Starting a Business in France as a Micro-Enterprise: What should you know?
When looking to setup a business alone, there are two possibilities available to you:
- Applying in your own name (either as an individual business or a micro-enterprise)
- Creating a one-person company (either as an EURL – a one-person limited liability company or a SASU – a simplified shareholder company)
Part I of this series will focus on the micro-enterprise (formerly known as ‘autoentrepreneur’). Since the 1st of January 2016, the status ‘auto-entrepreneur’ has changed to ‘micro-enterprise’. In effect, individual entrepreneurs under the micro-fiscal regime regarding tax on revenue are now automatically subject to the micro-social regime regarding social contributions.
In the frame of the law on modernising the economy (LME), the status ‘auto-entrepreneur’ refers to individual entrepreneurs or those who wish to have additional business activity and it was created on the 4th of August 2008.
The micro-enterprise plan applies as long as the CAHT (chiffre d’affaires réellement encaissé au cours de l’année civile) does not exceed the threshold of €82,200 for sales activity or €32,900 for service provision and freelancers (or independent professionals).
The Tax Plan
A micro-entrepreneur is excused from professionally declaring their profits. They must declare the annual amount of gross sales through the annual declaration of revenues on the n°2042-C PRO form. The taxable profit is subject to the tax tariff on revenue. The tax administration determines this by applying a lump-sum allowance for business expenses of:
- 71% of the turnover (Chiffre d’Affaires) for the activities of purchase/resale or housing provision (holiday cottages, guest houses and bed and breakfasts)
- 50% for the other activities pertaining to BIC (Bénéfices Industriels et Commerciaux) (e.g. furnished accommodation besides holiday cottages, guest houses and bed and breakfasts)
- 34% for the BNC (Bénéfices Non Commerciaux) (e.g. non-furnished rentals)
EXAMPLE: a micro-entrepreneur with sales activity and a turnover of €10,000, taxed according to the micro-fiscal regime, will have a taxable profit of €2,900 [10,000 x (100% – 71%)]
However, a micro-entrepreneur can choose the option of a settlement payment from the tax on the revenue if their benchmark taxable income for the year N-2 is inferior or equal to a threshold (€26,764 for a single person or €53,528 for a married person without children). In this case, the pay scale of the IR is inapplicable and the tax (to pay) corresponds to a percentage of the turnover (from 1% to 2.2%, depending on activity).
This option becomes very interesting if it allows one to benefit from a tax saving. It is therefore worthwhile to compare the two ways in which the tax can be calculated: with the pay scale of the IR and with the option of the settlement payment.
The Social Plan
A micro-entrepreneur is in the category of workers without a salary (TNS). They must be aware of RSI for the exclusion of independent professionals, URSSAF for family allowances and of CNAVPL for retirement provision. The amount of social contributions to pay is calculated on the number of gross sales by applying a percentage comprised between 13.4% and 22.9% according to the activity of the business.
If you think that this matter applies to you, it is important to ensure substantial understanding of all relevant information, facts and procedures. Here at Maupard, we would be more than happy to advise you on the next steps and to allow you to make the most of these opportunities.
Do not hesitate to contact us by telephone on +33 (0) 1 53 93 94 20 or by e-mail to email@example.com, so we can work out the needs of your business. Our team of experts is here to answer any questions you may have.