Micro-entrepreneur and auto-entrepreneur: what are the differences?

Micro-entrepreneur or auto-entrepreneur?

Before 2016, there were two statuses: auto-entreprise and micro-entreprise

Before 2016, sole traders had to choose between two types of status:

• micro-business
• self-employment

The auto-entrepreneur status was introduced on January 1, 2009. It offered real advantages over the micro-entrepreneur status. The lack of administrative coherence and growing inequalities between the two regimes prompted politicians to merge the two names.

Indeed, before 2016, a micro-entrepreneur was not necessarily an auto-entrepreneur, whereas the reverse was an administrative given. An auto-entrepreneur was defined as an individual entrepreneur who chose the micro-enterprise tax regime, but opted for the auto-entrepreneur micro-social regime.

The methods for calculating and collecting social security contributions were different for the two types of status:

• An auto-entrepreneur paid his social security contributions based on a percentage of his sales (simplified micro social scheme). They could also opt to pay income tax at source.
• A micro-entrepreneur paid social security contributions in the same way as a conventional self-employed worker.

The two statuses led to a great deal of confusion concerning the entrepreneur's personal and professional assets. As a result, a creditor could obtain payment of unpaid invoices by drawing on the entrepreneur's personal assets. If the entrepreneur wished to protect his personal assets, he had to opt for the EIRL (limited liability company) status.

Since February 14, 2022, the EIRL has been obsolete, replaced by a new, simplified entity: theEntreprise individuelle (EI). This is the only legal status to which the micro-enterprise is attached. Since then, the personal and business assets of individual entrepreneurs have been kept separate.

Since 2016, a single status: micro-entreprise

Since January 1, 2016, the terms micro-enterprise and auto-entreprise mean the same thing. They are grouped under the same legal status, that of micro-entreprise. We can still see some remnants of the "auto-entrepreneur" appellation in institutions, notably on the URSSAF website, dedicated to this scheme: autoentrepreneur.urssaf.fr

The name "auto-entrepreneur" is still used in everyday language, but for official, administrative and legal documents, the term "micro-entrepreneur" should be used.

The advantages of merging

With the merger of the two statuses, the sole trader benefits de facto from several advantages:

• Simplified set-up formalities thanks to the Guichet unique.
• Micro-social and micro-tax regimes.
• Basic VAT exemption, provided you meet certain sales thresholds.

A sole trader choosing the status of micro-entrepreneur benefits from a simplified micro-tax and micro-social regime. Taxation is based on sales, after deduction of a flat-rate allowance for professional expenses:

• Rental of unclassified furnished tourist accommodation: 30% allowance rate
• Service activities: 34% allowance rate
• Liberal professions: 50% tax allowance
• Merchandise sales activities: 71% allowance rate

The micro-tax regime for micro-entrepreneurs

The micro-business tax regime is subject to certain sales thresholds over a calendar year:

• 188,700 for the sale of goods, food to be consumed on the premises or taken away, and the provision of accommodation.
• 77,700 euros for services (BIC) and self-employed professionals (BNC).
• 15,000 for rentals of furnished accommodation (including unclassified furnished tourist accommodation).

Micro-entrepreneurs can opt to pay their income tax in full discharge. Each month or quarter, they pay income tax on the basis of their sales. The payment in full discharge of income tax varies according to the nature of the micro-entrepreneur's activity:

• Merchandise sales activities: 1% of sales
• Service activities (BIC): 1.7% of sales
• Activities of BNC professionals: 2.2% of sales

A low-rate VAT exemption applies on the basis of certain sales thresholds:

• Sale of goods: 91,900 euros.
• Services: 36,800 euros.
• Sales of goods and services: 91,900 euros, including 36,800 euros for services.

Micro-entrepreneurs are liable for the Contribution foncière des entreprises (CFE). However, certain tax exemptions apply to auto-entrepreneurs, based on an annual sales threshold.

The micro-entrepreneur micro-social scheme

Micro-entrepreneurs must declare their sales on a monthly or quarterly basis. Thanks to the URSSAF website and application dedicated to micro-entrepreneurs, you can find out the amount of your social security contributions in just a few minutes. If sales are zero, no social security contributions are deducted.

However, a micro-entrepreneur wishing to benefit from effective social security coverage can apply to pay minimum social security contributions. This request is tacitly renewed every calendar year.

The micro-social regime is made up of several rates applied according to the nature of the activities carried out by the micro-entrepreneur:

• Purchase and resale of goods (BIC): 12.3
• Commercial and craft services subject to BIC industrial and commercial profits: 21.2%.
• Other services subject to BNC non-commercial profits: 23.1%.
• Self-employed professionals (Cipav): 23.2
• Rental of classified furnished tourist accommodation: 6.0

Social security contributions are paid by direct debit the month following the declaration.

With the establishment of the micro-entrepreneur status, individual entrepreneurs benefit from a reduction in administrative and accounting formalities. The micro-entrepreneur scheme offers simplified micro-social and micro-tax operations.