Flat-rate allowance: what is it?
Compared with other types of company, the tax system for micro-entrepreneurs is particularly simplified. With regard to income tax (IR), the auto-entrepreneur has a special status which enables him/her to benefit from a flat-rate allowance, also known as an allowance for expenses and charges or an allowance for professional expenses. In other words, the auto-entrepreneur doesn't need to officially declare (online or offline) the profits from his or her business. All they have to do is enter their company's annual sales figures.
Speaking of sales, they must not exceed the auto-entrepreneur ceiling if you wish to benefit from a flat-rate allowance. For auto-entrepreneurs engaged in purchase and resale activities, as well as accommodation services, annual sales (excluding VAT) must not exceed €188,700. For self-employed entrepreneurs engaged in self-employed activities and the provision of commercial and craft services, annual sales (excluding VAT) must not exceed €77,700.
The abatement for the micro-entrepreneur is therefore a rate applied directly to the company's declared sales. It is used to calculate the amount of income tax due. The flat-rate deduction thus replaces personal expenses, and simplifies tax calculation at the same time.
Unlike micro-entrepreneurs, who apply the flat-rate deduction directly to their sales figures, conventional companies must calculate their actual business expenses and deduct them from their actual sales figures. This is the case for SA, SCI familiale, SAS, SASU, SARL and other types of company.
Flat-rate allowance for auto-entrepreneurs: what is it for?
The main aim of the lump-sum allowance is to simplify the taxation of micro-enterprises. Indeed, one of the main advantages of the micro-enterprise system is that accounting obligations are reduced to a strict minimum. All the micro-entrepreneur needs to do is keep a daybook for his business, in which he records his receipts chronologically. They must also draw up a purchase register if they are engaged in a commercial activity, and issue invoices in line with standards.
As a result, the auto-entrepreneur can hardly determine the real profit of his activities, unlike a classic business where it's easy to calculate the sum of professional expenses. As a result, you cannot deduct business expenses from the sales figure of a micro-enterprise. A flat-rate deduction is therefore applied to ensure that, as an auto-entrepreneur, you are not unfairly taxed on the full amount of your company's sales.
To determine the taxable income of your micro-enterprise, subtract this allowance rate from the sales generated by your auto-entrepreneur status. Other household income (property income, wages, etc.) is then added to this income to determine the amount of tax due. Income tax is also used by the CAF (caisses d'allocations familiales) to determine your entitlement to social benefits (prime d'activité, RSA). Pôle Emploi also uses your income tax to calculate the amount of your unemployment benefit (if you are a self-employed worker).
Are you working hard to develop your business, but the financial results just aren't keeping up? Rest assured, there are a number of ways to improve your company's profitability.
Review your quotations
Raising the prices of your products and services may seem absurd at first glance, but it can help improve your company's profitability, provided you get it right. In fact, you can raise the prices of your products and services without driving your customers away.
To improve your company's financial performance, you can increase your prices gradually. We're not talking about a 30% or 40% increase here, but a small one that can be easily justified to your customers.
Focus on high-margin products
To optimize your company's profitability, focus on different products or services. Ditch products that don't sell quickly, and focus on products and services that generate high margins.
Expand your business
Your business may have reached its maximum potential in a given sector. This may be due to a lack of customers or competition from other companies. In this case, to improve your profitability, you need to expand your company's activities.
To do this, you need to weigh up the pros and cons in terms of budget, market and competitive intensity for each business sector you're considering. Speaking of business sectors, dropshipping is one of the most popular e-commerce activities.
Written by our editorial expert
June 16, 2023
