Choosing the legal status

The first basic step consists in determining the most appropriate legal form to start with: whether to carry out business as a sole trader or create a firm. As such, the applicant may try finding answers to a number of questions:  

• What legal form should I choose?

• What will be my social security?

• What will be my tax scheme?

• What costs shall I have to bear?

• What formalities should I comply with?


 In a sole proprietorship, the businessperson carries out his/her professional activity under his/her own name.

 If married, the sole trader should take cognisance of the principles of his/her marital regime. As such, he/she should conclude a marriage contract so as to choose either separate ownership of property or that of sharing of assets acquired after marriage in order to protect the property of the spouse. If there is no contract, joint ownership will apply to the couple. As a result, the firm’s creditors may seize not only the businessperson’s property, but also that of the spouse.

The sole proprietorship is a lighter and more economical business to create and more flexible for the promoter to manage.

In terms of taxation, its tax returns are simplified and its accounting obligations are limited to keeping a simple book for recording daily takings. The major inconvenience for the promoter lies in the fact that this type of business does not offer any protection for his/her estate.


Creating a company means giving birth to a new person distinct from the associate(s):

- The company possesses its own estate. Where it faces difficulties and no management errors are blamed on its managers, the personal belongings of the latter – and naturally those of the associates – will be safe from the actions of the creditors of the company, if they are not in a general partnership where each associate is jointly and severally liable alongside the company. 

- The use of the company’s property for personal ends can attract legal action for “misuse of corporate assets”.

- Concerning a « new person », the company has a name (corporate name), a domicile (head office), and has a minimum number of inputs that make up its initial estate to carry out its first investments and its first expenses (share capital). 

The manager appointed to represent the company before third parties acts not on his/her own behalf but on that of a distinct moral person. Consequently, he/she has to respect a number of formalities when it comes to taking important decisions. Similarly, he/she has to render accounts of his/her management to the associates.

These conditions will be presented in a tabular format showing the forms of businesses and the legal conditions the texts provide for each form.

These conditions relate to the capacity, minimum number of associates prescribed by the law, minimum capital and management style of the business to be created.


Sole Proprietorship

Capacity of Associates: Legal age of 21 years; Emancipated minor (married or who has been emancipated by his/her parents)

Number of Associates: 1 trader: the sole trader

Form of incorporation act: No specific form

Minimum share capital: No minimum capital imposed

Management style: Personal decisions of the entrepreneur.

Capacity of Associates: 21 years
Minimum number of Associates: At least 2
NB: 2 spouses cannot both be associates of the Partnership

Form of incorporation act: Partnership agreement

Minimum share capital: No minimum capital imposed

Management style: One or more managers

Limited Partnership

Capacity of associates: Legal age required of the limited partners. An mancipated minor can be an associate partner

Minimum number of Associates: At least 2

Form of incorporation act: Partnership agreement

Minimum share capital: No minimum capital imposed

Management style: One or several managers chosen from among the limited partners. If the Articles of Association do not specify the manager(s), all the partners are the managers.

 Limited Liability Company
Capacity of Associates: Legal age required
Minimum number of Associates: At least 2

Form of incorporation act: Partnership agreement

Management style: One manager

The corporate name is immediately preceded or followed by the words « Limited Liability Company » or the acronym « LLC » in legible letters.

NB: Each associate enters into contracts on his own behalf and is solely committed vis-a-vis third parties.

Capacity of Associates: Legal age required. However, the emancipated minor can be an associate within an company.

Minimum number of associates: At least 2.

Form of incorporation act: Notarised deed

Minimum share capital: 1,000,000 FCFA divided into shares with nominal values of not less than 5,000 FCFA.

Limited Company

Capacity of Associates: Legal age of shareholders. However, the emancipated minor can be a shareholder in such a company.

Number of Associates: As fixed by partnership agreement.

Form of incorporation act: Unilateral Incorporation Act drawn up by the founders of the enterprise and entrusted to a notary for the remaining formalities as required by the law.

Minimum share capital: 10,000,000 FCFA divided into shares with nominal values of not less than 10,000 FCFA.

Management style: –A board of directors

- A general management

Economic Interest Group

Capacity of Associates: Not needed since the IEG brings together pre-existing companies.

Minimum number of Associates: 2 natural person or corporate bodies already engaged in either commercial or liberal profession activities

Form of incorporation act: Partnership agreement

Minimum share capital: No minimum capital imposed. EIGs can be formed without capital.

Management style: One or more natural person or corporate bodies appointed as administrators.

There is no doubt that the creation of an enterprise with a considerable capital (Limited Companies, for instance) will be recommended for the business to approach certain markets.

D –The tax scheme of the entrepreneur and the company

Depending on the form of business chosen, it will be liable to income tax or corporate tax. Here again, the criteria will rarely be decisive at the stage of creating the business. It is in effect difficult to assess with precision the projected turnover of the future enterprise and, thereby, provide a realistic tax plan.  


In accordance with Law N°2011/020 of 14th December 2011, natural persons and corporate bodies will be taxed according to the schemes listed below, which will be determined according to the turnover obtained: 
- Discharge Tax scheme 
- Simplified Scheme 
- Actual scheme 
Apart from forest exploiters, public ministerial officials, liberal professionals, sole proprietorships with annual turnovers of less than 10 million fall under the Discharge Tax scheme. 
Apart from transporters of persons and enterprises for games of chance and leisure, sole proprietorships and corporate bodies with an annual turnovers of or in excess of 10 million but below 50 million fall under the simplified tax scheme. 
Furthermore, taxpayers liable to the simplified scheme but having proof of an annual turnover of at least 30 million can, before 1st February of each taxation year, request for an option of the actual scheme from the competent chief of taxation centre. 
This option remains irrevocable for a three-year period and also carries the option for the same scheme with regard to value-added tax. 
Sole proprietorships and corporate bodies with an annual tax-exclusive turnover in excess of 50 million Francs fall under the Actual Scheme.



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