Simply Starting a Business in France…Where Nothing is Simple!
On the surface, that sounds pretty simple. The steps are:
1. BUSINESS PLAN
2. STRUCTURE & BY-LAWS
3. THE BANKER
4. PAY SHARE CAPITAL
5. LEGAL PUBLICITY
7. REGISTERED NUMBERS
8. YOUR COMPANY IS BORN!
But this is France where NOTHING is SIMPLE. I am convinced that it’s ‘simply’ not fun for the French if it’s ‘simple.’ EVERYTHING must be as complicated as possible to test ye olde intellectual mind and make SOMETHING from NOTHING. Even French-made appliances require a PhD before one can operate them.
Katya opened her presentation with an analogy of buying a hair dryer at a U.S. store, like Best Buy or Target, vs buying one at Darty here in France: Walk into Best Buy or Target, choose from dozens on the shelf, walk to the cash register, make your payment and leave with your hair dryer in a bag with a receipt. It takes about five minutes, unless you spend more time deciding which to purchase.
Now, try the same action at Darty: Walk into Darty, choose from a half-dozen hair dryers on display (the boxes are not on the shelf), find a salesperson, follow that person to a desk where they make an entry on their computer and print out a sales slip (or write one up by hand), take it to a cashier and pay for it, take another receipt from the cashier and go to another part of the store where you will wait in a line to retrieve your hair dryer. It will take about 30 minutes, depending on how successful you are making your choice, finding a salesperson and waiting in line for the cashier and then the line to retrieve it.
The funny thing is that I did just that about a month ago. When I got home with the hair dryer, I tested it and didn’t like it. I went right back to Darty to return it. That took another 30 minutes because you can’t go back to the cashier. Again, you must go to the “après vente” (service) desk, turn in the item, get a credit slip and then take that to the cashier to get your money back.
And so it is the same with starting a business in France.
In the U.S., you can create an LLC or an INC or whatever ONLINE in a matter of minutes, in just about any state you wish, which has nothing to do with where the business might be located. You need NO MONEY to do that, with the exception of the cost of creating the LLC or INC or whatever (like even a “DBA” — “Doing Business As…”) which is ridiculously inexpensive. You will receive one document that verifies you’re the owner and you can do any kind of business you want from that entity…ANYTHING (as long as it’s legal). You take the document to your bank, in person or online, and open a bank account in the name of the company you created. Once in business, at the end of the year, you declare your earnings to the IRS, pay your taxes and life is SIMPLE: you’ve made money, the IRS has made money and your new company adds to the economy.
Let’s go back to the eight steps in France. They look SIMPLE from the surface, but within each of those steps are complications that will tax your intellectual mind. For example, let’s look at #2. STRUCTURE & BY-LAWS. You have to decide what type of company you want to create: EI, EIRL, EURL, SARL, SCP, SEL, SA, SAS, SNC and SCM! Have fun! Then, if you do not describe the ACTIVITIES of your company in exact detail, or what you might project your activities will be in the future, you CANNOT PERFORM those business functions from that new business entity. Period.
JB explained how there is a difference if you wish to sell clothing vs manufacturing clothing and then again, should you decide to add shoes to your garment line, that if your by-laws don’t refer to shoes, you can’t…’simple’ as that.
Then, there is #4. PAY SHARE CAPITAL to consider. I can remember years ago when one needed a minimum of 50,000 French francs to capitalize a new company, and then the government did us a big favor and reduced it to just one euro! Great, but no one will take you seriously if you open a company with capital of just one euro! Nor will the bank want to open your bank account with just one euro. And here’s the “Catch 22”: you can’t incorporate without share capital nor open the bank account without the incorporation. Somehow it works, but it’s certainly not SIMPLE.
And if you think the steps to creating a business are complicated, just wait till you’re actually in business! That’s when the real fun begins!
At the end of Euro Start Enterprises’ presentation there were lots of questions, of course. Americans who come from the land of Free Enterprise where one can start a business with even less than ‘simply’ a business card, have a hard time getting their minds around the complications of owning and operating a French business. In fact, from my perspective, I think it’s the toughest hurdle — the cultural one. We Americans think one way (Free Enterprise) and the French think another way (Controlled Enterprise) and this is where most of the mistakes can be made. I know. I’ve made them myself for this very reason.
My advice: never open a business in France yourself without advice from professionals. Katya and JB certainly know how to help someone open a business here in France or elsewhere for that matter to help anyone plow through the tangled web of bureaucracy to come to step #8. YOUR COMPANY IS BORN!
Read more about the afternoon by visiting Parler Paris Après Midi.
A la prochaine…
Director of The Adrian Leeds Group, LLC
P.S. There are only three shares left to call your own at Le Palace des Vosges! If you want to own a share at the city’s best address and most beautiful place, visit Le Palace des Vosges for more information or email: [email protected]