What legal status for my company ?

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 PROPRIETORSHIPSÀRLSÀRL-S
NUMBER OF PARTNERS1from 1 to 100from 1 to 100
CAPITAL AMOUNTno capital requiredminimum €12,000from €1
FINANCIAL RESPONSIBILITYPersonal liability towards third partiesLiability limited to the amount of the contributionLiability limited to the amount of the contribution
TAX REGIMEContractor’s tax returnSubject to corporate income taxSubject to corporate income tax
CONSTITUTIONAL DOCUMENTSNo 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 AND DISADVANTAGES OF THE SOLE PROPIERORSHIP (ENTREPRISE INDIVIDUELLE)

ADVANTAGESDISADVANTAGES
No constitutional documents (statuts) needed, the entrepreneur acts on his own nameThe private assets of the entrepreneur are mixed with the assets of the business activity
Management of accounting and tax is quite easyThe entrepreneur is responsible for all the debts of the business  
No minimum capital required Not possible to have shareholders

ADVANTAGES AND DISADVANTAGES OF A SÀRL(S)

ADVANTAGESDISADVANTAGES
Personal goods are not impacted by debts or financial difficultiesMore formalism to produce accounting documents (balance sheet, profit and loss table,…)
Limited responsibility towards the capital brought into the companyConstitutional documents, memorandum of association (statuts) are mandatory. (you can download a model here)
Possibility to have one or more partners
Before choosing the legal status which corresponds best to your situation, you should ask yourself: 
  • Am I ready to take the risk to link my assets to the company’s?
  • Do I want to work alone or have a partner?
  • Depending on my activity and development model, which fiscal regime would be the most beneficial?
  • What is the amount of the capital I will put in the company?

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