Individual business business Turning the
Verified 05 May 2023 - Legal and Administrative Information Directorate (Prime Minister)
Individual business With a view to its development or transmission, a transit company may have to “switch to business” (SARL/EURL, SAS/SASU, SA...). To do this, the individual entrepreneur must create a new business and y to bring his professional heritage. It may also decide to transmit only the goodwill, without the debts and debts and without the premises it would eventually own.
The transformation into a business can also take the form of a individual business disposal of to the newly created business.
Contribution of the professional heritage
The business individual business-raising of education and training implies the ‘universal transmission of professional heritage’ (TUPP), i.e. all property, rights, obligations and collateral necessary for the activity.
In other words, the individual entrepreneur brings theactive of the company (in particular the components of the goodwill) and its indebted (debts, collateral).
Concretely, it brings the goodwill including the following:
- Clientele
- Sign and trade name
- Right to lease : right to take over from the holder of a commercial lease, occupy the premises and enjoy a right to renewal of the lease
- Furniture, material and tooling : vehicles, machinery, computers, offices
- Inventory and goods
- Intellectual property rights : patents, software, trademarks, domain name
- Money : cash fund means any cash held at the place of pursuit of the professional activity and the sums entered in the bank accounts dedicated to that activity
- Employment and insurance contracts
In addition, a universal transfer of professional assets implies the contribution of these other elements:
- Immovable property used for the activity (if the contractor is the owner)
- Receivables : amounts owed by customers but not yet paid
- Collateral : pledge of the goodwill, pledge on stock, for example
- Debts : repayment of bank loans and operating debts (e.g. to a supplier). The assignment of a debt requires the written agreement of the creditor. However, contributions and social contributions debts are not included in the transfer.
FYI
If the contractor is married under the community scheme reduced to acquisitions (default marital status), he must obtain the agreement of his spouse to bring the goodwill and/or premises in business.
The Universal Transfer of Professional Assets (UETP) is the scheme default. On the contrary, the entrepreneur can carry out a non-integral transfer and bring in elements in isolation. For example, the contribution of the only business fund without the real estate and debts of the company is possible.
Individual business When he brings his (EI) in business, the entrepreneur feeds social capital of the new business. In return, it becomes associated and obtains social rights (voting rights and dividends) to the extent of its contribution.
The entrepreneur may be led to realize different types of input :
- Cash contribution
- Contribution in kind
- Contribution to industry
Cash contribution
Thecash contribution shall consist, for the individual entrepreneur, in bring a sum of money making available to the business. This amount of money is used to train share capital. Depending on the legal form of the beneficiary business (SARL/EURL, SAS/SASU, SA...), the payment of the contribution is strictly regulated by law or freely organized by the statutes.
Please note
A manager who makes a cash contribution to his business may benefit from a income tax reduction. This is the “ IR-SME reduction '' equal to 25% the amount of payments made, subject to certain ceilings.
Contribution in kind
When performing a contribution in kind (goods other than money), the individual entrepreneur can choose between 3 types of input :
- Transfer of ownership
- Supply of usufruct
- Enjoyment
The type of intake will set the extent of the rights conferred to the business.
Transfer of ownership
Property input is the most common input. It translates into Next 2 items :
- The property of the goodwill is transferred to the business.
- The goodwill is set aside effective disposition business.
As part of a transfer of ownership, the business becomes property owner. The sole trader must issue the goods as soon as the business is registered in the SCR: titleContent and the RNE. After the supply, the business can freely dispose of the property and even sell it.
In usufruct
A usufructuary contribution consists, for the sole trader, in granting the business the right to use the property and to receive the income generated by such use. The business receiving the contribution shall be: " usufructuary ”.
On the other hand, the entrepreneur retains the bare-ownership of the good brought. In other words, he can no longer use and collect the income from that property. The non-owner can only sell or give the property, with the agreement of the usufructuary.
The supply of usufruct therefore results from a dismemberment of property rights, with the transfer of a real right to the business.
