· lina hammoud · Strategy
How to choose the legal status of your business?
The choice of the legal status of a business is a very important step in the process of creating or developing a company. Indeed, the stakes are high. The choice of the legal form determines the organization, the operation of the business, and even the future status of the manager. It is therefore crucial to obtain all the necessary legal information for your business.
To find the legal status that best suits you, many criteria must be taken into account: the nature of your activity, the presence of partners, the associated legal personality, etc. This decisive choice will have fiscal and social consequences on your business and personal life.
Inclusion has prepared this article to guide you in choosing the legal form of your business.
What are the criteria to consider?
You should choose your status according to:
– The number of people in the business. You can start alone or with partners. Be aware that it is possible to change status later and include one or more partners.
– The amount of your assets or those of your partners and close associates.
– The size of the project, the amount of investment required, and your personal contribution. Some statuses have limits, while others do not.
– The social security system you choose. Indeed, the manager can be considered an employee or a non-employee.
– The tax system. Depending on the status you choose, your business will not be subject to the same type of taxes.
Which statuses to choose when starting your business?
There are many legal forms (EI, EURL, SARL, SAS, SNC, etc.), and each has its specific requirements, advantages, and disadvantages.
The sole proprietorship (EI) or individual entrepreneur.
A sole proprietorship is a simplified form of business. Any person over the age of 18 can create this type of business and become a sole proprietor.
This type of business is suitable for commercial, artisanal, industrial, or liberal activities. The owner must register as a merchant in the commercial register and obtain their professional card.
This form offers the advantage of not requiring any statutes, a partner is not necessary, and registration in the commercial register is quick. However, the owner is responsible for the company’s assets, and therefore, its debts.
Single-Member Limited Liability Company (EURL).
The EURL is composed of a single person. It requires drafting legal statutes with a notary and a capital contribution.
The registration of the company with the CNRC grants the company legal personality and the status of a merchant to the manager.
Unlike an individual proprietor, the company’s assets are separate from those of the business creator. As a result, the creator will only be liable for the company’s debts up to the amount of the company’s share capital.
The limited liability company (SARL).
This form is one of the most common in Algeria. It is a capital company that must be formed by a minimum of two partners and a maximum of fifty (50).
It requires drafting legal statutes with a notary and a share capital that is freely set by the partners in the company’s statutes. The share capital is divided into shares according to the number of partners.
The partners are liable for the company’s debts only up to the amount of their contributions, hence the concept of limited liability.
It can be managed by one or more managers. Registration in the commercial register grants the company legal personality and the status of a merchant to the managers.
The simplified joint-stock company (SAS).
This form is generally intended for large companies. It is a capital company consisting of at least seven (7) shareholders. The minimum required share capital is five million Algerian dinars (5,000,000 DZD) for companies raising public funds, and one million Algerian dinars (1,000,000 DZD) without public fundraising. The share capital is divided into shares.
The joint-stock company is managed by a board of directors composed of at least three (03) members and no more than twelve (12), and is under the supervision of a supervisory board.
The directors are elected by the founding general assembly or the ordinary general assembly.
The general partnership (SNC).
La Société en Nom Collectif (SNC) est une société de personnes. Les associés sont responsables indéfiniment et solidairement des dettes de la société et les parts sociales ne sont pas librement cessibles. La SNC est généralement créée par les membres d’une même famille en vue d’exploiter une activité en commun.
La société en commandite simple (SCS)
The rules of a limited partnership (SNC) are based on those of a general partnership.
It consists of general partners, whose status is similar to that of partners in a general partnership, and limited partners, who are liable for the company’s debts only up to the amount of their contributions.
This form of company remains very rare in Algeria.
The limited partnership with shares (SCA).
It is a mixed company composed of one or more general partners, who are considered merchants, and limited partners, who are shareholders. The number of limited partners must be at least three. The minimum required share capital is five million Algerian dinars (5,000,000 DZD). The limited partners are only liable for losses up to the amount of their contributions. The general partners are jointly and severally liable for the company’s debts. Registration in the commercial register grants the company legal personality and the status of a merchant to both the limited partners and the managers.
The grouping (GR).
A grouping is formed between two or more legal entities for a fixed period to implement all means to facilitate or develop the economic activity of its members, to improve or increase the results of this activity. It can be established without capital.
The grouping itself does not involve the realization and distribution of profits and can be formed without capital. It is managed by one or more individuals.
The members of the grouping are liable for its debts with their own assets. They are jointly liable unless otherwise agreed with the third party contracting.
Registration in the commercial register grants the grouping legal personality.
Conclusion
The operation, organization, and social and fiscal charges of a business are directly influenced by its legal status. With a significant impact on both your business and your personal and family life, choosing the right legal status should be done methodically and with seriousness.
Inclusion reminds you that no legal status is inherently better than another! It all depends on your personal situation and the specifics of your business project. The ideal status is the one that best fits all aspects of your situation.
