For expatriates looking to establish themselves in France, navigating the intricacies of entrepreneurship can be both exciting and challenging. One avenue that offers simplicity and flexibility is the micro-enterprise – a streamlined form of individual enterprise.
Starting a micro-enterprise in France as an expat comes with a unique set of considerations. From understanding the tax implications to complying with local regulations, it’s essential to have a clear roadmap. Whether you are a foreign student seeking extra income, an expat retiree venturing into consultancy or an entrepreneur establishing a foothold in the French market, this guide will serve as your trusted companion.
Table of contents
What is a micro-enterprise?
Definition of a micro-enterprise
A micro-enterprise, often referred to as self-enterprise, operates under the simplified individual enterprise (EI) regime in France. This business structure provides entrepreneurs with a straightforward and streamlined approach to conducting their professional activities. One key distinction to remember is that self-enterprise is not considered a distinct legal entity from the entrepreneur. Instead, the entrepreneur operates under their own name, assuming full responsibility for all actions taken within the scope of their micro-enterprise.
Synonyms and equivalents
It’s important to note that, since 2016, the terms micro-enterprise and self-enterprise have become synonymous. This means that their is no substantive difference between these two designations. Additionally, the self-employed and micro-entrepreneurs share the same legal status.
Characteristics of micro-enterprises
This micro-enterprise framework primarily revolves around a unified and simplified tax and social regime, rather than constituting a distinct legal status. Various types of businesses can opt for this regime, including individual businesses taxed in either the industrial and commercial profits (BIC) or non-commercial profits (BNC) category. Moreover, individual limited liability companies (EIRL) that haven’t chosen corporate tax, as well as single-member companies with limited liability (EURL) under IR, where the sole partner is an individual holding managerial functions, can also apply for this regime.
Categorisation based on activity
Depending on the nature of their activities, micro-enterprise are categorised under different tax regimes. Commercial or artisanal activities fall under the micro-BIC regime, while liberal professions are classified under the micro-BNC regime. Finally, agricultural entrepreneurs benefit from the micro-BA regime, specifically tailored for ‘Agricultural Profits’.
Micro-entrepreneurs vs. micro-enterprise
In a strict tax sense, a micro-entrepreneur is an individual entrepreneur who conducts business in their own name, operates within an individual business, falls under the micro-enterprise tax regime (either micro-BNC or micro-BIC), and enjoys the advantages of the simplified micro-social regime. On the other hand, companies subject to the micro-enterprise regime include individual limited liability companies (EIRL) that haven’t opted for corporate tax or single-member companies with limited liability (EURL) under IR, where the sole partner is an individual and also fulfils the role of manager.
How to start a micro-enterprise in France?
Starting a micro-enterprise in France is a streamlined process that offers entrepreneurs a simplified path to conducting business. Here’s a step-by-step guide to help you establish your micro-enterprise:
Compliance with micro-enterprise turnover thresholds
One of the critical aspects of maintaining micro-enterprise status is adhering to the prescribed turnover thresholds. These ceilings are defined by law and vary annually based on the nature of the business.
As of 2023, the turnover limits stand at:
Sale of merchandise and accommodation service
Service provision and liberal activities
Should your business exceed these thresholds, it will automatically transition to the conventional sole proprietorship regime. In such a scenario, you’ll be duly notified through a formal letter sent with acknowledgement of receipt (LRAR).
Simplified creation processes
Once you’ve ensured compliance with the turnover limits, initiating your micro-enterprise is a straightforward process. Being by filing a micro-enterprise declaration online, which brings your business to life. The key information to provide includes:
- your identity
- the activity you intend to pursue
- your chosen tax option
- supporting documents: this encompasses an identity document, proof of address (dated within the last three months), and a sworn certificate of non-conviction
Your file is then automatically routed to the appropriate Business Formalities Centre (CFE).
Finalising the creation of your micro-enterprise
Once you’ve completed these formalities, your micro-enterprise will be officially established. You’ll receive essential documents associated with your micro-enterprise including:
- Certificate of registration in the directory of companies and establishments: This contains the APE code and SIRET of your micro-enterprise
- Notification of affiliation to the micro-enterprise regime
- For traders and craftsmen: You’ll receive either a K or D1 extract following your registration with the RCS or RM.