In enjoyment
The contribution to profit consists, for the individual entrepreneur, of to make a property available to the business for a specified time (business period), while remaining the owner of the said good.
Concretely, the entrepreneur allows the business to use the property but without transferring any real right. The property is not part of the shareable asset and cannot be seized by the business' creditors. The individual entrepreneur has thus the assurance of recovering his property dissolving the business.
The realization of a contribution in use may relate to a wide variety of goods (real estate, material or goodwill...). Where the contribution relates to fungible goods, i.e. goods which are interchangeable (e.g. furniture produced in series, cereals, diesel): they may be used or consumed by the business which must return an equal quantity, quality and value to the end of the agreed period.
Whether it is a contribution of ownership, usufruct or enjoyment, the conditions of the contribution must be included in the statutes of the business or in a contribution agreement annexed to the articles of association.
Contribution to industry
Thecontribution to industry shall consist in devoting the activity of the rapporteur to the affairs of the business. It shall make available to the business its technical or professional knowledge, experience and relationships.
Please note
The rapporteur may not engage in a competing activity. He may engage in a foreign activity the objects of the company provided that he has sufficient time to devote to social affairs.
Industrial contributions must be mentioned in the statutes. The partner who brings his industry must carry on his business throughout the business. However, the statutes may provide for a shorter period.
A contribution to industry does not feed into social capital. On the other hand, theallocation of securities (shares) to the transferor, who contributes to the company's losses to the extent of his contribution. If the transferor withdraws from the business or ceases to honor his contribution, his securities shall be canceled.
Moreover, contributions to industry disappear with the death of the transferor, without any possibility of transmission to the heirs or beneficiaries. These industrial securities cannot be not sold, no data.
Please note
Industrial inputs are not not allowed in anonymous businesses (SA).
Universal transmission as business delivery should respect 3 conditions following:
- Theavailable assets of the professional heritage must enable to cope with to his current liabilities. Otherwise, the newly created business would be in a state of cessation of payments and could lead to the opening of collective proceedings.
- The contractor must not have been hit with personal bankruptcy or a prohibition on managing a company.
- Goods constituting a contribution in kind (e.g. goodwill) must be subject to the valuation of a commissioner for contributions. In SARL and SAS, the members may decide unanimously that such intervention is not necessary, provided that each contribution in kind is of a value lower than €30,000 and that all such contributions in kind do not exceed half of the share capital.
FYI
If the contractor is married under the community scheme reduced to acquisitions (default marital status), he must obtain thespouse's agreement to bring the goodwill and/or premises in business.
Advertising formalities are obligatory and make business enforceable against third parties.
Publication in the Bodacc or in a legal advertising medium
The individual entrepreneur has the choice between 2 means of publication :
- Either publication in Bodacc
- Either publishing legal announcements in a medium
Publication in Bodac
The entrepreneur has a period of1 month from the transfer of the assets to publish a notice to the Official Bulletin of Civil and Commercial Advertisements (bodacc.fr).
To publish the notice, the Contractor must contact (on-site or by mail) the commercial court registry on which the seat of his company depends. The Registry will send the notice directly to the dedicated website bodacc.fr for publication.
The notice must include following mentions :
- Name of birth, surname, forenames and, where appropriate, commercial name of the individual contractor
- Professional activity and EPA code
- Address of the principal establishment or, in the absence of an establishment, the address of the dwelling-place where the transferred company is fixed
- Siren Number
- Name of company, type, address of registered office, amount of capital of the business receiving the contribution.
In addition, the notice must be accompanied by a descriptive statement professional heritage. It contains the following information:
- Overall value of the asset
- List of collateral from which the entrepreneur benefits and the amounts of the claims guaranteed by them
- Aggregate value of liabilities
- List of the professional assets subject to a security right and, for each of the assets concerned, the nature of the security right and the amount of the secured claim
The descriptive state shall be established taking into account the last closed accounting year updated on the date of the transfer, or, for individual contractors not subject to accounting obligations, on the date resulting from the agreement of the parties.
