Sole Proprietorship: Features of Professional Assets

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On May 15, 2022, the new standardized status of the individual entrepreneur came into effect. The assets that make up professional assets are defined by a decree of April 28, 2022. They define the undertaking of professional creditors.

The reform of independent professionals is gradually coming into effect. In fact, the main idea of ​​\u200b\u200bprofessional assets has just been established by decree.

Minimum automatic protection

Law No. 2022-172 of February 14, 2022 in favor of independent professional activity (JORF No. 0038 of February 15, 2022) reformed sole proprietorship, creating a unified status for the independent entrepreneur. All individual entrepreneurs – merchants, artisans, liberal professionals – are now subject to the same situation. An individual entrepreneur is a natural person who carries out one or more independent professional activities in their name.And the Refer to Article L. 526-22 of the Commercial Code.

The law ends the status of Individual Entrepreneurs with Limited Liability (EIRL), without eliminating the 100,000 existing EIRLs who can continue to operate in this way. However, it is no longer possible to create one. The law also put an end to the various mechanisms for exempting real estate from seizure: automatic protection for the main residence, which the businessman can concede, and protection on demand by declaring exemption from seizure on directly owned real estate. From now on, all personal property of the entrepreneur, whether real or movable, is protected automatically. The entrepreneur has no steps to take in this regard. In fact, private heritage does not enter into the undertaking of professional creditors, unless the entrepreneur arranges this system with conventional guarantees. This regulation applies to claims arising on May 15, 2022.

The concept of professional heritage

Article 1 of the law defines the professional assets of an independent entrepreneur. “The property, rights, obligations and securities that he owns and which are useful to his independent professional activity or activities constitute the professional assets of an individual entrepreneur. Subject to Book VI of this Act, this heritage cannot be divided.” The personal or private legacy of the individual entrepreneur is defined negatively: it corresponds to everything that is not included in the legacy that is not included in the professional heritage. So it is important to know what is included in the definition of a professional asset.

Decree issued to implement Article 1Verse It has just been published (Decree No. 2022-725 of April 28, 2022 on the definition of the professional assets of an individual entrepreneur and references to documents and correspondence for professional use, JORF No. 0100 of April 29, 2022). It came into effect on May 15, 2022. It pertains to individual entrepreneurs, creditors, credit institutions and finance companies. Thus the decree defines the elements that are likely to be included in the professional assets of an individual entrepreneur because of their usefulness, the concept of which is defined.

Goods useful for the activity

The list of assets useful to the business appears in Article R. 526-26-I of the French Commercial Code. Assets, rights, obligations and guarantees held by an individual entrepreneur, which are useful for professional activity, mean those that, by their nature, by purpose or according to their purpose, are used in this activity.

The decree proposes a list of them, as it presents them by mentioning “such”. It aims:

– goodwill, craft fund, agricultural fund, all tangible or intangible assets that make up them, and rights to them, and the right to offer clients a liberal professional;

– movable property, such as goods, equipment, tools and agricultural equipment, as well as means of transportation for mobile activities such as sales and household services, transport or delivery activities;

– immovable property used in the activity, including part of the main place of residence of an individual entrepreneur used for professional use; When such premises are owned by a company in which the individual entrepreneur is a shareholder or partner and whose main activity is to make them available to the individual entrepreneur, the shares or units of this company;

– intangible assets such as customer data, patents, licenses, trademarks, designs and models, and in general intellectual property rights, trade name and trade name;

– cash money, that is, a cash amount kept at the place of professional activity, amounts credited to bank accounts designated for this activity, in particular under Articles L.613-10 of the Social Security Act and L 123-24 of this Code, in addition to sums allocated to cover current expenses related to this same activity.

The ordinance provides clarification for the individual entrepreneur who is bound by legal or regulatory accounting obligations. Dans ce cas, son patrimoine professionnel est présumé comprendre au moins l’ensemble des éléments enregistrés au titre des documents comptables, sous réserve qu’ils soient réguliers et sincères et donnent une image fidèle de la patrimo être situation ‘a company. Subject to the same reservation, accounting documents are supposed to determine the remuneration derived from independent professional activity, which is included in the personal assets of an individual entrepreneur.

The burden of proof lies with the individual entrepreneur in the event of any dispute regarding enforcement measures or measures of protection raised by him regarding the inclusion or non-inclusion of certain assets in the vicinity of the general right of encumbrance of the creditor. However, liability of the withholding creditor may be claimed for the abuse of attachment when it has executed a measure of coercive enforcement or a protective measure on an asset that is clearly not part of its general lien.

Creditors pledge

In principle, the separation of assets makes it possible to protect private assets from professional creditors. However, the law provides for the possibility of a contractual guarantee, or assignment of a special asset protection benefit, a specific obligation, for example to support an application for a bank credit line.

In the same way, only the personal legacy of an individual entrepreneur constitutes the general pledge of creditors whose rights have not been generated by the occasion of his professional exercise. However, if personal assets are insufficient, the general right to pledge creditors can be exercised over professional assets, within the amount of profit earned during the last closed financial year.

Also, the distinction between the personal and professional assets of an individual entrepreneur does not entitle him to guarantee the debt in which the principal debtor is.

Mandatory mentions

The decree of April 28 also establishes the details that an individual entrepreneur must attach to the exercise of his professional activity in documents and correspondence for professional use.

The name used to carry out a professional activity that includes his or her usual name must be preceded or followed by the words “Solo Entrepreneur” or the initials “EI”. The name appears on documents and correspondence for the professional use of the person concerned. Each bank account dedicated to his professional activity opened by the individual entrepreneur must have the category in his name. Finally, the decree states that in the absence of registration, the first use of the name is due to the declared date of commencement of activity to identify the first act performed as an individual entrepreneur.

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