Just bouncing off the walls with energy won’t work in launching the venture you are dreaming of day and night. It requires commitment, dedication, knowledge, and terrific guts to go through all the red tape for tax, business registration, licenses, permits, and so forth.
Have you planned to locate your business in France, the world’s seventh-largest
and Europe’s third-largest
economy? Great! With a highly developed and market-oriented economy, you can see your business flourishing in the country in no trice. Being a business-friendly country that offers a talented and passionate workforce, premium quality transportation facilities and infrastructure, robust intellectual property protections, and innovative and dynamic business leaders, France renders itself almost an ideal country for basing a startup. However, before finalizing your decision of launching a venture in France, you should know the qualifications as a native, EU citizen, or non-EU citizen to start a business in the country, the legal obligations one has to follow, and knowing the business registration process, etc.
Although starting a business
is exciting, at one point, it can numb you when going through the formalities needed for its incorporation. And there comes in handy the knowledge of legal obligations, processes, and other details relevant to starting a business. It will spare you some pain and hassle while establishing your venture.
France ranked 32
in the Ease of Doing business, a position conferred by the Doing Business report to indicate how easy it is to launch a business in a specific country. France bears a market of more than 65 million customers and enjoys access to the single market of over 500 million customers in Europe. These figures signify the steep purchasing power of French consumers, averting your decision to start a business here. However, to launch a startup in the country, you need to go through a process, abide by legal regulations, and fulfill certain requirements and formalities.
For instance, you have to begin by having a profitable business idea, preparing a business plan, that would be translated into French (if written in another language), do market research, and grasp the demand and supply of the product/ service your business intends to offer in the market.
All this is done, keeping France in mind specifically (unless you want to engage in export/ import). Then, you will have to open your French business bank account, get your business registered, choose a legal structure for the business, incorporate it, and finally hire the employees.
Fret not. The following sections break down the process of starting a business in France. Read on!
Process of setting up a business in France
How to start a business in France? Starting a business in Paris, France, or, say, anywhere can get nerve-wracking as you move through the hoops of bureaucracy and red tape. Nonetheless, with the right information in hand about launching a business in France, you can streamline your journey and preserve your mojo.
If you are starting a business in France as an American or from another country, you need to heed the official directives like having a residence permit, needed diplomas and qualifications, and so forth. In order to launch your venture in France, you will have to delve into the market, research the demands and supply of the product, prepare a business plan, make financial plans and budget forecasts, register your business, and more. There’s a lot this endeavor demands, but, in the end, you would smile and say to yourself, “it was worth it!
Here is an ultimate and worthy guide to help you understand what the process of starting a business in France looks like. Read on!
- Get a business name: Now that you have a profitable and marketable business idea ready, you will need to create a remarkable business name. Of course, you should strive to incorporate your values into it, but mind that your efforts do not get wasted as the name was already taken by someone else. So, consider spitballing brand name ideas, then check their availability. If it’s unique, go with it, register it, and get it secured.
- Prepare an elaborate French business plan: As an impresario, never allow the guts of ignoring the need for a business plan to roam inside your mind. Be it a small business or a behemoth company you covet to establish; a business plan is a splendid tool to clarify your business’s vision and mission statement. Furthermore, you will need to show your business plan to the potential investors in your company and business bank account manager in France.
- Choose the legal structure of the business: The next step is to select the company structure type for your venture. Before hastening to get this done, you must consider in-depth research on the types of legal structures in France and their benefits and then decide on the one that suits your business the best. Typically, the following are the common business structures you will see in France:
- SARL- This is the equivalent of LLC or Ltd. or French Limited Company.
- EURL- This is owned by a single individual and is operated as a limited liability single stakeholder company.
- SAS- This is a Simplified Stock Company ideal for ex-pat investors who do not intend to become French residents.
The type of venture you want to launch determines the legal structure you need to choose. Furthermore, factors like who will be in charge of your business. The business owns personal assets that need to be safeguarded, or paying tax through corporation tax or income tax also determines the legal structure.
- Open a business bank account: To set up a business bank account in France, you will need to brook strict laws and regulations which exist to avert money laundering. Nonetheless, you need it. Present your business plan to the bank manager, so he/ she may know what your business is all about and digest the figures and facts of your business.
- Deposit capital in a business bank account: The minimum paid-in capital for starting a SARL, EURL, or SAS was lowered to €1. However, it requires more funds to launch a business bank account. The typical share capital used to be 7500 euros, but a person could deposit a working capital of about 4000 euros. As soon as the banker receives the certificate of your new business (Kbis), your share capital will be unblocked. On top of this, if you decide to drop the idea of forming a company, the bank will return your capital immediately.