Publish Legal Ads in Media
The entrepreneur has a period of1 month from the transfer of the assets to publish an opinion in a legal listing support.
In addition, the notice must be accompanied by a descriptive statement professional heritage. It contains the following information:
- Overall value of the asset
- List of collateral from which the entrepreneur benefits and the amounts of the claims guaranteed by them
- Aggregate value of liabilities
- List of the professional assets subject to a security right and, for each of the assets concerned, the nature of the security right and the amount of the secured claim
The descriptive state shall be established taking into account the last closed accounting year updated on the date of the transfer, or, for individual contractors not subject to accounting obligations, on the date resulting from the agreement of the parties.
Once published, a certificate of publication the notice of amendment is issued.
Please note
If the sole proprietor brings the premises owned by him into business, the contribution must be recorded in the land advertising department by the notary.
Opposition by creditors
The creditors of the company shall have a1 month as of the advertisement for oppose the transfer professional heritage.
Creditors shall indicate, by registered letter with acknowledgement of receipt or by extrajudicial act , the amount and causes of the claim.
The judge shall examine the merits of the application and, where appropriate, order repayment of the debt. In this case, the contractor is committed to all its movable and immovable property present and future (except for his principal residence).
On the other hand, opposition does not prevent the universal transfer of assets which takes place on expiry of the opposition period.
In order to obtain the property or enjoy the goods brought, the business must first proceed to registration at SCR: titleContent and the RNE: titleContent. It is only from this registration that the business obtains legal personality and its own heritage.
Please note
We'll explain how to create a business and how to register with the RCS and the RNE.
Individual business The contribution of a given to a business is analyzed, in fiscal terms, as a cessation of company. It therefore gives rise, for the rapporteur, to immediate taxation of operating profits carried out during the financial year and at taxation of capital gains on assets.
The rapporteur shall also save report with the registration tax office.
Taxation of profits and capital gains
The contribution of professional assets entails the taxation of income (IR) of untaxed profits carried out since the end of the last completed financial year.
The contribution shall also give rise to the taxation of professional capital gains at the reduced rate of 12.8% for long-term capital gains and the progressive rate of income tax for short-term capital gains.
As a reminder, the surplus value is calculated from the disposal price, less net book value of the contribution.
In the case of business, the transfer price corresponds to the value of the contribution, i.e. the real value of the securities received as remuneration for the contribution. However, the real value of the contributed assets will be retained if it is greater than the value of the securities received in return for the contribution.
As for the net book value, it shall refer to the original value of the goods brought. For depreciable items, the original value shall be reduced by the depreciation applied and deductible for the tax base.
The transferor may opt for a deferral of taxation of capital gains offering him the following 2 opportunities:
- Defer the taxation of capital gains on non-depreciable items until the transfer (sale, business contribution, exchange), the redemption or cancelation of the securities received as remuneration for the contribution. In the event of disposal, capital gains become taxable in the name of the transferor in respect of the year in which the event occurs and at the rates in force on that date.
- Avoid the taxation of capital gains on depreciable items. These capital gains will therefore not be taxable in the name of the transferor, they will be reintegrated into the taxable profit of the business over a maximum period of 5 years (15 years for immovable property).
Please note
The transferor and the business must jointly exercise the option for tax deferral in the act of contribution or constitution of the business. Otherwise, the capital gain is taxable immediately.
Reporting obligations
In order to allow the assessment to be made, the tax administration must be informed the transmission of company as soon as possible.
Thus, the carrier has 45 days to notify the tax department (SIE) the date on which the assignment was or will be effective. The time limit shall run from the publication of the transfer to the Bodacc or in a legal listing support. In the 60 days from the same date, the transferor must also send to the tax office the statement of result of the financial year ended by the contribution.
The form to report the results varies under the tax system of the company provided: income tax (BIC), income tax (NBC), business tax (IS).
