We possess vast experience as statutory auditors and chartered accountants having worked with startups across diverse sectors. While these sectors may exhibit unique characteristics, they commonly face issues related to Financing, the capitalization of research and development expenses, eligibility for tax credits, the significance of recruitment, and the management of relationships with business angels and investment funds.

Beyond our accounting, bookkeeping, and auditing services, as your start-up’s chartered accountant, we provide a tailored approach that proactively anticipates your requirements. We stay updated on shifts in social and tax regulations, ensuring the implementation of suitable solutions while keeping you well-informed.

As a statutory auditor for your startup, we adopt a constructive and flexible approach, anchored in substantive testing and, most importantly, in the review of your various processes, collaborate closely with your teams to foster a strong sense of trust and act as a valuable source of recommendations for the ongoing improvement of these processes.

The growth of our firm in the realm of accounting expertise and auditing relies on the technical support of multi-skilled, regularly-trained team. Furthermore, our associated chartered accountants and statutory auditors are known for their proximity and availability, always ready to help when you require their assistance.

Our missions as a chartered accountant for start-ups

Managing accounting and bookkeeping for your Start-up

Our firm is a member of the Paris Chamber of Chartered Accountants. Our mission of keeping or reviewing the accounting of your start-up or tech company results in a comprehensive support aimed at:

  • Establishing or taking over a start-up, regardless of the sector of activity,
  • Ensuring the fiscal security of your projects, particularly with respect to VAT and the deductibility of financial expenses,
  • Analyzing the economic results of your projects using analytical accounting if necessary,
  • Optimizing your financial resources, including external financing,
  • Assisting you in drawing up reporting statements for fund providers.

To ensure the reliability of established financial information, we help you implement effective information retrieval and internal control processes, as well as suitable tools to monitor the value of work in progress and future margins for each project within your digital services company.

We proactively address upcoming issues across various projects by familiarizing ourselves with each one and analyzing their accounting and tax implications.

We can potentially connect you with tax specialists or experts who are well-versed in collaborating with young and innovative companies if our expertise doesn’t cover all the issues that arise, such as analyzing the eligibility of certain projects for the Research Tax Credit (CIR), for example.

If your start-up or e-business company is a subsidiary of a foreign group or is owned by venture capital firms, as an expert accountant, we assist you in constructing the reports or dashboards intended for fund providers and for their periodic production.

Management of your start-up taxation

Your start-up designs an innovative product or service, and you might be expanding internationally. You could potentially be eligible for the status of a Young Innovative Company (JEI), and some of your expenses might qualify for various tax credits, such as the Research Tax Credit or the Innovation Tax Credit.

We take care of both recurring and occasional tax declarations. We thoroughly examine the context and purpose of each of your start-up’s projects beforehand, to identify tax issues, especially in terms of VAT territoriality or eligibility for the research tax credit. We support you in the event of tax audits and conduct ongoing monitoring of tax legislation and changes in the various Finance Acts.

Social Management for your Start-up

On the social front, Houdart A&C possesses a thorough understanding of the SYNTEC agreement and all the applicable collective agreements relevant to various business sectors, to which start-ups belong based on their APE code, due to the diversity of activities among our clients.

When your business evolves, we analyze the impact of any changes to the main activity. This helps us assess whether the affiliated collective agreement needs to be modified and the subsequent social implications.

We handle payroll processing for employees of start-ups within our clientele. We provide assistance during URSSAF audits, prepare DSN (Social Declarations), and can handle employee salary transfers.

We can also manage of affiliation to the relevant provident organizations in your company’s sector of activity.

In case of disputes with one or more employees, we provide advice and connect you with a lawyer we are ready to recommend for labor dispute cases.