- Publicize your French business: Let the world know of the inception of your dream venture! Publicizing the opening of a business in the press, such as newspapers, magazines, etc., is a typical French rule. This is to formally announce and introduce your business to the business world outside.
- Incorporate your business: For the incorporation of a business in France, you need to have certain documents with you, such as a filled application form, a verified copy of the stakeholder’s or director’s passport, and two utility bills that must be less than 3 months old as an address proof; however, cellphone bills aren’t acknowledged.
Then you need to send these documents to different administrations, such as INSEE (the National Institute of Statistics and Economic Studies). Here, your business will be registered in the national business directory. Furthermore, these documents are also sent to the tax office and commercial court.
To ensure that your company is reimbursing the appropriate labor payments and pensions, you need to inform the URSSAF (social security office) and Inspection du Travail
and Caisses Sociales
in case you are recruiting staff, Send the documents to Chambres des Métiers as well.
These steps and procedures are required to formalize the incorporation of your company.
- Get your business registered: With the certificate of incorporation (Extrait Kbis), you will receive a unique 14-digit number, including a SIRET Number and SIREN Number, which is the ID number of your company. You will need to mention the company ID number, official documents, and invoices on your website. You will also get a NAF or APE code that navigates the chief activity undertaken by your business.
With the advent of the Kbis, the banker activates the French business bank account while unblocking your share capital. On top of this, the tax office will also send you a welcome letter with the contact details of the tax officer and your VAT number, which begins with the letters FR, a two-digit code, and your SIREN number.
Hiring Employees in France
Your hiring process must focus on discovering great candidates that will only facilitate you, your team, and your company. Recruiting the workforce neither starts with getting applications from job seekers nor does it end with showing the chosen candidate his/ her work desk in the company. You need to follow legal obligations and many things you need to consider for managing employees. With the help of an experienced HR consultant like Zimyo, you can certainly enjoy a hassle-free working experience in France.
Here we shall walk you through an employer’s legal obligations and duties in France that you shouldn’t ignore. Dive in!
- Trial Period/Probation Period: Instead of instantly enforcing an employment contract as the employee is hired, the company may opt for a probationary period. The company has the entitlement to renew it under a specific condition or even terminate it without notice or formality.
In case the employee and the employer satisfy each other’s work expectations, the employment contract is made definitive. The maximum length of the probationary period is determined by government laws which differ across different employee categories. The trial period
should be clearly stated in the employment contract should be done while adhering to the Labour Code, as per the contract’s duration.
- Leave and Holidays: Every employee is authorized to get paid vacation, irrespective of age, contract type, or seniority. Employees must be allowed at least ⅖ days of paid leave every month as per the law. Moreover, the span of paid vacations differs, corresponding to the acquired rights of the employee. Also, vacation dates are arranged by the employer as per the company’s requirements.
If the employee misses work due to sickness, he/ she has to observe certain formalities such as submitting a sickness slip to the employer and the Social Security Office. If the employee fulfills all the requirements, he/ she is entitled to get a regular allowance during his leave, however, after a waiting period of three days. The daily allowance reimbursed for sick leave
is 50 percent of the basic daily wage.
This allowance will be increased to 66.66 percent after 30 days of sick leave if the employee has a minimum of three children to look after. After three months of sick leave, the daily allowance would be reassessed.
- Maternity Leave: Maternity leave in France is the right of pregnant employees who can leave the work for 16 to 46 weeks. The leave duration depends on the number of unborn babies or already under the mother’s care.
- Termination of Services: Termination of services of the indefinite-term employment contracts is done on valid and serious grounds. These grounds may be economic such as technological changes, or economic challenges a business and personal face, such as poor and unsatisfactory performance, offensive attitude towards colleagues and employer, unnecessary and excessive absence from work, etc.
When dismissing an employee due to valid reasons, the employer should issue a letter five working days ahead of a meeting. The time and place of conducting a meeting and the employer’s authority to take a fellow employee or third-party person should be stated in the letter.
Through the meeting, an employer must clarify the grounds for dismissal
. The employee is rightful to solicit further information regarding the dismissal within 15 days period and disputes the reasons of dismissal in Labour court.
- Pension: The retirement pension system in France is organized into three parts, namely, the basic and the complementary retirement pension, which is compulsory; thus, contributions are imposed on the employers and employees, and the third is additional pension.
- Work Hour Norms: The standard workweek in France is 35 hours, which can be extended under the collective agreement. In this case, working more than 35 hours would be considered overtime, and employees must be paid.
In France, employees should not work beyond:
- 48 hours in a week.
- 10 hours a day
- 44 hours a week on average during any 12 weeks in a row.
