SWOT of the Auto-Entrepreneur Statute

SWOT of the Auto-Entrepreneur Statute

SWOT of the Auto-Entrepreneur Statute

 SWOT of the Auto-Entrepreneur Statute

SWOT of the Auto-Entrepreneur Statute

SWOT of the Auto-Entrepreneur Statute – we couldn’t write about the statutes of companies in France, without at least mention the statute Auto-entrepreneur, which, rather than statute, is a regime (micro- simplified) in the status of an individual business, which currently has three different plans (real, micro and micro- simplified).

Strengths of the statute auto-entrepreneur :

  • Inscription very simple with just a few clicks on a government Internet site.
  • Can be combined with other statutes to earn more : students, employee (if not in competition with employer), unemployed, civil servant (with agreement from hierarchy), retired.
  • Can concern the following activities; commercial, craft or liberal (unregulated professions).
  • If the turnover is zero, there are no social charges and taxes payable.
  • No VAT to charge to clients : selling price = direct price including taxes. This is also beneficial for clients who are not subject to VAT.
  • Simple Accounting : records of purchases and sales only.
  • No obligation to have an accountant.
  • Exemption from CFE (cotisations foncière des entreprises during the company’s first year and the two following
  • Ease ceasing the activity in a few clicks (simpler than the liquidation process of a conventional individual business).

Weaknesses of the auto-entrepreneur statute:

  • Contributions payable on the turnover and not profit earned : provide a large enough margin to accommodate this.
  • The auto-entrepreneur is a form of individual business: entrepreneurs are responsible, with all their own personal funds. They must ensure that they protect their home if they own one, by a notarial act of non-seizure.
  • None of the different charges are tax deductible.
  • The margins are very low on standard products in order to remain competitive on the price criteria under a purchase and resale activity : needs to be positioned mainly in niche markets or selling intangible products (software, ebooks, music, travel, … ).
  • Banks are more reluctant to lend money to auto-entrepreneurs.
  • The turnover of this statute is limited (between 32,900€ and 34,900€) the obligation to change their status at the end of the year or within two years after passing this threshold. This obligation to change remains valid change if the business was created during the year and the ceiling exceeds the upper limit of the threshold.
  • The VAT paid on purchased articles for the business is not deductible from tax.
  • Regulated professions are not eligible for auto-entrepreneur status.
  • The auto-entrepreneur is a real entrepreneur who has to do a market study and build a suitable business plan to determine whether the business is sustainable over time maintaining this status.
  • The entrepreneur should not pass up the advice of professionals (accountants, lawyers, bankers, insurers, support organisations) so that the activity remains sustainable.
  • There should not be a subordinate relationship with the client (this is not the one who sets the working schedule, nor impose the working methods and equipment) this is considered as moonlighting.
  • No company name must appear in payments (for example cheques) otherwise they will generally be invalidated. Only the name of the entrepreneur has any legal value.
  • The ARE or ASS benefits, accumulated with income from those of the auto-entrepreneur are limited in time (to the length of rights to benefits up to 15 months maximum for the ARE for under 50 and 12 months ASS). After this limit, the auto-entrepreneur will have to choose : either to stop the auto-entrepreneur activity or to continue receiving benefits or to continue the auto-entrepreneur activity and live only from revenue from the business. NB, an auto-entrepreneur who made no turnover was obliged to repay an overpayment exceeding the limits of their benefits. Sometimes it is better to continue the auto-entrepreneur business with RSA rather than unemployment benefits.

Opportunities of the auto-entrepreneur statute:

  • Inscription very simple with just a few clicks on a government Internet site.
  • Can be combined with other statutes to earn more : students, employee (if not in competition with employer), unemployed, civil servant (with agreement from hierarchy), retired.
  • Can concern the following activities; commercial, craft or liberal (unregulated professions).
  • Enables the testing of an activity in a niche market.
  • Adapted for the launching of an activity with minimum fees.
  • Allows the entrepreneur to legally declare their business activity.

Threats of the auto-entrepreneur statute:

  • 2 years, 8 quarters without revenue may result in the cancellation of the auto-entrepreneur status.
  • Low turnover threshold may hamper the launching of the business or lead to high levels of tax being paid when the threshold is exceeded.
  • The monthly declaration of turnover, or every quarter, is mandatory; and results in a penalty payment of charges calculated a fixed sum of turnover for non-declaration.
  • It is not possible to have an Kbis extract by registering directly as an auto-entrepreneur since they are not registered with the RCS (Registre des Commerces et des Sociétés) : therefore they are unable to work with some wholesalers in the act of a purchase – resale activity.
  • It is not possible (or rather not recommended) to have an employee.
  • It is not possible to be both an auto-entrepreneur and a partner in a company (could pose a problem for the financial launch of a company).
  • The entrepreneur has to manage all the administrative, commercial and technical aspects of their activity.

Changes in the AE statute in 2016

Tags:, , , , , ,

Leave a Comment

Name *

Email

Website