Micro-entrepreneurs benefit from the simplified micro-social scheme: administrative, legal, and tax formalities are greatly reduced.
This status works for all commercial and artisanal activities, as well as freelance professions. Only agricultural activities aren't allowed.
Let's explore together everything you need to know before diving into the world of entrepreneurship with a micro-business!
The reason the micro-entreprise is so popular is because it's primarily simple and flexible to manage! The creation steps involve a single form to fill out online, without any form of deposit or guarantee to provide.
The simplified micro-social tax system consists of paying your contributions based on the turnover achieved, and reporting your income in your income tax return.
Above all, the flexibility of this status is its greatest asset!
You then become completely free in how you organize things.
You get to choose the tasks you want to do, your workplace, your hours, etc.
That especially helps entrepreneurs boost their efficiency based on their preferences.
For several years, the need to have professional insurance has emerged for micro-entrepreneurs who are craftsmen and traders.
Also, those using a transport vehicle (such as Uber drivers for example) must take out civil liability insurance.
Entrepreneurs in the construction and public works sector must take out ten-year liability insurance and professional civil liability insurance.
Since January 1, 2019, micro-entrepreneurs with an annual turnover of less than €5,000 are exempt from paying the CFE (Business Property Tax).
Otherwise, it must be paid each year.
To qualify for micro-entrepreneur status, you need to stay below the official turnover threshold.
It is set at €170,000 for commercial and accommodation supply activities and €70,000 for service providers and liberal professions.
If your business has a low net margin, the micro-entrepreneur status can become disadvantageous because the amount of social security contributions is calculated on the basis of turnover, without any deductions.
That might happen in a fast-growing business or one that requires significant upfront expenses.
A micro-entrepreneur is considered a self-employed worker affiliated to the social security system for the self-employed.
Here are the social security contributions you'll need to pay:
- For sales of goods and provision of accommodation (excluding furnished housing and furnished tourist accommodation): 12.8%
- Furnished residential rental, services, liberal professions under the RSI and CIPAV: 22%
- Furnished tourist accommodation: 6%
You may be able to benefit from ACCRE when you create your company in order to benefit from a partial exemption from social security contributions.
You are then liable for income tax.
The taxable profit is calculated by applying a standard allowance to your turnover, as follows:
-
71% for purchase-resale activities, accommodation provision, and on-site consumption sales
- 50% for commercial service provision
- 34% for non-commercial service provision (e.g. freelance activities).
You can opt for the flat-rate withholding tax, which allows you to pay a single rate including social security contributions and income tax in a single payment.
Micro-entrepreneurs get a full VAT exemption. They don't charge it, so they can't reclaim it on their expenses.
Becoming a micro-entrepreneur couldn't be easier: just visit www.lautoentrepreneur.fr or guichet-entreprises.fr.
These two official platforms created by the State allow you to carry out all your procedures online.
Your declaration of commencement of activity is contained in a single form
The following information must be provided:
- Your business address
- Contact details for the sole shareholder
- Choice of health insurance organization and declaration of rights
- The preference for the discharging payment of income tax.
For traders and craftspeople, registration with the relevant official register is mandatory. Among the documents to be attached, a copy of your identity document is sufficient.
More than 1.2 million French people have adopted the micro-entrepreneur status since it was created in 2008!
It's super appealing because it's easy to create, manage, and dissolve, making it perfect for launching a project or doing some extra work.
Between 2017 and 2018, micro-enterprise registrations increased by 28% - it's the most dynamic legal status nationwide!
This success can be explained by the legislative changes that came into effect on January 1, 2018, especially the doubling of the turnover thresholds.
Written by our expert Paul LASBARRERES-CANDAU
on August 9, 2019
