Cheuvreux Bordeaux – The disappearance of the individual entrepreneur with limited liability: a real revolution? – PATRIMOINE24 – All news about wealth management

Awaiting practitioners, February 14, 2022 Law No. 2022-172 comes to sound the death knell for the limited liability sole proprietorship that was recently put in place by the June 15, 2010 law.

Until then, a sole proprietorship carrying out an economic activity had the choice between the simple mode of sole proprietorship and the more protective mode of sole proprietorship with limited liability, known as “EIRL”.

As a reminder, the implementation of the Simple Sole Proprietorship (EI) Statute resulted in a lack of separation between the operator’s professional and private assets, allowing its creditors to request repayment of its debts on the entrepreneur’s assets in full. To overcome this risk, protective mechanisms have been put in place, in particular for the main residence that cannot be taken over since the PACTE Act of May 22, 2019 or any property, built or not, not intended for professional use listed in a notarized declaration of non-signability.

An entrepreneur can also choose the status of the EIRL, isolating goods that are necessary/useful to run his business, thus creating a true legacy dedicated to his economic activity, without creating any social form like EURL or SASU.

Then the undertaking of professional creditors is limited to this simple inheritance, which should have been the subject of the appropriation declaration or be directly updated by entering it into the balance sheet of the entrepreneur.

The law in favor of independent professional activity comes into force from May 15, 2022 to undo this division by giving the entrepreneur, always hesitating in the social form, only one status: sole proprietorship.

While retaining the concept of renunciation heritage, the professional would then enjoy the protection of his personal inheritance without any formalities. His professional assets will consist of property, rights, obligations and guarantees that are “useful” for his independent activity.

However, it should be noted that, like EIRL, this separation of assets can be undermined in some cases, in particular:

Ultimately, the EURL or SASU constitution must be preferred by the entrepreneur, despite the more rigorous formalities and cost of forming such a social form, in particular for the following reasons:

  • Even if the assignment is not caused by any process, it is not without questions. Even if the concept of “useful” was recently defined by decree, the term nonetheless remains imprecise. The judge’s intervention to clarify this concept on a case-by-case basis seems inevitable and a source of legal uncertainty.

  • The success of this situation will depend on the desire of the creditor institutions not to make the entrepreneur systematically abandon the merits of this task.

  • An individual entrepreneur who is looking for liquidity in practice can only resort to bank loans.

  • Sole proprietorship constitutes a whole group consisting of intangible and tangible elements such as customers, right to lease, equipment, etc., and it can only be transferred free of charge, especially for the benefit of the children of the entrepreneur, in full. The sole shareholder of EURL or SASU, on the contrary, may gradually transfer his shares.

  • The registration fee for an exorbitant transfer is lower with the company form: EURL (3%) / SASU (0.1%). While the rights will be between 3 and 5% after applying the 23,000 euro reduction for individual companies.

The individual entrepreneur will be subject to the self-employed system, a status subject to less social contributions than the employee’s social status, but with less effective social protection. The SASU President will be subject to the Employee Plan.

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