SETTING UP A COMPANY: 5 COSTLY MISTAKES

Setting up a company: 5 mistakes

Setting up a business involves much more than a simple administrative formality. Behind the enthusiasm of the launch, fundamental legal choices determine the long-term future of the project. A hasty decision can have far-reaching repercussions, both in terms of taxation and relations between partners. This is a structured process that requires rigour, foresight and informed support.

Here are five common mistakes to avoid if you want to get off to a solid start.

Mistake No. 1 - Rushing into things without choosing the right legal form

Le choice of corporate form determines the tax regime, social security cover for the director and the degree of liability. A limited liability company (SARL) does not give rise to the same obligations as a limited company. simplified joint stock company (SAS).

For example, opting for a SARL (limited liability company) limits the flexibility of the articles of association, while an SAS (simplified joint stock company) allows for more personalised governance. A sole trader running a micro-business runs the risk of coming up against a restrictive turnover ceiling, with no deductibility of actual expenses.

The structure chosen must reflect the nature of the project, the composition of the shareholder base and the growth prospects.

Mistake No. 2 - Neglecting to write the articles of association (Setting up a company: 5 mistakes)

The use of standard articles of association may seem cost-effective, but it can lead to costly legal inaccuracies. A standardised document often omits key clausesThese include the distribution of capital in the event of fund-raising, the delegation of powers and the terms and conditions for the sale of shares.

For example, a majority shareholder with no transfer restrictions can sell his shares to an outside third party without prior agreement, thereby compromising the balance of the founding group. In the event of disagreement, poorly drafted articles of association leave the door open to lengthy and paralysing litigation.

Mistake no. 3 - Underestimating the importance of the partnership agreement

Le partnership agreement supplements the Articles of Association by providing contractual guarantees. It provides a framework for governance, exit clauses and decision-making procedures. This is often not the case in young companies, mainly because they are not familiar with it.

In the event of disagreement, a well-drafted agreement avoids a deadlock. An approval clause can prevent the entry of an undesirable shareholder. A joint exit clause allows minority shareholders to sell on the same terms as a majority shareholder.

Mistake no. 4 - Failing to anticipate tax and social security obligations

Errors relating to VAT, social security contributions or the tax system are commonplace. The choice between income tax (IR) orcorporation tax (IS) directly influences a company's financial strategy. Uninformed choices can lead to inappropriate levels of taxation.

The risk of omission or misrepresentation leads not only to penalties, but also to a cash flow freeze. A tax reassessment for a start-up at the fund-raising stage can derail a strategic operation.

Mistake no. 5 - Forgetting to protect your intellectual property

Intangible assets (trade name, logo, website, etc.) must be protected from the outset. Registering a trademark with the INPI or contractually defining the ownership of software developed for the company is a basic precaution.

Failing to take these steps means exposing your project to competitive litigation or disputes with external service providers.

Our practical recommendations (Setting up a company: 5 mistakes) :

-. Call in a professional from the outset Legal or accounting advice can help you avoid structural errors that are difficult to correct later on;

-. Customise your articles of association and draw up a shareholders' agreement These documents must reflect the reality of the project, everyone's ambitions and anticipate conflicts;

-. Accurately assess your tax and social security system a strategic decision on the choice between income tax and corporation tax, or on the status of the manager, must be carefully considered ;

-. Protect the key elements of the project from the outset These are all intangible assets that need to be legally protected.