France has become an increasingly attractive destination for American expats looking to start a business. Whether you’re a freelancer, entrepreneur or small business owner, France offers a variety of opportunities to grow your venture. However, navigating the French business environment as an American expat can present unique challenges. This guide will walk you through everything you need to know about starting a business in France as an American.
Table of contents
Types of business structures in France
When starting a business in France as an American expat, selecting the right business structure is crucial for legal, tax, and operational reasons. Here are the key options:
Auto-entrepreneur (micro-entrepreneur)
This structure is ideal for freelancers and small-scale businesses with low overhands and modest income expectations. The auto-entrepreneur status allows for simplified registration and tax reporting, making it a popular choice for those offering services like consulting, freelance writing, or small retail operations. There are income caps for this structure, so it is best suited for solo entrepreneurs or small ventures.
Société à responsabilité limité (SARL)
The SARL is the French equivalent of a Limited Liability Company (LLC) and is well-suited for businesses with multiple owners or employees. In an SARL, liability is limited to the amount of capital invested, protecting personal assets from business risks. This structure is often used for family-owned businesses or small to medium-sized enterprises. It provides more protection than the auto-entrepreneur status but comes with stricter accounting and reporting requirements.
Société par actions simplifiée (SAS)
The SAS offers flexibility in terms of management and ownership structure, making it a favoured choice for startups or businesses that may seek outside investment. Owners (referred to as shareholders) can freely structure the company’s management and decision-making processes, which is advantageous for growing businesses. It is less rigid than the SARL and is often used by entrepreneurs who aim for rapid growth or partnerships.
Société anonyme (SA)
This structure is designed for larger corporations that may wish to trade publicly or have significant shareholder participation. The SA requires a minimum share capital and has stringent reporting and governance requirements. It is typically used by large businesses and those intending to raise capital through the stock market. While it offers substantial growth potential, the administrative burden is higher than with other business structures.
Legal requirements for starting a business in France
Visa requirements for American expats
If you are an American expat looking to start a business in France, securing the appropriate visa is the first step. For long-term stays and business activities, you’ll need to apply for a long-stay visa, known as a visa de long séjour. The most relevant type for entrepreneurs is the Profession Libérale Visa, which allows you to engage in self-employed or freelance activities. Alternatively, if you plan to invest in a company or start your own, you may be eligible for the Talent Passport – Business Investor Visa. Both visas require proof of sufficient financial resources and a solid business plan to ensure your enterprise will be sustainable in France.
Registration with the Centre de Formalités des Entreprises (CFE)
The first step for any new business in France is registering with the Centre de Formalités des Entreprises (CFE). This organisation is the central body that handles admin procedures for businesses. Depending on the type of business, you will register with the relevant CFE associated with your business activity. For example:
- Commercial businesses register with the Chamber of Commerce (CCI)
- Artisanal businesses register with the Chamber of Crafts (CMA)
- Freelancers and self-employed professionals register with URSSAF, the social security organisation for independent workers
The CFE will process the necessary documentation, notify relevant authorities, and help you obtain your SIRET number, which is you business identification number. This number is crucial for opening a business bank account, signing contracts and legally operating in France.
Business registration and permits
After registering with the CFE, you’ll need to choose a business structure, see above. Each structure comes with different tax obligations, social security contributions, and legal responsibilities. Depending on your business sector, you may need additional permits. For instance, restaurants and food-related businesses must obtain hygiene certifications, while businesses in regulated industries like real estate or finance require specific professional licenses. Ensure you are familiar with the sector-specific requirements before starting operations to avoid legal complications.
> You might be interested in this article: Setting up a business as an auto-entrepreneur in France
Opening a French bank account
Opening a French business bank account is crucial, as it’s required by law for managing business finances and ensuring compliance with tax regulations. As an American expat, the process is relatively straightforward, but it involves several steps and the need for specific documentation.
Steps to open a business bank account
- Choose the right bank: Research and compare banks in France to find one that suits your business needs. Some French banks specialise in expat services and may offer English-speaking advisors to help navigate the process. Popular choices for business accounts include BNP Paribas, Société Générale and Crédit Agricole.
- Make an appointment: In most cases, you’ll need to book an in-person appointment at the bank. Many French banks require a face-to-face meeting with a business advisor to discuss your needs and review your application.
- Prepare the required documents: Bring all necessary documents (see below) to your meeting. French banks are strict about documentation, so ensure everything is in order.
- Submit your application: During your appointment, submit your documents, discuss account options, and fill out the necessary forms. The bank may ask about your business plans, expected revenue, and client base to better understand your needs.
- Approval process: After submitting your application, the bank will review it. Approval can take anywhere from a few days to a few weeks, depending on the bank and the complexity of your business.
- Receive your business account details: Once approved, you’ll receive your account details, including your IBAN (International Bank Account Number). You can now start managing your business finances, paying suppliers, and receiving payments.
