Category Archives: Setting up

The auto-entrepreneur becomes a micro-entrepreneur

The auto-entrepreneur becomes a micro-entrepreneur

The auto-entrepreneur becomes a micro-entrepreneur

The auto-entrepreneur becomes a micro-entrepreneur

The auto-entrepreneur becomes a micro-entrepreneur As of 1 January 2016, new entrepreneurs subject to the tax regime for micro-enterprises are subject to the micro-social regime.
Auto-entrepreneurs exercising their activity on 31 December 2015 are not affected by this change: for them, nothing changes except the name!

This new status allows anyone to create individual business, under the tax system of micro-businesses :
commercial or artisanal activity (under the RSI)
a professional activity (within the CIPAV for pensions insurance)
The micro-entrepreneur activity is suitable for:
a person who wishes to test a project
a principal activity for jobseekers
an employee, civil servant or as a complement for retirement
a student
It is possible to pursue a self-employed agricultural activity and become micro-entrepreneur under a non-agricultural activity. The person is subject to and contributes to each plan (MSA and RSI) which correspond to the activity carried out.

It is not possible to exercise both as an activity of independent and micro-entrepreneur:
An activity with independent status.
An independent business activity outside the scope of the micro-tax system
Some activities can not be carried out as a micro-entrepreneur:
Real estate agents
Property dealers
Renters of unfurnished buildings for professional use.
Lessors of equipment and durable consumer goods.

Limited sales
To benefit from the micro-entrepreneur status, turnover must not exceed a certain threshold:
€ 82,200 excluding VAT for a purchase / resale activity, making products from raw materials (bakery, sewing, jewelry making), sales for consumption on premises or take away, accommodation services (hotels, guest rooms Tenancies unfurnished accommodation).

Services
€ 32,900 excluding VAT for commercial services (selling intangible products such as computer programs, music etc), for craft services (construction work, repair of products provided by customers), rental of furnished residential accommodation, services, relevant to the CIPAV (translation, consulting etc.)

*Turnover HT is the amount of goods, manufactured products and rendered services.

First year
For the first year, the thresholds take into account the duration of the activity.
Example for a start activity on 1 May in services:
32 900 x 245/366 = € 22,023 the threshold is not exceeded
Joint activity
In case of joint activity (sales and services) the overall turnover must not exceed € 82,200 and the turnover relating to services € 32,900.
VAT
The micro-entrepreneur does not charge VAT. In return, they do not recover VAT on purchases made. Invoices must be marked “not applicable to VAT – Article 293 B of the Tax Code.”

Tolerance
If thresholds are exceeded, the status is retained if the annual turnover does not exceed € 90,300 (sales) or € 34,900 (service delivery).

Légère hausse des cotisations sociales des auto-entrepreneurs en 2016

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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

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Five company statutes under the microscope

Five company statutes under the microscope

Five company statutes under the microscope

Five company statutes under the microscope

Entreprise individuelle, SAS, EURL , SA , SARL … So many choices of corporate statutes an which the entrepreneur must make their choice at the time of the company launch, here are Five company statutes under the microscope

A delicate time when the characteristics of each of the company statutes may not be not precisely known. To find one more easily we have compared five statutes.

Here are Five company statutes under the microscope :

  Entreprise Individuelle EURL SARL SAS SA
Number of shareholders None One person 2 minimum and up to 100 maximum One or several shareholders. 7 shareholders, no maximum.
Capital No notion of capital. The amount is not fixed. 20% of funds to pay at creation, the rest in the next five years. The amount is not fixed. 20% of funds to pay at creation, the rest in the next five years. Freely fixed. 37,000€ minimum.
Direction The creator. The CEO / Owner, who can be the sole partner or a third party. The CEO or CEOs, partners or third parties designated by the partners. The partners. The only obligation is to nominate a president, who may or not be a shareholder. The board of directors from 3 to 18 members.
Decision Making The creator. The CEO, their powers are limited if they are not the sole partner. The CEO for the everyday management. The Annual General Meeting (AGM) for certain important decisions. The partner or partners. The Managing Director takes care of everyday running / management. The AGM approves the accounts and decisions.
Owner / CEO responsibility. Responsible for debts on personal property unless:

A declaration of exemption from seizure has been made before a notary to protect their land and property.

EIRL choice of regime.

