All business creators get social security benefits, which are determined based on your status as an independent "non-salaried" or "salaried equivalent" and the percentage of ownership in the share capital.
Since the beginning of 2018, the social security scheme for the self-employed (RSI) has been abolished. The goal is to harmonize all social protection schemes within the general social security system.
This reform will be completed by the end of 2019.
You'll find all the answers to your questions in our complete 2019 guide!
The protection scheme for business creators depends on the legal status chosen. All sole traders operating in an EI (sole proprietorship), EIRL, and joint-stock companies are subject to the general social security scheme.
In an EURL, managers who are not partners contribute to the general scheme, while sole partner managers are affiliated to the social security scheme for the self-employed.
In an SARL (Limited Liability Company), non-partner, minority or equal managers contribute to the general scheme, while majority managers contribute to the self-employed scheme.
The partners in an SNC are affiliated to the social security system for the self-employed.
Business creators who are subject to the social security system for the self-employed need to be aware of the specific features that apply to them. The cost of social protection is lower compared to people affiliated with the general system. Sometimes, supplementary insurance must be taken out.
The calculation of social security contributions depends on the tax system chosen by the company. You need to consider the remuneration paid and the dividends if it's taxed under IS (corporate income tax), or only the profits if it's taxed under IR (income tax).
For each payment deadline, contributions are settled on the basis of an estimate and are always subject to adjustment at the end of the period. Whatever your level of remuneration, you are required to pay minimum social security contributions to guarantee a decent level of social protection.
This scheme provides social security for sickness and maternity, family allowances and retirement. In most cases, it also offers social cover for disability and death and inability to work.
Generally speaking, social security coverage for this type of status is less advantageous than the general scheme. The waiting period for receiving daily sickness benefits is longer, and retirement pensions are lower.
Executives who are treated as employees" benefit from the same social protection scheme as employees themselves. All the rights applicable to the latter also apply to this category of business creators.
To benefit from it, however, they must pay themselves a salary, unless they continue to receive their unemployment benefits.
Unlike the self-employed system, a payslip must always be issued when remuneration is paid.
Under certain conditions, you can combine a corporate mandate with an employment contract for a technical function that's separate from the corporate mandate.
More expensive than the social security system for the self-employed, the general system, however, offers better coverage guarantees. It is important to note that the dividends received by the executive treated as an employee are not taken into account in the calculation of social security contributions.
Choosing the best social security scheme depends primarily on the legal status of your company. Sometimes you have the option to choose, but that's not always the case. For example, it's impossible to opt for the self-employed scheme as a sole proprietorship, EIRL, or joint-stock company.
Also, you should run your own simulation based on your personal situation (marital status, current tax rate, acquired rights, etc.).
We advise you to improve your welfare benefits from the start of your business
Don't delay in preparing for your retirement, as income gaps are more significant for the self-employed.
There are other ways to improve your social security coverage, such as "Madelin" contracts, retirement savings plans, or specialized products for business owners, like the popular retirement savings plan, etc.
There is no ideal system, but the system best suited to your personal and professional situation. To find out the impact of a change in social protection scheme, it is advisable to contact a professional.
The current reform is encouraging the growth of independent work by bringing all workers under the same status and to offer better social protection to the entire working population.
Written by our expert Paul LASBARRERES-CANDAU
May 16, 2019
