of customers.
Run some numbers #
I understand that when one’s just starting their business it may be complicated to have predictions, none the less, it may be good idea to write some sort of business plan. If not whole business plan, just jot down some figures:
- Revenues – what you expect to earn in the first few months? First year? First three years?
- Will you be below the ME threshold for you actvity type?
- How quickly will you reach the VAT threshold? If your clients are private individuals, would you incorporate VAT into your pricing from the start
- Costs
- What will be your fixed and variable costs?
- What is your breakeven point?
- How many months can you operate at a loss?
- With your margin, is micro-entreprsise the best set up?
You can also find it useful to try this custom GPT I have created – a quiz that asks you some questions and suggests a business structure that might be a good fit for your situation.
Comment below with your questions! I will be happy to reply.
