What is a sole trader (EI)?
Thesole trader carries on business in his own name. This legal form simplifies day-to-day management compared with companies: SASU, SAS, SARL, EURL. Although often equated, sole proprietorships and micro-enterprises are not the same thing. They have different tax and social security regimes.
Sole proprietorship does not imply the creation of a separate legal personality. It is attached to a natural person. So there's no need to draw up articles of association or to set up share capital.
Sole proprietorships are affiliated to the social security system for non-salaried workers. The amount of contributions depends on the entrepreneur's income. They represent around 45% of business income. A minimum contribution must be paid, even in the case of low sales, in order to continue to benefit from social protection.
Is a sole trader entitled to unemployment insurance?
A self-employed entrepreneur can find himself in a variety of situations involving the loss of his job. Following a judicial liquidation, a self-employed person can benefit from unemployment insurance under certain conditions:
- Have been self-employed without interruption for at least two years within the same company.
- Be registered with France Travail (formerly Pôle emploi) on the list of jobseekers and be actively looking for a new job.
- Prove income in excess of 10,000 euros for one of the last two years of self-employed activity.
- Prove personal resources of less than 635.71 euros per month for one person.
The average amount of unemployment benefit for a sole trader depends on his last income. The flat-rate amount is 26.30 euros per day, for a period of 182 days. If the entrepreneur's earned income is lower than the unemployment benefit, the latter is reduced to 19.73 euros per day for the same period.
The same conditions apply to self-employed workers who have ceased their activity due toreceivership or an unfavorable economic situation.
Unemployment and business creation: the ARCE scheme
What is ARCE?
If you are an unemployed employee, registered with France Travail and wish to return to work by setting up your own business, you can benefit from theAide à la reprise et à la création d'entreprise (ARCE) scheme. ARCE is a way of obtaining payment of 60% of your unemployment benefits in the form of a lump sum. This is paid in two instalments:
- 50% on creation of sole proprietorship
- 50% six months after launching your business
To qualify for ARCE, you must have set up a sole proprietorship at the end of your employment contract, and you must be eligible for unemployment benefit when you register with France Travail. The amount of ARCE is based on the amount of unemployment benefit you receive on the day it is granted. Thus, if ARCE is granted with a degressive coefficient, the capital is affected.
How to obtain ARCE
To obtain the ARCE, you need to follow certain steps:
- Register your project with France Travail.
- Fill in the ARCE application form.
- Prove that you have set up or taken over a business by providing a legal document (Kbis extract, Guichet unique certificate, etc.).
ARCE cannot be granted if the business is set up or taken over abroad. Finally, if you are no longer able to work in your sole proprietorship, you may be entitled to the remainder of your unemployment benefit.
Can I continue to receive the ARE if I set up my own business?
If you're unemployed, the ARE provides you with a framework for retaining a salary despite the loss of your job. It is not possible to benefit from 100% ARE support when setting up your own business. The amount of assistance you receive depends on the salary you manage to pay yourself as a sole trader. Entrepreneurship is a demanding profession. We recommend that you take out additional insurance to increase your social protection.
Can an unemployed sole trader benefit from ACRE?
An unemployed person wishing to set up a sole proprietorship can benefit from ACRE, Aide à la création ou à la reprise d'entreprise. Since January 1, 2020, sole traders have been required to submit a formal application to benefit from the scheme. Micro-entrepreneurs can also benefit from ACRE under the same conditions.
This is government support in the form of a 50% exemption from social security contributions. Assistance runs until the end of the 3rd calendar quarter following the company's registration date.
A sole trader can benefit from the ARE provided he or she is registered as a jobseeker and his or her sole trader activity has ceased for legitimate reasons. If you are already receiving unemployment benefit following the loss of your job, you may be eligible for assistance in setting up your own business.
Written by our editorial expert
July 31, 2024