Limited to the financial contributions at creation, except for civil and criminal liability for mismanagement Limited to the financial contributions at creation, except for civil and criminal liability for mismanagement Limited to the financial contributions for the partners and shareholders. Limited to the financial contributions except in the case of mismanagement
Fiscal regime Income tax, except if the choice of regime of the IERL which allows, under certain conditions the option of paying company tax. Income tax, in the BIC (bénéfices industriels et commerciaux) or BNC (Bénéfices Non Commerciaux) The option is possible for paying company tax. Company tax, the option of paying income tax under certain conditions for an SARL that is less than 5 years old. Company tax, the option of paying income tax under certain conditions for an SAS that is less than 5 years old. Company tax, the option of paying income tax under certain conditions for an SA that is less than 5 years old.
CEO / Owner remuneration Not deductable from profits, except if the choice of paying company tax was taken in the case of an EIRL. Not deductable from profits, except if the choice of paying company tax was taken or the CEO is a third party. Deductable from profits. Deductable from profits. Deductable from profits.
CEO / Owner Social regime Self-employed If the CEO is the sole partner, self employed regime. If the CEO is a third party, they are considered as an employee of the company. Self employed, if they are the managing director. Salaried if they are the equal or minority director. The CEO is considered as an employee of the company. The president and the managing director are considered as employees of the company but excluded from unemployment benefits.
Comments Attractive by its simplicity, but be careful to protect personal assets. Allows the creation of a company as a sole self-employed person, whilst being able to reap the advantages of the status of a company. All purpose statute adapted to numerous business projects, but imposes a certain rigor of operation. Allows a lot of flexibility. A legal form that is appreciated by investers. Reserved for companies with high potential, which targets the stock exchange or trading abroad.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The French government site for this information.

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Choice of the legal status when creating a company

Choice of the legal status when creating a company

Choice of the legal status when creating a company

Choice of the legal status when creating a company

The Choice of the legal status when creating a company is one of the first steps to ensuring that your business gets off to the best start possible and should not be underestimated.

The person who creates a business in France must choose a legal status for their company, sole proprietorship or partnership, which will be decisive for the legal formalities with the French administration, for the personal legal status of the company owner, as well as fiscal, administrative or social matters.

Creating a company is an important step, that needs to be considered carefully, it is usually best to consult with a legal specialist or an accountant before the final choice, in order to choose the right status for you.

The choice of the status of the company depends on the type of professional activity that will be carried out, as well as other items to consider:

  • Will the company be created by an individual or created in association with partners?
  • What are the financial needs of the new structure?
  • Does the company creator wish to separate their personal assets from the business assets?
  • What will the turnover of the company be?
  • How can the business be tailored to ensure that the business owner is not paying unnecessary taxes and charges.

 The different types of company statuts are :

Legal Status Characteristics Who can use this statut?
Entreprise individuelle Business in their own name or in a  personalised name.

The identity of the company is in the name of the owner, who is responsible for their own assets.

Craftsperson, tradesperson , industrial/professional persons.
Entreprise individuelle à responsabilité limitée (EIRL) Individual company where the entrepreneur can keep professional assets separate from their personal assets. Craftsperson, tradesperson, industrial, professionals (but not the legal professions, judicial or healthcare, with the exception of pharmacists)

 

Entreprise unipersonnelle à responsabilité limitée (EURL) A company that has only one partner / shareholder, similar to an individual company (EIRL), but that has the same financial and administrative rules as a Limited company. Craftsperson, tradesperson, industrial, professionals (but not the legal professions, judicial or healthcare, with the exception of pharmacists)

 

Société en nom collectif (SNC) Company in which the partners (minimum 2) have the status of tradespeople and are jointly liable for debts of the company. No minimum capital is required. Craftspeople, tradespeople, industrial, freelancers (but not the legal professions, judicial or healthcare, with the exception of pharmacists)
Société anonyme (SA) Company with share capital, whose shareholder participation (minimum 2, or 7 for a listed company) is based on the capital that they have invested in the business. It can be run by a board, with a chief executive officer (CEO) or by a board of directors with a managing board.
Société à responsabilité limitée (SARL) Company in which each partner (2 to 100) is not, in principle liable for the debts of the company only up to their personal contributions. No minimum capital required. Craftspeople, tradespeople, industrial, freelancers (but not the legal professions, judicial or healthcare, with the exception of pharmacists)
Société d’exercice libéral à responsabilité limitée (SELARL) Company in which a freelancer can exercise a regulated profession in the form of a limited liability company (SARL). Regulated professions.
Société civile professionnelle (SCP) Company allowing multiple members of a regulated profession to exercise their activity in common, even if each partner remains personally taxed on their own share of any profits made. Regulated professions (except speech therapists, chiropodists, pharmacists, midwives, insurance agents, accountants, dieticians and psychologists).
Société par actions simplifiée (SAS) Society in which each of the partners (at least 2, with no maximum) is responsible for the debts of the company only up to their own personal financial contribution. No minimum capital required. Craftspeople, tradespeople, industrial professionals, freelancers (but not the legal professions, judicial or healthcare).
Société par actions simplifiée unipersonnelle (SASU) Company with single-member shares the same the characteristics of an SAS. No minimum capital required. Craftspeople, tradespeople, industrial professionals, freelancers (but not the legal professions, judicial or healthcare).

 

Choix du statut juridique de l’entreprise en création

 

 

 

 

 

 

 

 

 

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