Répondez aux questions successives et les réponses s’afficheront automatiquement
Income tax (BIC)
The declaration of results must be made with the next form :
2023 Income Statement 2022 - Industrial and Commercial Profits (BIC)
Income Tax (NTB)
The declaration of results must be made with the next form :
Tax on businesses
The declaration of results must be made with the following form :
In addition, the rapporteur shall attach to his declaration of results a tax deferred capital gains tracking report.
Reporting of capital gains on tax deferral
Who shall I contact
Please note
The business receiving the contribution must keep a register of gains on non-depreciable items deferred taxation. Otherwise, the business shall be liable to a fine of 5% of the amounts omitted.
Record of contribution
At the time of placing on the business individual business of the save transform to the registration tax service. According to the tax treatment of new business who collects the contribution (income tax or business tax), the contributor may be required to pay registration fees.
Business subject to IR
Registration is free where the business receiving the supply is subject toIncome tax (IR).
Who shall I contact
Business subject to SI
Registration is paying where the business receiving the supply is subject tobusiness tax (IS).
Registration fees are calculated on the value of the goods brought in, as follows:
- 0% up to €23,000
- 3% between €23,001 to €200,000
- And 5% beyond €200,000
For immovable property, the rate is set at 5%.
However, the contribution may be recorded for free if the rapporteur undertakes to to keep the securities for 3 years (shares) received in return for the contribution.
Who shall I contact
Please note
The contributions liable to VAT (e.g. contributions of buildings or building land) are registered free of charge.
Contribution of the goodwill
When the company is placed on the business, the individual entrepreneur may to provide isolated elements without making a full transfer of his professional assets.
Concretely, it brings the goodwill including the following:
- Clientele
- Sign and trade name
- Right to lease : right to take over from the holder of a commercial lease, occupy the premises and enjoy a right to renewal of the lease
- Furniture, material and tooling : vehicles, machinery, computers, offices
- Intellectual property rights : patents, software, trademarks, domain name
- Money : cash fund means any cash held at the place of pursuit of the professional activity and the sums entered in the bank accounts dedicated to that activity
- Employment and insurance contracts
- Inventory and goods
The contribution does not have to relate to the entire fund, but must include its essential elements, namely the clientele and the elements that allow the preservation and exploitation of this clientele (commercial lease, commercial name, brand name, equipment...). For example, the supplier may keep the stocks provided they are not indispensable the continuation of the activity by the beneficiary business.
FYI
If the contractor is married under the community scheme reduced to acquisitions (default marital status), he must obtain the agreement of his spouse to bring the goodwill and/or premises in business.
Individual business When he brings his (EI) in business, the entrepreneur feeds social capital of the new business. In return, it becomes associated and obtains social rights (voting rights and dividends) to the extent of its contribution.
The entrepreneur may be led to realize different types of input :
- Cash contribution
- Contribution in kind
- Contribution to industry
Cash contribution
Thecash contribution shall consist, for the individual entrepreneur, in bring a sum of money making available to the business. This amount of money is used to train share capital. Depending on the legal form of the beneficiary business (SARL/EURL, SAS/SASU, SA...), the payment of the contribution is strictly regulated by law or freely organized by the statutes.
Please note
A manager who makes a cash contribution to his business may benefit from a income tax reduction. This is the “ IR-SME reduction '' equal to 25% the amount of payments made, subject to certain ceilings.
Contribution in kind
When performing a contribution in kind (goods other than money), the individual entrepreneur can choose between 3 types of input :
- Transfer of ownership
- Supply of usufruct
- Enjoyment
Use of the commissioner for contributions is mandatory for the valuation of the goodwill provided. However, in SARL and SAS, the members may decide unanimously that such intervention is not necessary, provided that each contribution in kind is of a value lower than €30,000 and that all such contributions in kind shall not exceed half of the share capital.
