The Sole Proprietorship with Limited Liability is defined and differs from the SARL by its mode of incorporation:a single partner.
The EURL is aimed at entrepreneurs who wish to launch their project on their own. However, nothing prevents them from associating with other people afterwards by selling shares. What are the features and benefits of this form of business? Our explanations.
The EURL is a SARL with only one partner and which, therefore, is subject to the rules applicable to the SARL, except for adaptations provided for in the articles of association. The sole shareholder can be appointed as manager of the company but this is not mandatory. The appointment and powers of the manager must be mentioned in the articles of association or in a separate document.
The share capital of the EURL is freely defined by the sole shareholder. The latter can therefore create his business with capital corresponding to his needs. Its liability is limited to its contributions, except in the event of mismanagement in which case the liability of the managing partner may be incurred on his personal property.
The EURL should not be confused with the EIRL (Individual Company with Limited Liability) whose characteristics are opposite. Indeed, the status of EIRL does not lead to the creation of a separate legal person.
The creation of an EURL allows you to benefit from five main advantages compared to other forms of business in your own name.
As its name suggests, the EURL gives the manager the possibility of limiting his liability to the height of his contributions. In other words, if the company is no longer able to pay its creditors, it cannot lose more than what it has invested. However, this rule does not apply in the event of mismanagement by the manager.
Only the actual profit of the EURL (after deduction of expenses) is taxed. The purchase of supplies, electricity bills or the payment of rent are for example considered deductible expenses. When the sole shareholder is a natural person, the company is subject to income tax as a partnership. The EURL can also opt for corporation tax (IS).
The EURL is a form of business that is both simple and secure. Indeed, the fact that there is only one partner considerably simplifies the management of the company compared to the SARL. In addition, the articles of association provide in particular for a mandatory formalism for the transfer of shares, which further encourages entrepreneurs to choose this structure.
Within the framework of the EURL, it is possible to sell the goodwill while keeping the shares or by selling them partially.
The manager of EURL who has practiced for at least 5 years can claim an exemption from capital gains on the sale of shares, in accordance with the General Tax Code.
