Protection of Personal Assets, One of the Advantages of the Single-member LLC

Any commercial subsidiary must comply with legal regulations concerning corporate taxes, hence the term SARL or Limited Liability Company. Different forms of corporations exist and apply worldwide.

This article will focus on the single-member LLC and its advantages.

SARL or Limited Liability Company

Definition and Functioning

A Limited Liability Company is a commercial enterprise limited through the amount of the contributions (existence of competitions). Generally, it is qualified as mixed and is composed of two (02) to one hundred (100) natural or legal persons. However, a company can now be created by a single individual and will take the form of a one-person company.

The Commercial Code governs the rules relating to the organization of the powers of the partners, the status of the company and the registration procedures.

The SARL must be managed by at least one natural person, partner or not, who will exercise the role of “manager”. Nevertheless, this does not prevent the existence of several managers simultaneously. The share capital is variable according to the agreements of the partners. And all the administrative formalities also depend on the form of the company and its activities.

SARL with a single partner

Definition

  • It is also known as a Limited Liability Company or EURL. It is a form of company with only one partner with an independent legal personality, a share capital, and one or more managers.
  • It is governed by articles L223-1 of the Commercial Code.
  • Note that the functioning and the advantages are very similar to those of the SARL.

Operation

  • As its name indicates, the company has only one partner, and its responsibilities are limited.
  • The minimum share capital is set at one (01) euro and requires drafting articles of association.
  • The contributions are either in cash, in-kind, or in industry.
  • The management can be taken either by the associate himself or by a third person perfectly eligible and conditioned for the position or co-management with several individuals.

Characteristics

  • The company has legal and moral personalities and its own patrimony;
  • The sole partner can be either a natural person, or the founder of the company or a legal person and thus another company;
  • The company is free to practice any commercial, agricultural, craft, or liberal activities;
  • The company is free to practice any commercial, agricultural, craft or liberal activity; It can opt for the regime of the micro-enterprise with a turnover not exceeding 176 200 euros for the trade and 72 500 euros for the other activities;
  • The sole proprietor is free to choose the prerogatives and the administrative procedures of the company;
  • The fiscal and social regimes of the company depend entirely on its components and the administrative formalities adopted by the company.
  • What Is an Asset? Personal and Business Assets

Advantages

The single-member limited liability company has many advantages.

We will particularly develop:

The Protection of Personal Assets

All the elements outside of the company’s activities are not linked to the company structure. Therefore, the protection of personal assets is guaranteed because of the legal personality of the Limited Liability Company.

Indeed, because of the company’s limited liability, the sole shareholder will only intervene in the amount of his capital contribution. His personal and professional patrimony is then distinct by its characteristics.

As a general rule, the sole partner will not be sued by creditors on his assets but on the structure’s holdings in financial problems.

On the other hand, in case of severe management incidents or offenses under the criminal code, this rule will be immediately abolished. Consequently, the personal liability of the partner will no longer be limited.

In addition, clarity and security are well regulated, and the taxation of the company is done on the profits generated by the company. The determination of the amount of taxes is entirely free and does not require any specific constraints.

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