Required documents
When opening a business bank account in France as an expat, you’ll need to provide the following documents:
- Proof of identity: A valid passport or national ID card
- Proof of address: A recent utility bill or rental contract (less than 3 months old)
- Business registration certificate: Proof of business registration, such as your Kbis extract or registration with the Centre de Formalités des Entreprises (CFE)
- SIRET Number: Your business identification number issued during registration
- Business plan: Some banks may request a business plan, especially for larger companies
- Tax documents: Recent tax returns or financial statements may be required, particularly if you’re self-employed or operating a small business
- Proof of residency or long-stay visa: As an expat, you may need to provide proof of your visa or residency status
Taxes and social contributions
Understanding the French tax system and social contributions is essential for any business owner, especially for American expats starting a business in France. Taxes in France can be complex, but knowing your obligations will help you stay compliant and potentially take advantage of tax benefits available for small businesses.
Overview of the French tax system for businesses
France has a structured and comprehensive tax system for businesses. The main types of taxes you’ll encounter as a business owner include:
- Corporate income tax (Impôt sur les sociétés): If you operate a Société à Responsabilité Limitée (SARL) or a Société par Actions Simplifiée (SAS), your business will be subject to corporate income tax. The standard corporate tax rate in 2024 is 25%, but small businesses with profits under 42,500 € may qualify for a reduced rate of 15%.
- Value-added tax (VAT or TVA): VAT is a consumption tax that applies to most goods and services sold in France. The standard VAT rate is 20%, but reduced rates of 5.5% or 10% may apply to certain sectors. As a business owner, you are responsible for collecting VAT from customers and paying it to the government.
- Income tax (Impôt sur le revenu): If you are self-employed or an Auto-Entrepreneur, you will be subject to personal income tax rather than corporate income tax. Income is taxed progressively, with rates ranging from 11% to 45%, depending on your earnings.
Social security contributions for business owners
Social security contributions in France are mandatory for all business owners and self-employed individuals. These contributions fund essential services like healthcare, pensions, and unemployment benefits. The amount you pay depends on your business structure:
- Auto-entrepreneur: For small-scale businesses under the Auto-Entrepreneur regime, social contributions are calculated as a percentage of turnover, with rates between 12.8% and 22% based on your business activity.
- SARL and SAS owners: Business owners under these structures must contribute to the social security system based on their salary or dividends. Contributions can range from 30% to 50% of your earnings, covering healthcare, pensions, and other benefits.
> You might be interested in this article: Understanding URSSAF when working in France
Tax benefits for small businesses
France offers several tax benefits and incentives for small businesses:
- Micro-entrepreneur scheme: If your revenue stays below certain thresholds (188,700 € for commercial activities and 77,700 € for services), you may qualify for simplified tax reporting and reduced social contributions under the Micro-Entrepreneur regime.
- Research and development (R&D) tax credit: Businesses involved in innovative projects can benefit from the Crédit d’Impôt Recherche, a tax credit for R&D expenses.
- Startup Incentives: France’s Jeune Entreprise Innovante (JEI) status provides tax breaks for startups in specific industries, such as technology or research-based businesses.
Common challenges and how to overcome them
Starting a business in France as an American expat comes with unique challenges, including language barriers, navigating French bureaucracy, and finding local support. However, with the right strategies and resources, these challenges can be successfully managed.
Language barriers
One of the most common challenges for American expats in France is the language barrier. While many French professionals speak English, much of the business documentation and legal procedures are conducted in French. Misunderstandings due to language can lead to delays or costly mistakes.
Solutions:
- Learn basic French: Investing time in learning French, especially business-related terms, can go a long way in smoothing your path as an entrepreneur.
- Hire a translator: For complex legal and business documents, it’s advisable to hire a professional translator or use translation services. This ensures accurate interpretation of contracts, permits, and tax filings.
- Use bilingual services: Some banks, accountants, and legal advisors offer bilingual services tailored to expats, which can simplify the process.
Dealing with French bureaucracy
France is known for its paperwork-heavy bureaucratic processes. From business registration to tax filings and permits, dealing with the bureaucracy can be overwhelming, especially for those unfamiliar with the system.
Solutions:
- Work with local experts: Hiring a local accountant or lawyer who understands the ins and outs of French bureaucracy can save you time and hassle.
- Utilise online portals: Many bureaucratic processes can now be handled through online portals such as Guichet Entreprises for business registration. These platforms simplify the filing process and provide clear instructions.
- Be patient: Bureaucratic processes in France often take time, so prepare for delays and set realistic timelines for your business setup.
Finding local support
Building a network of local support is essential for overcoming challenges and growing your business in France. It can be difficult to establish connections, especially if you are unfamiliar with the French business culture.
Solutions:
- Join business associations: Organisations like the Chambre de Commerce et d’Industrie (CCI) provide valuable resources, networking opportunities, and support for entrepreneurs in various sectors.
- Engage with expat networks: Joining expat communities and professional networks such as InterNations or American Chamber of Commerce in France (AmCham) can provide insights and guidance from fellow expats who have gone through similar experiences.
- Attend local events: Regularly attending business conferences, meet-ups, or workshops in your industry helps you meet key stakeholders and stay informed about local trends.
Useful resources
Chambre de Commerce et d’Industrie (CCI): Provides support and resources for entrepreneurs, including training programs and networking opportunities. Visit website here.
Business France: The national agency supporting the international development of the French economy, offering various resources for businesses entering the French market. Visit website here.
Guichet Entreprises: This official portal provides step-by-step guidance on registering a business in France, including necessary forms and administrative procedures. Visit website here.
Just Jump Blog: Read all our blog articles on starting a business in France as a foreigner. Read the articles here.
