Starting a business in France
Problems of starting a business in France
So you’ve decided to become your own boss. Be an entrepreneur. You’ve also probably decided on what type of business you want to start. Here are some of the benefits of starting your own business particularly in France.
Benefits of starting a business in France
- You can start a small business, as an individual enterprise or Enterprise individuelle (EI) or also known as a sole proprietorship. It is relatively easy to set up and is quite popular for new entrepreneurs. This type of business structure is called micro entrepreneurs or previously known as auto entrepreneur. It’s quite well known as it has a different tax status that is more favorable than other business structures such as the private limited company.
- Good purchasing power – From the population size we can deduce that France has a very good purchasing power. GDP for the country in 2016 was reported at EUR2.42 trillion while GDP per capita was EUR42,000. The country also recorded a GDP growth of 1.3% in 2016. All this points to a size able market and a strong economy.
- France has a highly qualified and productive workforce – France recorded a high productivity, compared to other countries in Europe, in spite of the French being well known for its 35 hour week.
- France also has a good high education system which is capable of producing highly qualified workforce.
- Excellent infrastructure – France has a very good infrastructure system in place. It also has a high speed rail network and also has one of the fastest trains in Europe, the TGV (Trains a Grand Vitesse). It has excellent inter connectivity between cities in France and also to other main cities in Europe.
Besides a good rail network, France also has an extensive road system. It has approximately one million kilometers of roads in the country.
France also has many airports linking it to the world and to other European cities.
- Location – France is one of the major countries in the European Union (EU). It is bordered by Germany, Belgium, Luxembourg, Switzerland, Italy and Spain. France is also connected to the UK through the English Channel tunnel. With its strategic location, it allows the country to easily sell its products to its EU counterparts and the international market.
- Ease of doing business – According to a World Bank report, France ranked 29th out of 189 countries in terms of doing business. The French government is also striving to promote the country.
There are also problems of starting a business in France
Problems to set up a business
Here are some typical problems that you may encounter.
- Language – The main problem a foreigner faces living in France is the language. The French are very proud of their language and there are not many who can speak English. As such it would be essential for you to learn some French quickly. Although in the business world, most people would find no problem as English is widely used.
- The next important issue that you will encounter is whether you are a French resident or any of the countries in the European Union. If you are neither of both, you can still open a business. The process is a bit longer and there’s obviously more paperwork.
- To start you would need a residence permit or ‘visa de long sejour’, also known as a long stay visa. You would need to have a special visa for you to start a business. Once you have the appropriate visa, you can then register your business.
- Depending on what type of business you wish to start, you would need to hire an accountant. This is mandatory for the following types of companies – the Societe Anonime (SA), the Societe par Actions Simplefiees (SAS) and the Societe a Responsabilite Limitee (SARL). As you need to hire an accountant, this will increase your initial expenses in starting your business.
- Highly qualified workers –This can be a problem to starting a business in France. Being highly qualified, the workers can demand for a higher salary. This will be a burden especially smaller companies that are just starting out.
- Taxes – There are quite a lot of payroll taxes that an employer needs to pay. Some of these includes social security contributions for medical benefits, old age minimum (which is like a pension fund used when a person retires) and child benefits. These taxes must be paid by the employer and is based on the worker’s salary. It can add up to about 24 to 25% of the salary. Hence running costs for the business is quite high.
- Labor laws – France has quite strict labor laws which tend to be sided with the employee rather than the employer. Some of the points to note in the law is the working hours, the overtime rate, paid annual holidays, conditions for dismissal and many others. You need to be properly informed of these laws before hiring.
There are problems that you will encounter anywhere in the world that you want to start a business. There’s no way around this except to have the necessary information and be properly advised by a professional before you take the next step.