Sole proprietorship or company: what to choose to get started

Quick answer. A sole proprietorship suits a simple, low-risk launch with moderate income: since 2022, personal assets are protected automatically. A company (EURL, SASU, SARL, SAS) limits liability to contributions, strengthens credibility and opens tax and social choices, at the cost of heavier formalities and expenses.

You are launching your business, and the first structural question is neither the trade name nor the logo: it is the legal form. Sole proprietorship (entreprise individuelle, EI) or company? This choice commits your liability on your assets, your taxation, your social contributions, your credibility with banks and clients, and how easily you will one day open up your capital or pass on the business. Many founders decide too quickly, on a received idea ("a SASU looks more serious", "a micro-enterprise carries no risk"), then pay for that shortcut in contributions, formalities or growth blockages.

This article compares the two families of statuses for a founder, with concrete decision criteria and the pitfalls we see most often in practice. It does not replace a review of your situation, but it equips you for the conversation.

We first need to clarify what is actually being contrasted. On one side, the sole proprietorship (EI): you operate in your own name, without creating a separate legal entity. On the other, the company (EURL, SASU, SARL, SAS): you create a distinct legal entity, with capital, bylaws and its own legal life.

The micro-enterprise is not a third form: it is a simplified tax and social regime that applies to a sole proprietorship, subject to turnover thresholds. So you can be an EI without being under the micro regime, and every micro-enterprise is legally an EI.

What the 2022 law changed for the EI#

The most important reform of recent years concerns the sole proprietorship. Law no. 2022-172 of 14 February 2022 created a single status for the sole entrepreneur, effective from 15 May 2022 for any new EI. Its core contribution: personal assets are separated from professional assets automatically, by operation of law, without any formality or notice to creditors, and they are protected from business creditors (articles L526-22 and following of the Commercial Code).

In practice, the main home and personal assets are no longer, in principle, the pledge for debts arising from the activity. This is a change in nature: the old argument that "an EI exposes all your assets" is no longer accurate. In return, the EIRL, which used to allow allocating a dedicated estate, can no longer be created since 15 February 2022: the single status made it pointless.

One point of vigilance remains: the protection applies to personal assets, not to professional assets. On the latter, the entrepreneur remains liable without limit. And a bank can still ask for a personal guarantee on a loan, which reopens the exposure contractually.

No single line of this table settles the matter. It is their combination, weighed against your project, that guides the choice.

Liability: the false contest#

For a long time, the decisive argument leaned toward the company for limited liability. Since the single status, the gap has narrowed for the prudent founder. If your activity generates few business debts and little contractual risk, the EI's automatic protection may suffice. If you commit heavy inventory, commercial leases, subcontractors or exposure to claims, the company's liability limited to contributions retains its full value, because it confines the risk to the company's own assets.

Taxation: income tax, micro and corporate tax#

This is often the least understood criterion. In an EI, profits are by default subject to income tax (BIC category for trade and crafts, BNC for the liberal professions). The EI can, however, opt for corporate tax by being treated for tax purposes as an EURL (article 1655 sexies of the General Tax Code). This option, still little used, brings the EI very close to a company in tax terms, without taking its form.

A company is subject to corporate tax by default (except the EURL, taxed under income tax by default, with an available corporate tax option). Under corporate tax, you arbitrate each year between salary and dividends, which opens fine-tuned management of your income and taxation. We detail this mechanism in our article on dividend taxation in a SARL and, more broadly, in our business tax advisory.

The self-employed (TNS) contributes less, for lighter social protection and a calculation based on profit. The assimilated employee (president of a SAS or SASU) enjoys cover close to that of an executive, but at a markedly higher contribution cost on the remuneration paid.

Our reading. The director's social status often weighs more heavily on early-year cash than taxation does. A SASU president drawing a significant salary bears social charges substantially higher than those of a TNS manager for a comparable net income. Conversely, the TNS must plan retirement and personal cover on their own. There is no "cheaper" status in the absolute: there is a status suited to your need for cover and your saving capacity.

The EI is set up simply, without bylaws, without capital and without annual filing of accounts at the registry. Its day-to-day management is lighter, especially under the micro regime.