The employer must ensure that employees aren’t exceeding weekly or daily work limits. Overtime should be paid as 25 percent charges for initial eight hours in a week, then surcharged 50 percent. Each overtime hour may be made up by providing corresponding hours of rest or payment with a pertinent surcharge.
How easy is it to conduct business in France?
How easy it is to start a business in a particular country is determined by its Ease of Doing Business rank. EODB rank is given by the Doing Business, which investigates several factors that contribute to launching a business in a specific economy. The Doing Business considers and compares 190 countries on diverse factors such as Getting Electricity, Resolving Insolvency, Getting Credit, Paying Taxes, and so forth. Knowing the rank helps one decide the profitability and practicality of launching a startup in a country. The 2020 Dong Business Report studied various elements in France for grasping the Ease of Doing business. The country ranked 32
, a position it has borne since 2018 while scoring 76.8 out of 100
. Let’s parse through individual ranks and other details related to subindex subjects.
- Starting a Business: When starting a business, you will need to invest your money, time, and resources and go through several procedures. The less hassling it is to start a business in a country, the higher the EODB rank. In the subindex, France was granted 37th position among other 189 countries while it scored 93.1 out of 100. The country streamlined the process of registering a company at the Centre de Formalities des Enterprises.
- Managing Permits: Getting permits and licenses for a business is another indicator to gauge the EODB rank of a particular country. The Doing Business considers the costs, time, formalities, procedures, etc., involved in getting permits for warehouses and other business-related constructions. The permits and licenses required by a business depend upon its activities and location. France bagged 52nd position in the subindex of dealing with construction permits. The country lowered the cost of procuring a building permit, thus making it less expensive.
- Getting Electricity: Efficient businesses rely on electricity supply. Thus, Getting electricity is another factor that influences the EODB rank of a nation. The Doing Business investigates the efficiency and reliability of electricity supply in the country and the time, procedures, and costs involved in getting electricity connection for a business. France, in this subindex, got 17th rank which is fair. The country made getting electricity easier by rendering the application process smoother and lowering the time involved earlier for external works.
- Getting Credit: Businesses require funding to operate successfully, so getting credit is another factor that plays a key role in enhancing the EODB rank of a country. To estimate the strength of this indicator, the Doing Business looks at the efficiency of collateral laws and bankruptcy regulations in a country. Furthermore, it also checks the power of the credit reporting system in enabling funding for businesses. In this subindex, France was ranked 104 while it scored 50 out of 100.
- Managing Payroll: With the growth of the company, you are endowed more power and responsibility. Your workforce increases, and you need to manage their payroll, attendance, and other records. Now, it isn’t possible for you to leave other priorities of your business to look after these matters. It is pragmatic to avail the services of experienced payroll experts like Zimyo for such tasks, so your energy is channeled into other important endeavors to grow your company.
- Paying Taxes: Businesses need to pay various taxes such as local, state, and federal. Certain types of taxes are levied depending upon the type of business and activities it indulges in, such as selling taxable services or products, owning business property, owning several employees, being self-employed, etc. Now, you need to file for income tax returns, and it takes time, costs, and several formalities and rules to go through. The easier and more affordable it is to file and pay taxes and contributions in a country for a medium-sized business, the higher the Paying Taxes rank and score. France bagged 61st position while scoring 79.2 out of 100 in this subindex.
- Enforcing Contracts: World Bank clarifies the role of the indicator “Enforcing Contracts.” The Doing Business looks into the time, cost, and several procedures and formalities one has to go through to resolve commercial legal disputes. Furthermore, the Doing Business Report also measures the efficiency and strength of court systems and judicial processes. France ranked 16 in the subindex considered by the Doing Business Report.
- Resolving Insolvency: This is yet another The Doing Business report indicator considered while measuring the overall Ease of Doing Business rank in a particular country. The report probes the outcome, time, formalities, and costs of settling insolvency legal proceedings. Furthermore, it also estimates the power and efficiency of legal structure and reorganization proceedings in the court. France got 26th position while it scored 74 out of 100 in this subindex.
When it comes to basing a business, one gropes for a place that offers maximum opportunities for the venture to grow. With its 32 ranks in the EODB index, France promises fortune, however, at the cost of drudging through a bit of bureaucracy. Today, the businesses that enjoy the most scope in France are transport/ tourism business, cultural bites sale, photography, restaurant, translation service, resort business, plumbing, house decoration, and more.
Zimyo has emerged as a leading HR solutions provider in France, offering businesses a one-stop solution for all the HR requirements, be it acquiring and training new employees or managing advances against payroll. With multiple years of experience, the team at Zimyo is equipped to take on every challenge that you may encounter.