In recent years, e-commerce has been a particularly profitable sector and connects with new consumer habits. Maybe that’s why you finally decided to get into this sector? But before you start your new online business, it is important that you choose a suitable legal status. This kind of decision is not taken lightly: take time to analyze the advantages and disadvantages of the different options available to you. Your choice will depend on many elements such as the turnover limit, the tax system, etc.
If you are a beginner, it is advisable to start with self-employed status. This will allow you to take your first steps in the field without taking too many risks. This status is particularly interesting if you are also an employee, because you will benefit from more flexibility compared to other legal forms.
This is indeed the legal form easiest to set up, compared to a society. To start a business with self-employed status, you can simply submit an online declaration. You also benefit from a considerable advantage concerning the VAT in auto-entrepreneur, which allows you to propose cheaper products or services. In fact, your self-employed status will give you a VAT exemption, which means that you will not have to include VAT in your production costs. In other words, you can offer a tax-free rate to your customers.
The tax regime for self-employed status is much simpler, especially at the administrative level. You will not have to undergo heavy accounting obligations, which is important when you start your business. In addition, you will have no trouble calculating your income taxes and social security contributions even without the help of an accountant. Tax returns are also simplified, whether in terms of procedures or calculations. This status is mainly addressed to working people, retired people, students, non-civil servant employees, etc.
Some disadvantages of self-employed status
Note that when you choose the status of auto-entrepreneur, your turnover should not not exceed 176 200 euros annually if you exercise a commercial activity. On the other hand, it should not exceed 72,500 euros excluding taxes if your e-commerce provides services. In the event that your activity combines the sale of products and the provision of services, your turnover must not exceed a total of 176,000 euros, excluding taxes.
If you exceed the threshold imposed by the legal form of auto-entrepreneur, you automatically leave the status for switch to that of a company. Thereafter, you will be immediately subject to VAT. This means that you are quite limited and that your development prospects are relatively limited. If you plan to keep this status for the long term, you will be forced to work alone.
What status should you choose when you have exceeded the limits authorized for a self-employed entrepreneur?
If you exceed the threshold, different solutions are available to you. The simplest is to change the legal structure of your micro-enterprise so that you can continue to exercise and develop your e-commerce activity. For example, your micro-enterprise can switch to the schemes of a sole proprietorship, a sole proprietorship with limited liability, a sole proprietorship with responsibility or a simplified joint stock company with sole liability.
Do not hesitate to inquire about the tax, contribution and protection regimes offered by these different statuses, as well as the work of the spouse, etc. All this information can affect your choice and your assets, but also your liability in the event of insolvency. The entrepreneur’s biggest risk is bankruptcy: it remains to be seen whether it will affect the person, the business, or both.
Individual business or IS
This legal form has many points in common with micro-enterprise. Indeed, this is a company registered under the name of a natural person. On the other hand, a sole proprietorship no longer benefits from simplifications of tax procedures and the various reductions in self-enterprise. However, it is no longer limited to a ceiling and there is no billing limit imposed on it.
SASU and EURL
These are the best options if your project is ambitious enough, with a turnover of more than 170,000 euros. It is also a solution to consider if you anticipate rapid development.
These legal forms are also a good choice if you want to be more credible in the eyes of your customers. Indeed, being a SASU or EURL will inspire more confidence in your network: financial partners, suppliers, etc. If you plan to bring in new associates some time after the creation of your company, it would also be more interesting to favor the legal forms of the SAS or the SARL.
Finally, SASU and EURL do not involve your personal property, since your civil liability will not be engaged in the event of litigation or insolvency problems.
According to statistics, almost 48% of entrepreneurs choose the legal form of LLC, especially those who prefer to work with several partners. This is an attractive option only if you plan to set up a fairly large e-commerce project.
The Simplified Joint Stock Company is a more flexible version of the LLC and much cheaper. This is the plan to adopt if you plan to collaborate with several investors.
The status of auto-entrepreneur remains the most interesting option for you if you think that your e-commerce will not reach the ceiling of 170,000 euros per year, and that you prefer to manage your business alone. Otherwise, opt for a status more suited to the nature of your activity and get advice from an expert if necessary!