A Personal Limited Liability Company or Single Member Limited Liability Company (EURL) is a type of company that has only one partner.
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A Sole Proprietorship with Limited Liability (EURL) or Personal Limited Liability Company allows a single person to create a company with the status of a company.
The advantages of EURL
The status of Sole Proprietorship with Limited Liability or Personal Limited Liability Company offers many advantages.
EURL is a form of company that is easy to set up and manage. For the creation of the company, the center of formalities of the companies (CFE) or the registry of the commercial court provides a standard model of statute, which then suffices to use while possibly making some adjustments.
The legal status of a Single-Person Limited Liability Company (EURL) allows you to create a company with the status of a company, without the need to associate with other people. It is therefore suitable for entrepreneurs wanting to start individually.
Subsequently, it will always be possible to modify the articles of association to include other partners in the capital. it is therefore easy to transform a EURL into a Limited Liability Company (SA) or a Limited Liability Company (SARL).
EURL share capital
The liability of the sole partner is limited to the amount of capital that he brings to the company. This means, that the personal assets of the partner cannot be used to pay the debts of the company. Except in the event of serious mismanagement.
The amount of share capital to be contributed to the company is free, minimum one euro, and indicated in the articles of association. That is to say that we can create the company with only a small contribution.
The sole shareholder of EURL also has the possibility of contributing only one fifth of the amount of the share capital when the company is created. The remainder of the capital will then have to be contributed within five years.
The sole shareholder owns all of the company’s shares. He can be the manager, but he can also choose a third party as manager of the company.
Taxation and social protection of the partner in EURL
The partner of the Single Member Company with Limited Liability EURL can choose his own tax regime, ie whether he prefers to be taxed by income tax or by corporation tax.
The EURL is easy to transmit to heirs since the transfer of shares can be done gradually without being taxable.
The disadvantages of EURL
Partner’s social plan in EURL
One of the major drawbacks of the status of Sole Proprietorship with Limited Liability is that the managing partner does not benefit from the status of employee and therefore not from employee social protection. It comes under the Non-Salaried Workers (TNS) scheme, which is less advantageous.
Liability limited or not really in EURL?
Even if the liability of the sole shareholder of the Sole Proprietorship Limited Liability Company is statutorily limited to its capital contributions, in practice, banks and other investors will often still require a personal guarantee. The partner’s personal assets can then be used as collateral for the repayment of debts, despite the EURL status.
In addition, the Single-Person Limited Liability Company, although its operation is simplified, must still comply with formalities, such as the annual presentation of accounts and inventory.
What alternatives to the EURL?
You can also create a Limited Liability Company ( SA) , a Simplified Joint Stock Company (SAS), or, if you also want to have limited liability for capital contributions, a Limited Liability Company (SARL).
The status of Sole Proprietorship with Limited Liability (EURL) looks a lot like that of SARL, but with only one person as a partner, instead of two minimum for SARL.