Legal Assistance for your Start-Up

Our legal department can help you with the day-to-day and extraordinary legal tasks involved in running a company. We are also available to provide you with all the advice you may need as a start-up manager in running your business. Our legal mission includes annual legal compliance, drafting specific documents, preparing minutes for ordinary and extraordinary general meetings, convening of meetings, amendments to the articles of association (transfer of registered office, company name, etc.), formalities with the clerk of the relevant commercial court, etc.

Additionally, we assist your cfo services in executing operations such as contributions, transformations, mergers and demergers.

For complex transactions involving the issue of securities such as convertible bonds into shares (OCA), share subscription warrants (BSA), business creator share warrants (BSPCE), etc., as well as the drafting of shareholders’ agreements, we connect start-up executives and shareholders with trusted specialized lawyers to ensure the smooth progress of these operations.

MyUnisoft, a Digital, Collaborative, and Innovative Accounting Software Tailored for Start-Up Needs

We have an innovative, efficient and collaborative accounting production tool, a real market place with open API, to which can connect most of the common apps used by entrepreneurs, whether digital neobanks, CRM, data analysis, EDM or payroll software tools.

Thanks to the agreements concluded with most banking institutions, we can set up with your bank an automatic recovery of your bank flows in EBICS format.

We can provide your accounting teams with our software, enabling them to collaborate on your financial data in real time. We can also fully handle your accounting if you don’t have an in-house accounting service.

Due diligence

When an opportunity for external growth arises, we are capable of conducting an acquisition audit of the target company as either consultants or auditors before you make your decision.

Support for start-up business owners

Our mission is not limited to establishing the balance sheet of your innovative company. For startups and family businesses among our clients, we support the entrepreneurs on the patrimonial plan so that their business-related decisions, which have an impact on their assets are optimal for both them and their family.

The diversity of our expertise allows us to primarily assist you with your personal tax declarations. We prepare your income tax returns in France, as well as any potential real estate wealth tax declarations.

We provide guidance in choosing individual and group health and heavy-risk insurance contracts. We ensure that the formalities for setting up contracts cover the risk of tax and social audits.

We support you, if necessary, during your personal tax audits.

For business entrepreneurs, acquiring real estate for their company is often an interesting way to align their company’s interests with the development of their personal assets. We are at your side from the initiation of the project, the decision to invest in real estate, the choice of investment structure, right through to the preparation of the necessary documents to apply for funding from financing organizations.

We have a significant network of specialized professionals in insurance brokerage, notarial services, and legal experts specialized in social or tax matters, whom we can mobilize to complement our support.

Lastly, we accompany and study with our clients various possibilities for social security regimes and remuneration methods, aiming to optimize the remuneration of the startup manager in terms of tax and social benefits.

Our auditing services for start-ups

Statutory audit and certification of your start-up’s accounts

The objective of a legal audit is to provide an opinion on the regularity and reliability of the financial information available to all stakeholders of the audited startup or digital business.

As a member of the Regional Chamber of Chartered Accountants in Paris, our firm conducts this mission in strict adherence to ethical and legal rules regarding independence and incompatibility. We implement a rigorous methodological approach and rely on the technical expertise of our teams and partners. Our partners are personally involved and serve as the primary point of contact for our clients. Our audit approach is based on:

  • A risk-based approach targeting the essential aspects,
  • Sector-specific knowledge,
  • Analysis of internal control mechanisms,
  • Understanding of financial flows and complex accounting treatments,
  • Smooth communication with company representatives.

We are also responsive when requested to act as statutory  auditors for startups among our clients for transactions requiring a report, the most common of which are : capital increase with the removal of preemptive subscription rights, creation and issue of preference shares, capital release through compensation with a claim that is certain, liquid and due, issuance of share warrants or business creator’s ssubscription warrants / performance shares.

Audit of your start-up’s internal procedures and information systems

The risk-based approach adopted during the audit of an innovative company involves conducting reviews of various procedures that structure the company: purchasing processes, sales processes, inventory processes, IT security, personnel management, and any other specific processes relevant to your company.