Please note
The use of a commissioner for contributions is optional individual business for the sole member of an EURL or an SASU, natural person, if he brings an item on his balance sheet before the formation of the business.
The type of intake will set the extent of the rights conferred to the business.
Transfer of ownership
Property input is the most common input. It translates into Next 2 items :
- The property of the goodwill is transferred to the business.
- The goodwill is set aside effective disposition business.
As part of a transfer of ownership, the business becomes land owner. The sole trader must issue the fund as soon as the business is registered in the SCR: titleContent and the RNE: titleContent. After the contribution, the business can freely dispose of the goodwill and even sell it.
Please note
The individual entrepreneur remains trader if the contribution is made to CNS: titleContent or a SCS: titleContent.
In usufruct
A usufructuary contribution consists, for the sole trader, in granting the business the right to use the fund and to collect the income generated by such use. The business receiving the contribution shall be: " usufructuary ”.
On the other hand, the entrepreneur retains the bare-ownership of the good brought. In other words, he can no longer use and collect the income from that property. The non-owner can only sell or give the property, with the agreement of the usufructuary.
The supply of usufruct therefore results from a dismemberment of property rights, with the transfer of a real right to the business. This mechanism is very rare in practice.
In enjoyment
The contribution to profit consists, for the individual entrepreneur, of to make the goodwill available to the business for a specified time (business period), while remaining the owner of that fund.
In practice, the entrepreneur allows the business to use the fund but does not transfer any funds to it real right. The fund is not part of the shareable asset and cannot be seized by the business' creditors. The individual entrepreneur has thus the assurance of recovering your funds the dissolution of the business.
The contribution of a goodwill in business must be ascertained by a authentic written document or under private seal, barely null. In practice, this obligation is satisfied by the reference to contributions in the statutes, which must be drawn up in writing.
Contribution to industry
Thecontribution to industry shall consist in devoting the activity of the rapporteur to the affairs of the business. It shall make available to the business its technical or professional knowledge, experience and relationships.
Please note
The rapporteur may not engage in a competing activity. He may engage in a foreign activity the objects of the company provided that he has sufficient time to devote to social affairs.
Industrial contributions must be mentioned in the statutes. The partner who brings his industry must carry on his business throughout the business. However, the statutes may provide for a shorter period.
A contribution to industry does not feed into social capital. On the other hand, theallocation of securities (shares) to the transferor, who contributes to the company's losses to the extent of his contribution. If the transferor withdraws from the business or ceases to honor his contribution, his securities shall be canceled.
Moreover, contributions to industry disappear with the death of the transferor, without any possibility of transmission to the heirs or beneficiaries. These industrial securities cannot be not sold, no data.
Please note
Industrial inputs are not not allowed in anonymous businesses (SA).
Advertising formalities are obligatory and make business enforceable against third parties.
Publishing legal and Bodac ads in a media
The sole proprietor must publish the contribution of the goodwill in a legal listing support, in 15 days from the contribution.
Listing must include mentions following:
- Elements concerning the registration of the document (office, volume, number)
- Date of transfer
- Surnames, forenames and domicile of the rapporteur
- Name and registered office of the business receiving the contribution
- Nature and seat of the fund
- Evaluation of the fund
- Time limit for possible opposition by creditors
In addition, the rapporteur shall request the registrar of the commercial court within a period of 3 days following insertion into a legal advertisement medium.
The Registrar shall then publish a notice in the Official Bulletin of Civil and Commercial Advertisements (Bodac).
FYI
The entrepreneur is exempt from carrying out these formalities if he brings his goodwill to a business of which he is the sole partner (EURL or SASU).
Opposition by creditors
In the 10 days following the last publication, any creditor of the transferor may make known to the registry of the commercial court his status as creditor and the amount of the sums due to him.
Therefore, the entrepreneur and the new business have 15 days to pay off their debts. It is also possible to cancel the contribution.
In order to obtain the property or enjoy the goods brought, the business must first proceed to registration at SCR: titleContent and the RNE: titleContent. It is only from this registration that the business obtains legal personality and its own heritage.
