SARL vs SAS: Choosing the Right Structure for Your French SaaS Startup
Launching a SaaS startup in France involves numerous crucial decisions. Among them, choosing the right legal structure—SARL or SAS—is critical. Each has its specific advantages and disadvantages depending on your long-term vision, tax optimization goals, and your relationship with future investors.
Understanding SARL and SAS Structures
Before comparing the two structures, let's briefly define each one:
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SARL (Société à Responsabilité Limitée):
A limited liability company with a more rigid framework, generally suited to smaller teams or family-owned businesses. -
SAS (Société par Actions Simplifiée):
A simplified joint-stock company known for flexibility, attractive to startups with ambitious growth plans and requiring agility.
Key Differences Between SARL and SAS for SaaS Startups
To help you decide clearly, we’ll analyze key factors that SaaS founders should consider.
Flexibility and Governance
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SARL:
Highly regulated, governed by clear, strict rules defined by French commercial law. This structure often suits stable businesses with limited changes in governance or ownership. -
SAS:
Offers greater freedom to define internal governance. Startups often choose SAS because it adapts easily to dynamic environments, especially if you plan to frequently raise funds or add new partners.
Financial Implications: Taxes and Dividends
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SARL:
While SARLs often have lower social contributions on managerial salaries, dividend distribution is heavily taxed, limiting the attraction for outside investors looking for ROI. -
SAS:
Beneficial for founders seeking to attract investors due to its attractive taxation on dividends. The SAS structure can better accommodate fundraising, especially from venture capitalists or business angels.
Social Charges and Compensation of Managers
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SARL:
Managers ("gérants") are considered self-employed ("Travailleurs Non-Salariés" or TNS). They benefit from lower social charges but often have limited social protection. -
SAS:
Managers ("Présidents") have employee status, paying higher social charges but receiving better social protection, aligning well with startup founders looking for security.
Attracting Investors and Fundraising
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SARL:
Not particularly investor-friendly due to the rigidity of ownership and governance rules, limiting appeal for professional investors. -
SAS:
Highly investor-friendly, allowing tailored shareholder agreements (pactes d'actionnaires), easy issuance of different classes of shares, and flexible fundraising rounds.
Practical Recommendations for SaaS Founders
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If you're looking for stability and have a clearly defined, smaller-scale project:
Choose SARL to simplify your administrative burden. -
If you plan significant growth, fundraising, or international expansion:
Prefer the SAS structure, more adapted to evolving startups and investor expectations.
Conclusion
For most SaaS startups in France targeting growth and external investment, SAS offers clear advantages due to flexibility, investor appeal, and favorable taxation on dividends. However, if your business aims at remaining small and family-oriented, SARL could be sufficient. Your choice ultimately should align with your long-term vision and growth objectives.