Which legal form to choose for your new business (IKE, OE, AE)

Formation

A legal form isn’t a bureaucratic detail. It’s the first serious decision that will follow you into every tax return, every new partner and every funding round.

Most people choose a legal form on one criterion: the cost of setting it up. That’s understandable — but it’s the wrong lens. The right question isn’t “what does it cost to start”, but “what does this choice cost me in two, five, ten years”.

We won’t tell you which form to choose through an article — that depends on your specific case and needs specialist legal and tax advice. But we’ll give you the way to think about the question correctly.

The main options, in plain terms

Sole proprietorship

The fastest and cheapest start. There’s no separation between you and the business: profits are taxed as your income and you’re liable with your personal assets. Ideal for testing an idea at low risk, not for something you want to grow or bring partners into.

Partnerships (OE, EE)

Two or more partners, relatively simple to set up. In a general partnership (OE) everyone has unlimited liability; in a limited partnership (EE) there are also limited partners with limited liability. They work when there’s trust and a clear agreement between partners.

IKE (Private Company)

The most popular choice for new SMEs in recent years — and not by chance. Limited liability, low minimum capital, flexibility in structure. It combines the protection of a capital company with relatively simple operation.

AE (Société Anonyme)

The “heavy” form: larger capital, stricter governance, more obligations. It makes sense when there’s serious funding, many shareholders or the prospect of investors who require it.

The 4 questions that determine the choice

1. How much risk are you taking on? If the activity carries legal or financial risk, limited liability isn’t a luxury — it’s a shield for your personal assets.
2. Are you alone or with partners? With partners you need a structure that clarifies shares, roles and what happens if someone leaves.
3. Will you need funding? Banks and investors view each form differently. Some structures make bringing in capital easier, others make it harder.
4. What cost can you bear each year? Each form has different taxation and different compliance costs — not just at setup, but every year.

The mistake that costs later

The form can change — a sole proprietorship can become an IKE, an IKE can convert into an AE. But every conversion has cost, time and bureaucracy, and often happens at the worst moment: when you’re growing fast and have no time for paperwork.

Starting with the right structure saves you that cost. It doesn’t mean choosing the “heaviest” form just in case — it means choosing the one that fits where you’re going, not just where you are today.

The cheapest setup is rarely the cheapest decision.

How we approach it

In formation we don’t work from templates. We start from where you want the business to go and build backwards: which structure protects you, which leaves room for partners and capital, which has the lowest total cost for your case. The legal and tax implementation is handled by our partners; we hold the overall picture so the decisions make sense together.