Please note
We'll explain how to create a business and how to register with the RCS and the RNE.
The contribution of the goodwill to a business is analyzed, from a tax point of view, as a cessation of company. It therefore gives rise, for the rapporteur, to immediate taxation of operating profits carried out during the financial year and at taxation of capital gains on assets.
The rapporteur shall also save report with the registration tax office.
Taxation of profits and capital gains
The contribution of the goodwill results in the income tax (IR) of the untaxed profits carried out since the end of the last completed financial year.
The contribution shall also give rise to the taxation of professional capital gains at the reduced rate of 12.8% for long-term capital gains and the progressive rate of income tax for short-term capital gains.
As a reminder, the surplus value is calculated from the disposal price, less net book value of the contribution.
In the case of business, the transfer price corresponds to the value of the contribution, i.e. the real value of the securities received as remuneration for the contribution. However, the real value of the goodwill will be retained if it is greater than the value of the securities received as consideration for the contribution.
As for the net book value, it shall refer to the original value of the goodwill. As such, if the goodwill was created by the transferor, the entire sale price is used to determine the capital gain.
The transferor may opt for a deferral of taxation of capital gains offering him the following 2 opportunities:
- Defer the taxation of capital gains on non-depreciable items until the transfer (sale, business contribution, exchange), the redemption or cancelation of the securities received as remuneration for the contribution. In the event of disposal, capital gains become taxable in the name of the transferor in respect of the year in which the event occurs and at the rates in force on that date.
- Avoid the taxation of capital gains on depreciable items. These capital gains will therefore not be taxable in the name of the transferor, they will be reintegrated into the taxable profit of the business over a maximum period of 5 years (15 years for immovable property).
Please note
The transferor and the business must jointly exercise the option for tax deferral in the act of contribution or constitution of the business. Otherwise, the capital gain is taxable immediately.
Reporting obligations
In order to allow the assessment to be made, the tax administration must be informed the transmission of the goodwill as soon as possible.
Thus, the carrier has 45 days to notify the tax department (SIE) the date on which the assignment was or will be effective. The time limit shall run from the publication of the transfer to the Bodacc or in a legal listing support. In the 60 days from the same date, the transferor must also send to the tax office the statement of result of the financial year ended by the contribution.
The form to report the results varies under the tax system of the company provided: income tax (BIC), income tax (NBC), business tax (IS).
Répondez aux questions successives et les réponses s’afficheront automatiquement
Income tax (BIC)
The declaration of results must be made with the following form :
2023 Income Statement 2022 - Industrial and Commercial Profits (BIC)
Income Tax (NTB)
The declaration of results must be made with the following form :
Tax on businesses
The declaration of results must be made with the following form :
In addition, the rapporteur shall attach to his declaration of results a tax deferred capital gains tracking report.
Reporting of capital gains on tax deferral
Who shall I contact
Please note
The business receiving the contribution must keep a register of gains on non-depreciable items deferred taxation. Otherwise, the business shall be liable to a fine of 5% of the amounts omitted.
Record of contribution
At the time of placing on the business individual business of the save transform to the registration tax service. According to the tax treatment of new business who collects the contribution (income tax or business tax), the contributor may be required to pay registration fees.
Business subject to IR
Registration is free where the business receiving the supply is subject toIncome tax (IR).
Who shall I contact
Business subject to SI
Registration is paying where the business receiving the supply is subject tobusiness tax (IS).
Registration fees are calculated on the value of the goods brought in, as follows:
- 0% up to €23,000
- 3% between €23,001 to €200,000
- And 5% beyond €200,000
For immovable property, the rate is set at 5%.
However, the contribution may be recorded for free if the rapporteur undertakes to to keep the securities for 3 years (shares) received in return for the contribution.
Who shall I contact
Please note
The contributions liable to VAT (e.g. contributions of buildings or building land) are registered free of charge.
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