Tax obligations at the start of a micro-entrepreneur's activity
New auto-entrepreneurs must declare their activity to the Guichet unique des entreprises. The formalities include the production of a number of supporting documents and the selection of the activity in the trade register. Once registered with the Registre National des Entreprises (RNE), the micro-entrepreneur receives a SIREN number assigned by Insee.
Micro-entrepreneurs are required to create an account on the URSSAF website dedicated to auto-entrepreneurs. The worker can make his monthly or quarterly sales declaration directly on the URSSAF application.
Sales declaration for micro-entrepreneurs
Sales ceilings for micro-entrepreneurs
To remain eligible for the micro-tax micro-business scheme, entrepreneurs must comply with annual sales ceilings based on their activity:
- 188,700 excluding VAT for the sale of goods, foodstuffs and the provision of accommodation
- 77,700 euros excl. tax for industrial and commercial (BIC) or non-commercial (BNC) services
As a micro-entrepreneur, if you exceed these ceilings, you switch to the real BIC tax system or the BNC controlled declaration system.
Declaring sales as a micro-entrepreneur
Micro-enterprise obligations" include the declaration of the micro-entrepreneur's sales. The micro-entrepreneur can choose the reporting period that suits him best: monthly or quarterly.
Micro-entrepreneurs can opt to pay income tax at source. Income tax is paid at the same time as social security contributions.
The micro-entrepreneur's accounting obligations
In terms ofaccounting obligations, micro-entrepreneurs are not required to produce an annual balance sheet or income statement. The micro-enterprise tax regime requires the minimum in terms of bookkeeping, i.e. keeping a record of purchases and expenses.
If sales exceed 10,000 euros excluding VAT for two consecutive years, the auto-entrepreneur must open a bank account dedicated to his business. However, this account need not be a business account. They can open a personal bank account with an online bank to receive their income, make business purchases and pay social security contributions.
VAT declaration for micro-businesses
Basic VAT exemption
Micro-businesses are exempt from VAT:
- For services and liberal professions: the threshold is set at 36,800 euros, with a tolerance of 39,100 euros.
- For the sale of goods and accommodation activities: the threshold is set at 91,900 euros, with a tolerance threshold of 101,000 euros.
If a self-employed business complies with the VAT thresholds, it must include the following legal notice on its invoices: "TVA non applicable, Article 293 B du CGI" (VAT not applicable, Article 293 B of the French General Tax Code). The exemption threshold is the limit below which a micro-enterprise is not liable for VAT. The tolerance threshold is a tolerance ceiling above the exemption threshold, to prevent the auto-entrepreneur from switching to VAT status.
If the tolerance threshold is exceeded for two consecutive years, VAT exemption ceases to apply on January 1 of the following year. Furthermore, if a self-employed entrepreneur is not subject to VAT, he or she cannot reclaim the VAT paid on business purchases.
VAT liability
VAT liability becomes effective on the 1st day of the month in which the thresholds are exceeded. The micro-entrepreneur must then invoice VAT according to the applicable rates:
- Standard rate: 20% for sales of goods and services.
- Intermediate rate: 10% for sales of prepared food products.
- Reduced rate: 5.5% for food products, agricultural products, non-alcoholic beverages, etc.
Filing your VAT return as a micro-business
VAT declarations are made on a monthly or quarterly basis for the normal actual system. If you opt for the simplified actual regime, you can declare your VAT annually.
Auto-entrepreneurs must file their VAT declarations from their professional space on the impots.gouv.fr website. Two actions are required:
- VAT invoiced to customers and payable to the government.
- VAT paid by the micro-entrepreneur on professional purchases.
When a micro-business charges VAT, it must include its intra-Community VAT number on its invoices.
Business property tax (CFE)
Calculating CFE
The Cotisation foncière des entreprises (CFE ) is a local tax. Its calculation takes into account the geographical location of the micro-business, the surface area occupied for its activities, and annual sales.
When a micro-business operates from premises, the CFE takes into account the rate set by the municipality and the rental value of the premises. The calculation formula is as follows:
- CFE = Cadastral rental value x CFE rate
If the micro-entrepreneur works from home, he must specify the surface area he uses in his home for his professional activity. Even if they work at their customers' premises, micro-entrepreneurs are still subject to CFE tax. The tax authorities take into account the minimum tax scale for the locality in which the head office is located:
- CFE = Minimum tax base x CFE rate
To reduce your CFE rate, you can opt to domicile your micro-business. This involves choosing a P.O. box service provided by a domiciliation company to base your registered office, receive your official mail, and so on. When calculating the CFE, the tax authorities use the address of the domiciliation company as a reference. CFE must be paid by December 15 of each calendar year. A CFE notice is sent to the auto-entrepreneur.
CFE exemptions for micro-businesses
There are several ways in which micro-businesses can beexempt from CFE. In the first year of creation, an auto-entrepreneur is exempt from the CFE.
If the micro-entrepreneur's annual sales are less than 5,000 euros, he or she is automatically exempt from VAT. This is a positive point for small entrepreneurs who have opted for the micro-enterprise scheme to pursue a complementary activity.
With its micro-tax and micro-social regimes, the micro-enterprise offers real benefits in terms of day-to-day management. The status is sufficiently attractive to test the viability of a professional activity, or to combine a secondary activity with salaried employment.
Written by our editorial expert
July 2, 2024
