How to protect your home when starting a business in France explained

By Valérie Aston on 2 September 2015 · Viewed 7045 times · Questions

A business registered in France can be classified into two main categories:

  • Entreprise individuelle is a business registered under the entrepreneurs’ name. There is no distinction between the business and the entrepreneur. Therefore the entrepreneur is liable for the debts generated by the business.
  • Limited or incorporated companies such as SARL, EURL, SAS or SASU have their own legal entity. This means that there is a clean cut between the entrepreneur and the business, protecting the entrepreneurs’ personal assets.

Protecting your home for an entreprise individuelle

Until this year, it was strongly recommended to any entrepreneur individuel to protect their main home with a legal act called acte d’insaisissabilité. Entreprise individuelle refers to a business registered in a person’s name, such as auto-entrepreneur, micro entreprise or entreprise individuelle réel simplifié.

These are the easiest and least expensive business structures to set up in France, but their main drawback is that there is no distinction between the person and the business. Therefore if the business had financial difficulties, the liability would extend onto the entrepreneurs’ assets and property. Some entrepreneurs’s homes have been seized for this reason.

It was therefore strongly recommended to entrepreneurs starting an entreprise individuelle to see a notaire and have a legal contract, called acte d’insaisissabilite, drawn up to protect their main home residence principale.

The introduction of Loi Macron in August 2015 now automatically protects the entrepreneur’s main home. This protection also works if part of your home is used for your business, i.e. home office, storage of goods. Unfortunately, only new businesses created after the 8th August will benefit from this new law.

Therefore if you currently have an entreprise individuelle, you may still want to assess your financial risks and decide to protect your home with acte d’insaisissabilité. This legal contract created by a notaire costs about 400 euros.

Protecting your home for a SARL, EURL, SAS

As mentioned above societies such as SARL, EURL, SAS or SASU have their own legal entity, which enables to distinguish the entrepreneur (gérant) from the business. If the gérant was to make a faute de gestion (mismanagement), this distinction could be questioned by a tribunal, but is rare.

A société is therefore the type of business offering the best asset protection to an entrepreneur. It enables not only to protect your main home, but also your personal financial asset or secondary home.

Valerie Lemiere: Start Business in France

About the author: Valérie Aston

I've been helping people who want to start or already have a small business set up in France since 2009. After graduating from a Master of Business Administration (MBA) degree, I worked as a senior marketing consultant in the UK and France for various International companies. I worked as a conseillère en création d'entreprises (senior business advisor) for BGE here in France and run this independent business on a daily basis.