During this process, we identify control points, test them, and provide recommendations if we identify areas for improvement.

Ad hoc statutory auditors, Audits for contributions, mergers, and transformations

Ad hoc Statutory Auditor

Although they do not have a statutory auditor, some companies need to appoint a statutory auditor for specific operations. The use of an ad hoc appointed statutory auditor is common for startups that carry out recurring operations related to their capital. These operations may include :

  • Capital increases without pre-emptive rights,
  • Release of a capital increase by offsetting receivables,
  • Advance payment of dividends,
  • Issuance of bond securities granting access to capital.

Statutory Auditor for Contributions

When a company is set up or its capital is increased by a contribution in kind, the value of the contribution must be assessed by an independent expert in order to preserve equality between partners. As a statutory auditor for contributions regularly involved with startups or rapidly growing digital companies, our mission involves assessing:

  • The value of contributions, ensuring it is not overvalued and at least corresponds to the nominal value of the shares or parts to be issued,
  • Any special advantages stipulated during these operations.

Merger Statutory Auditor

We also act as a merger statutory auditor for startups. The mission of the merger statutory auditor involves validating the legal information regarding the merger and overseeing the fairness of the exchange ratio between the involved companies, ensuring that no shareholder or partner is disadvantaged, especially if they are a minority. The statutory auditor also ensures that the rights of current and future shareholders or partners are respected throughout the operation.

Transformation Statutory Auditor

Before bringing in new shareholders, start-ups sometimes change their corporate form in order to limit transfer rights. In the event of the conversion of a company of any form into a joint stock company, a Transformation Statutory Auditor is responsible for assessing the value of the assets of the company and any special advantages. It is important to ensure that the assets are not overvalued.

Characteristics of Startups, Tech, and Digital Companies

Intrinsic Characteristics of a Startup

The term “startup” refers to a recent, innovative, and high-growth potential company that holds significant future value in the case of success but also carries a high level of risk. A startup goes through a phase of market analysis, product experimentation, and validation of its economic model.

The innovative nature of the product, service or business model is paramount, because it must ultimately gain a competitive advantage.

The business activity’s deployment should ensure good “scalability,” meaning the capacity to adapt its business model to a significant increase in its activity volume.

The market, whether niche or mass, emerging or existing, should reveal substantial growth potential.

A startup is an agile entity, needing to rapidly adapt to its environment and its evolutions.

The need to rapidly dominate the market in which they operate forces start-ups to have substantial financing requirements. Their business model does not allow them to precisely define all the components and constraints of their market, nor to ensure immediate profitability.

A startup also stands out with a determined, ambitious, and complementary team, supported by a network established by the Management and enriched by business angels, incubators, or investment funds participating in the capital, who can provide technical, strategic, and financial support at key moments in its development.

A startup’s development generally follows five phases: creation, design, inception, industrialization, and expansion.

Irrespective of the sector it operates in (digital, cleantech, biotech, edtech, fintech, collaborative economy, etc.), the mentioned specifics characterize a startup.

Accounting Specificities of Startups, Tech, and Digital Companies 

The accounting specificities of startups are inherent to their activities. However, the following accounting issues are frequently encountered: analysis of the capitalization feasibility of software development costs, recognition and accounting valuation of work in progress at the end of the fiscal year, cut-off procedures, etc. These particularities necessitate engaging an accounting or auditing firm with a deep understanding of the sector and the associated accounting issues.

Tax Specificities of Startups, Tech, and Digital Companies

Tax specificities related to startups encompass eligibility for the Young Innovative Company (Jeunes Entreprises Innovantes – JEI) status for newer firms, the patentability of their innovative products that could qualify for Research Tax Credit (Crédit Impôt Recherche – CIR), the taxation of their revenue from sales or granting of rights attached to industrial property such as patents and related matters, and finally, the territorial aspects of their operations from a tax perspective, considering corporate income tax or VAT. These technical aspects on the tax front also require the company to be assisted by an accounting firm knowledgeable in these matters, either in an advisory capacity or audited by a statutory auditor with expertise in these challenges..

