Choosing the right legal status is an important step in setting up a business. EI (Entreprise Individuelle) and Sarl (Société à responsabilité limitée)/Sarl-s (Société à responsabilité limitée-simplifiée) are the statutes most frequently used by small businesses. To help you make the right choice, we’ve provided a description and a table summarizing the characteristics of these two types of company.
These information are only a general approach before choosing the legal status. Other legal forms exist. Do not hesitate to ask other professionals for advice and visit the website: guichet.lu by clicking here.
| SOLE PROPRIETORSHIP | SÀRL | SÀRL-S | |
| NUMBER OF PARTNERS | 1 | from 1 to 100 | from 1 to 100 |
| CAPITAL AMOUNT | no capital required | minimum €12,000 | from €1 |
| FINANCIAL RESPONSIBILITY | Personal liability towards third parties | Liability limited to the amount of the contribution | Liability limited to the amount of the contribution |
| TAX REGIME | Contractor’s tax return | Subject to corporate income tax | Subject to corporate income tax |
| CONSTITUTIONAL DOCUMENTS | No need to draw up articles of association RCS registration if commercial activity | Notarized articles of association RCS registration | Articles of association (no need to go before a notary) RCS registration |
| ADVANTAGES | DISADVANTAGES |
| No constitutional documents (statuts) needed, the entrepreneur acts on his own name | The private assets of the entrepreneur are mixed with the assets of the business activity |
| Management of accounting and tax is quite easy | The entrepreneur is responsible for all the debts of the business |
| No minimum capital required | Not possible to have shareholders |
| ADVANTAGES | DISADVANTAGES |
| Personal goods are not impacted by debts or financial difficulties | More formalism to produce accounting documents (balance sheet, profit and loss table,…) |
| Limited responsibility towards the capital brought into the company | Constitutional documents, memorandum of association (statuts) are mandatory. (you can download a model here) |
| Possibility to have one or more partners |
Depending on the progress of your project, we’ll give you advice, put you in touch with one of our volunteers, or refer you to another entrepreneurial support organization.