A company imposes a framework: drafting bylaws, forming capital, registration, then each year approving the accounts and filing them at the registry. This formality has a cost, in fees and time, but it also produces annual accounts, a guarantee of clarity for a bank or an investor. To frame a company formation and secure the bylaws, we act through our company formation support and our legal advisory.

The underestimated risk. The real cost of a company is not the registration, it is regularity. Annual accounts to approve on time, registry filing, formalities for partners' decisions: a founder who neglects these obligations faces friction at the time of financing, a sale or an audit. Formality is not administrative drudgery, it is the track record that makes the company financeable and transferable.

The micro-enterprise: the low-turnover launch#

The EI can fall under the micro regime if its turnover does not exceed, for 2026: 203,100 euros for the sale of goods, supplies, food to take away or consume on site and accommodation, and 83,600 euros for service provision (BIC) and liberal activities (BNC). These thresholds have been revalued; they previously stood at 188,700 euros and 77,700 euros. The micro regime applies a flat allowance for expenses and waives full commercial bookkeeping.

Two frequent pitfalls. First, these micro thresholds are distinct from the VAT exemption thresholds: you can remain under the micro regime while becoming liable for VAT. Second, the flat allowance is only advantageous if your actual expenses are low; an activity with heavy expenses pays tax on a profit it did not make. To start under the micro regime knowingly, see our complete guide to creating a micro-enterprise in 2026 and our analysis of status, charges and VAT for freelancers.

The EI under corporate tax: the overlooked option#

An EI that opts for corporate tax (article 1655 sexies of the General Tax Code) is treated for tax purposes as an EURL. It keeps the simplicity of the EI while accessing the salary/dividend arbitrage specific to corporate tax. It is a relevant middle path for an entrepreneur who exceeds the micro regime, wants to manage their income, but does not yet want a company's heaviness. The option must be considered carefully: it is regulated and not always reversible without consequence.

Moving from EI to company#

Starting as an EI then switching to a company as the project grows is a common and sound trajectory. The right moment shows in signals: income that justifies corporate-tax arbitrage, the need to bring in a partner, a fundraising, client contracts requiring a legal entity, or rising operational risk. For the "alone or with partners" question, read our article on going solo or partnering up; and if you are weighing a network, our comparison of franchise or independent.

Trade-off. EI or company: we reason in layers. Layer 1, risk: low and simple activity, the EI suffices; real contractual or financial risk, the company protects better. Layer 2, income: below the micro threshold with low expenses, micro; above it or with heavy expenses, we compare income tax, the EI under corporate tax and a company. Layer 3, the project: partner, fundraising, transfer on a visible horizon, the company takes the lead from the start.

In practice. In company formation files, the most frequent sticking point is not the EI/company choice itself, but the lack of figures. Three elements are enough to decide: an estimate of turnover and expenses over twelve months, the net income you are aiming for, and your need for social cover. With these three data points, the trade-off becomes a calculation, not an intuition.

We support founders and directors in the Paris region; the firm is registered with the Ordre des experts-comptables d'Île-de-France. One pattern recurs: a founder had chosen the SASU "by default" for the image, drawing no salary and funding themselves through dividends; they later discovered that this scheme left them with no social rights and paid charges another structure would have avoided. The status was not wrong, it was not connected to their income reality.

Hayot Expertise tip. Do not choose your status on reputation. First set out the figured scenario of your first twelve months, then test it against the three axes of liability, taxation and social regime. A well-chosen status at the outset spares you costly transfers later. For solo founders, our guide to creating an EURL in 2026 details a structured alternative to the SASU.

• The 2026 micro thresholds (203,100 euros and 83,600 euros) are not the VAT exemption thresholds: check both separately.
• The EI's personal-asset protection does not cover professional assets, and a personal guarantee signed at the bank neutralises it contractually.
• Under the micro regime, the flat allowance can make you pay tax on an unrealised profit if your actual expenses are high.
• The social cost of a SASU with no salary paid is not nil in terms of rights: no salary, no social rights accrued.