Social Specificities of Startups, Tech, and Digital Companies

The relationships between employers and staff in startups are governed by the collective agreements applicable to the sector in which the companies operate. Although not universal, many of these organizations, due to their APE code, are subject to the collective agreement for technical consulting, engineering, and advisory firms (SYNTEC). This agreement features specific aspects such as three types of time management options (standard, hourly package, daily package), the accrual of additional vacation days based on employees’ seniority, and a holiday bonus equivalent to 10% of the holiday pay allowances. Engaging an accounting firm with a solid understanding of the particularities of the different agreements for your startup’s payroll ensures the security of your company’s social management.

Legal Specificities of Startups

The most common legal form adopted by startups is the Simplified Joint Stock Company (Société par Actions Simplifiée (SAS)). This choice is explained in particular by the flexibility offered by the Commercial Code in the governance of this form of company as well as the relatively low registration fees for share movements relating to this type of structure.

From the very early stages of a startup, founders and executives typically establish a Strategic Committee, also known as an Advisory Board, which supplants the role of the Board of Directors in public limited companies (Société Anonymes (SA)). The company’s articles of association specify the role of this strategic committee, the number of members, the allocation of seats, and the methods for convening meetings and making decisions.

In order to grant specific rights to certain investors or founders, which can include financial aspects (preferred dividends) or governance-related matters (board seat, double voting rights, etc.), preference shares are often created during the establishment or throughout the company’s existence.

Furthermore, to avoid disclosing the entire governance structure and various commitments among the shareholders in the company’s articles of association, a shareholders’ agreement is typically drafted. This agreement includes clauses related to capital (rules for acquiring and selling shares, such as lock-up or joint exit clauses) or governance and decision-making (rules for sharing sensitive information, arbitration clause, limitations on powers, etc.)..

Common Questions Regarding Start-ups

What is the VAT regime for distance sales ?

The new regime for distance sales results from the transposition of EU Directives 2017/2455 and 2019/1995. The delivery of goods dispatched or transported on behalf of a seller from one European Union (EU) member state to another constitutes a distance sale, not an intra-community supply, when the buyer is not subject to VAT (private individual). Distance sales are subject to VAT in the destination country of the goods when the annual sales exceed the threshold of €10,000 in that country. The declaration of collected VAT is made through a centralized administration portal.

What are the different stages of financing a start-up ?

At its inception, a start-up typically requires limited capital. At this stage, funding comes from founders, family, and friends. This is known as “love money”. During this phase, crowdfunding is also used, allowing the testing of the product’s appeal while raising funds.

The start-up might then join an incubator, which facilitates networking and provides guidance and shared experience from other entrepreneurs.

During the seed stage, capital is opened up through the first funding round, known as “seed money.” Investors, often called “business angels,” enter the company and finance this initial phase of start-up development.

Lastly, investors exit the company by reselling to funds that take over to support growth, selling to a group or through an IPO (Initial Public Offering), either directly or via a Spac (Special Purpose Acquisition Company).

What are the main types of securities or subscription rights used in fundraising ?

