All business creators benefit from social protection, determined according to whether you are self-employed or an "assimilated employee", and the percentage of share capital you hold.
Since the beginning of 2018, the social regime for the self-employed (RSI) has been abolished. The aim is to harmonize all social protection schemes within the general social security system.
This reform will be completed by the end of 2019.
All the answers to your questions are in our complete 2019 guide!
The protection afforded to entrepreneurs depends on their chosen legal status. All sole proprietors working in an EI (sole proprietorship), EIRL (limited liability company) or joint-stock company are subject to the general social security system.
In EURL, non-partner managers contribute to the general scheme, while sole partner managers are covered by the social security scheme for self-employed workers.
In SARLs, non-partner, minority or equal partners contribute to the general scheme, and majority partners to the self-employed scheme.
SNC partners are covered by the social security system for self-employed workers.
Entrepreneurs covered by the social security scheme for the self-employed need to be aware of the specific features that apply to them. The cost of social protection is lower than for those covered by the general scheme. Additional insurance may be required.
The calculation of social security contributions depends on the tax regime chosen by the company. It takes into account remuneration paid and dividends if the company is taxed under the IS system, or only profits if it is taxed under the IR system.
Contributions are paid on the basis of an estimate for each due date, and are always adjusted at the end of the period. Whatever your level of remuneration, you are obliged to pay minimum social security contributions to guarantee a decent level of social protection.
This scheme offers social protection for sickness-maternity, family allowances and retirement. In most cases, it also provides social security coverage for disability, death and incapacity to work.
From a general point of view, social protection for this type of status is less advantageous than that of the general scheme. The waiting period for daily sick pay is longer, and retirement pensions are lower.
Managers who are " assimilated employees " benefit from the same social protection scheme as employees themselves. All the rights applicable to salaried employees are also applicable to this category of company founders.
In order to benefit from this, however, they must pay themselves a salary, unless they are still entitled to unemployment benefits.
Unlike the self-employed scheme, a payslip must always be drawn up when remuneration is paid.
Under certain conditions, it is possible to combine a corporate office with an employment contract in a technical capacity separate from the corporate office.
Although more expensive than the self-employed social protection scheme, the general scheme offers better coverage. It is important to note that dividends received by salaried executives are not taken into account when calculating social security contributions.
Choosing the best social security scheme depends first and foremost on the legal status of your company. Sometimes you can choose, but this is not always the case. For example, it is impossible to opt for the self-employed scheme for sole proprietorships, EIRLs or joint-stock companies.
You should alsocarry out your own simulation based on your personal situation (marital status, current tax rate, vested rights, etc.).
We advise you to improve your pension benefits right from the start of your business.
Don't delay in preparing for your retirement, as income disparities are greater for the self-employed.
Other solutions exist to improve social protection, such as " Madelin " contracts , retirement savings plans or specialized products for company directors like the popular retirement savings plan.
There is no such thing as an ideal scheme, but rather the one best suited to your personal and professional situation. To find out the impact of a change in social protection scheme, we recommend that you consult a professional.
The current reform encourages the growth of self-employment, bringing all workers under the same status and offering a better level of social protection to the entire working population.
Written by our expert Paul LASBARRERES-CANDAU
May 16, 2019
