An EARL? I’ve never heard of it. It’s certainly what you mentioned if someone talked to you about this type of legal structure. But as you will certainly understand, it’s a legal status that allows you to create a business. Do you know about EIRL? SA? Or even SARL? Well, an EARL is the same thing! The only difference that can be noted? It is a status reserved for a particular type of activity. EARLs are limited to agricultural operators. Like all legal forms, the EARL has both advantages and disadvantages.

Also note that to create the status, you have certain conditions. For example, you need to bring a starting amount. Unlike other businesses, the minimum contribution amount for an EARL is not very high.

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If you are here as a farmer looking for a legal status, you are in the right place. In fact, we will explain what an EARL is and the conditions that must be met to create this status. Are you ready to learn more? Then let’s go!

Content

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  • Characteristics of an EARL
  • How to create an EARL?
  • Advantages of an EARL
  • Taxation of an EARL

Characteristics of an EARL

The first thing to note about the EARL is that it cannot exceed a dozen partners. A single founding person is quite possible. It is then up to you to decide whether you want to be alone or not. Also note that the partners of an EARL are committed based on the amount of their contributions. In other words, if you invest €3,000 in this EARL, no one can demand more in case of a dispute. It is therefore a limited liability company. However, there are some obstacles to this system.

It is also important to take into account the fact that an EARL can only be a natural person. There are also two other conditions to highlight in order to create an EARL:

  • You must have French nationality or, failing that, be a member of the European Union.
  • If you wish to create a business under this agricultural status, legal majority is required.

To be a partner in an EARL, it is important to consider three conditions:

  • Active participation is mandatory for partners.
  • Partners must also be in the majority.
  • Only partners can be appointed to lead the business.

It is very important to take into account the fact that such a business needs contributions to start. The amount of this is then €7,500. It can, of course, be higher if some contribute more capital.

To create an EARL, the manager or one of the partners must also be an agricultural operator.

How to create an EARL?

Creating an EARL is done simply. Here are the steps to follow for your EARL creation to be effective:

  • The first step, which is common to all legal texts, is simply to draft the statutes. You will then need to register it for tax purposes, the month following the signing of your statutes.
  • You must then pay the contribution amount.
  • You are required to have the other contributions assessed by an approved person.
  • You will then need to create a notice of incorporation.
  • You will then be asked to create your business online.
  • All your business documents will be filed with the registry.
  • The last step to create your EARL is to submit your advertising act to the “BODACC”.

Advantages of an EARL

The EARL has several advantages that are not negligible. We will discuss with you what the strengths of this legal status are:

  • The first point we will highlight is that an EARL completely differentiates between personal and professional assets. Why is this good? Simply because in case of a dispute or financial problems, no one will be able to touch your personal belongings.
  • It is also worth noting that contributions are limited. Each partner commits to the author of their contribution.
  • You can include non-operational partners in your EARL. However, they will not have the right to be in the majority.
  • You can choose the taxation method you want, which is a real advantage. This must be included in the statutes.

Taxation of an EARL

We mentioned above the taxation of your EARL. Let’s discuss how your business can be taxed. You can choose between two different tax methods:

  • Either you pay a tax corresponding to the profits or losses of your business. The tax amount is therefore calculated on this and what the head of a business has already done. So, it’s a percentage that you will have to pay monthly.
  • Or you opt for corporate tax. This is the most advantageous thing when creating an EARL. It simply follows the corporate tax approach.

The choice of taxation is based on you and what you prefer.

In conclusion, it is important to note that only farmers can create an EARL. Indeed, it is the status that best suits agricultural activity. It is also worth noting that non-operators can also hold shares in an EARL, but they must be minority partners. The steps to create an EARL are fairly simple, but a bit tedious. Indeed, several important steps must be followed, which is not necessarily to everyone’s taste. Let’s not forget that if you create an EARL, you will have the option to choose your tax method. However, we strongly advise you to opt for corporate tax. But feel free to make your choice, in your soul and conscience.

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How to create an EARL?