  • BSA: the Share Warrant gives the right to subscribe to shares at a predetermined or determinable price. The beneficiary buys this right that he will have the choice to exercise, and thus to subscribe for the shares or not to exercise.
  • BSA ratchet : this consists of issuing BSAs to investors, allowing them to subscribe to a certain number of shares at nominal value, which is determined either by the valuation used for the next funding round (Full ratchet) or the average valuation of the initial and subsequent rounds (Average ratchet). BSA Ratchet enables investors to adjust their ownership in case the company’s later valuation is lower than that of their initial entry.
  • BSA-AIR : BSA-AIRs stand for “BSA- Accord d’Investissement Rapide”, are BSAs with a rapid investment agreement that enables start-ups in the seed phase to raise funds quickly by deferring the determination of the company’s valuation until a subsequent event occurs (a new financing round or a liquidity event).
  • BSPCE (Bons de Souscription de Parts de Créateur d’Entreprise): BSPCE, or ” warrants for subscription to business creator shares,” are well-suited for start-ups due to the specific conditions outlined in Article 163 bis G of the tax code that govern their allocation. These warrants are issued free of charge by the issuing company to all or some of its employees, giving them the right to subscribe to shares at a pre-determined price.
  • Actions de préférence (or Preference shares): These are equity securities that come with specific rights different from ordinary shares, as defined in the company’s articles of association. These rights can include priority dividend, increased voting rights, right to a seat on the Board, etc.

What expenses are eligible for the Research Tax Credit (CIR) ?

The CIR is calculated at a rate of 30% for research expenses up to or equal to 100 million euros, and at 5% for expenses exceeding that threshold. It applies to R&D expenses, as defined by Article L244 Quater B of the French General Tax Code (CGI), which primarily include:

  • Personnel expenses, proportional to the time spent on R&D activities.
  • Depreciation allowances for equipment directly used for research.
  • Certain operating expenses.
  • Intellectual property costs, including patent registration and maintenance fees.
  • Subcontracting expenses for research activities entrusted to a subcontractor who has obtained accreditation from the Ministry of Higher Education and Research.
  • Technological surveillance costs, up to a certain limit.
  • Partial coverage of standardization expenses.

What are the conditions for capitalizing research and development expenses ?

Development expenses can be capitalized if they are linked to clearly defined projects with a high probability of technical success and commercial profitability (PCG art. 212-3).

The following six conditions must be simultaneously met:

  1. Technical feasibility of completing the intangible asset for it to be ready for use;
  2. The intention to complete the intangible asset and use or sell it ;
  3. Ability to use or sell the intangible asset;
  4. Ability of the intangible asset to generate probable future economic benefits;
  5. Availability of adequate resources (technical, financial, and others) to complete the development;
  6. Ability to reliably measure the expenses attributable to the intangible asset during its development.

What is the tax regime for the profits earned from selling or licensing patents and other related rights?

Companies that are subject to income tax (IR) or corporation tax (IS) may opt to apply a reduced tax rate of 10% to net income earned from the sale, concession or sub-licensing of certain industrial property rights.

The eligible assets include patents, protected software, industrial manufacturing processes, and patentable inventions.

This tax system applies only if expressly stated in the income declaration for the fiscal year in which it is exercised.

The net income from the concession is determined by the difference between the revenue derived from eligible assets and the R&D expenses directly related to these assets and incurred. Expenses such as general and industrial property rights defense costs are excluded.

Can an intangible asset be amortized ?

The cost of an intangible asset with a finite useful life must undergo amortization and be spread out over that period. However, an intangible asset with an indefinite useful life should not be subject to amortization. The useful life of an intangible asset that is not amortized must be reassessed at each reporting period to determine if events and circumstances continue to justify the assessment of an indefinite useful life for that asset.

Why engage a specialized audit and accounting firm for startups ?

Whether you lead a startup, a scale-up, or an established innovative company with a solid national presence, consulting an accountant and expert who comprehends the specifics of startups can assist you with drafting legal statutes, creating business plans, managing daily accounting and taxation, analyzing external growth projects, and conducting due diligence. This guarantees that you receive technical expertise to address the challenges inherent to your field of activity, your rapid growth needs, and your capital structure. Both the chartered accountants and dedicated team members for your company are experienced and trained professionals.

Choosing an statutory auditor accustomed to working with startups guarantees a risk-based approach that is constructive and adds value to your teams. Apart from conducting substantial tests, the auditor also provides suggestions for implementing processes designed to improve your internal controls and the reliability of financial statement production.