A Single-Person Limited Liability Company, more commonly called EURL, is a legal form commonly chosen by entrepreneurs to launch their solo business. This structure offers many advantages and can be adapted to a wide variety of activities. Despite its popularity, the EURL still remains a complex subject, which is why we offer to present everything you need to know about this structure.
What is an EURL?
L’EURL is a form of sole proprietorship that offers limited liability to its sole owner. In other words, the entrepreneur is only responsible for the company’s debts up to the amount of his contributions, which protects his personal assets.
The EURL is a legal structure suitable for small business projects or for a liberal activity. It has the advantage of being able to become an SARL if the entrepreneur decides to integrate one or more partners into his project.
How to create an EURL?
To create an EURL, you must follow several steps: drafting the statutes, defining the share capital, choosing the tax regime, etc. A procedure that can sometimes seem complex. Discover how to create a EURL in this article.
The advantages of the EURL
- Limited Liability: as mentioned previously, the owner of the EURL is only held responsible for debts up to the amount of his contributions, which limits the risks.
- A flexible structure: the EURL offers great flexibility for the business manager, who can choose his tax and social regime.
- Simplified management: as the sole owner, the entrepreneur decides the direction to take his business.
The disadvantages of EURL
While EURL offers many advantages, it also has some disadvantages. For example, the manager of the EURL is subject to a less advantageous social security regime than that of employees. In addition, tax charges can be high in the event of large profits. Finally, the EURL can be more difficult to transfer or sell than a company with several partners.
One of the most important aspects to take into account when creating an EURL is the choice of tax and social regime. As manager of an EURL, you have the option of opting for income tax (IR) or corporate tax (IS). If you choose IR, company profits will be taxed directly on your personal income, which can be advantageous if your income is low. On the other hand, if you opt for IS, the profits are first taxed at the company level, and you will be taxed on the dividends you pay yourself.
Regarding the social system, the manager of an EURL is affiliated to the self-employed workers’ system (TNS), which implies social contributions generally lower than those of employees, but with less complete social protection. This choice has significant consequences on your net remuneration and your social protection, and must therefore be carefully considered according to your personal and professional situation.
In short, theEURL is an option to consider for entrepreneurs who want to start a sole proprietorship. It offers great flexibility and limited liability, which can be reassuring for solo entrepreneurs. However, like any legal structure, it also has disadvantages that should be taken into account.
It is therefore recommended to obtain detailed information and consult professionals before making a choice. The important thing is to find the legal structure best suited to your project and your situation.