- Certificate of affiliation with the social security system for the self-employed (SSI)
> You might be interested in this article: Setting up a business as an auto-entrepreneur in France
What is the cost of creating a micro-enterprise?
Creating a micro-enterprise comes at a minimal cost, a distinct advantage over establishing a formal company. The expenses vary based on the type of activity:
- Commercial activity: Free
- Liberal activity: Free
- Craft activity: Free
- Commercial agent activity: 24,71 €
The differences between the micro-tax regime and the micro-social regime
The transition from self-employment to the unified micro-enterprise regime in 2016 streamlined taxation and social contributions. Under the micro-enterprise framework, the tax plan (micro-BIC, micro-BNC, or micro-BA regime) and the social aspect (simplified micro-social) are intrinsically linked. Prior to this amalgamation, self-entrepreneurs adhered to both micro-fiscal and micro-social systems, while micro-entrepreneurs focused solely on micro-BIC or micro-BNC, necessitating an opt-in for simplified micro-social.
That said, since January 1, 2016, self-employment no longer exists. The two notions (self-enterprise and micro-enterprise) have merged into a single regime called micro-enterprise. When a micro-entrepreneur adopts the micro tax regime, they automatically fall under the purview of the simplified micros-social system. This signifies that the choice of micro-BIC, micro-BNC or micro-BA supersedes that of micro-social. However, contingent on specific criteria, there exists an avenue to exit the micro-social framework and transition into the standard regime for self-employed individuals (TNS). This shift entails a return to the conventional tax and social contribution structure. This structural unification serves to simplify administrative procedures and facilitate a more transparent financial landscape for micro-entrepreneurs in France.
The general functioning of a micro-enterprise
The micro-enterprise framework streamlines reporting procedures, significantly reducing operational expenses. Under micro-fiscal, a micro-entrepreneur’s income tax is directly computed based on their turnover. The authorities apply a deduction, representing assumed business expenses, before applying progressive IRPP rates. Meeting specific income criteria allows the micro-entrepreneur to choose final payment, freeing them from ongoing tax liabilities.
Through micro-social, entrepreneurs benefit from a simplified method for assessing and recovering social contributions. These contributions are calculated directly on declared turnover, without deductions, on a monthly or quarterly basis. The applicable rate hinges on the nature of the business activity. In instances where a micro-entrepreneur doesn’t generate revenue, no social charges are incurred, as there are no minimum contribution requirements. However, it’s important to note that this doesn’t entail comprehensive social coverage in return.
Moreover, if a micro-entrepreneur opts for sole proprietorship status, they gain additional exemptions in accounting practices. This encompasses exemption from maintaining detailed accounts and preparing annual financial statements. Administrative obligations are restricted to maintaining a revenue ledger, and for specific activities, a purchase register. Additionally, a dedicated professional bank account becomes obligatory only if the business achieves an annual turnover exceeding 10,000 € for two consecutive years. These provisions collectively foster a business environment that’s more accessible and financially feasible for micro-entrepreneurs in France.
The declaration of the turnover of the micro-enterprise
Declaring the turnover of your micro-enterprise is mandatory, regardless of whether it’s zero. You have the flexibility to opt for either a quarterly or monthly reporting frequency.
Worth noting: for the initial declaration, extra time is allowed. Your can report your turnover:
- within 3 months after establishing your micro-enterprise for a monthly reporting system
- within 6 months of creating your micro-enterprise for a quarterly system
This process is conducted online on the URSSAF website, providing a convenient platform for micro-enterprises to fulfil their reporting obligations.
> You might be interested in this article: Understanding URSSAF when working in France
What support is available for micro-entrepreneurs?
For aspiring micro-entrepreneurs, a range of assistance programs are available to facilitate the establishment of their self-enterprises, including aid for the creation of a micro-enterprise.
Key forms of support include:
- ARE (Aide au retour à l’emploi): This aid enables you to combine your self-employed status with unemployment benefits. Certain conditions must be met to ensure the full retention of benefits, making it possible to merge micro-enterprise activities with unemployment benefits.
- ARCE (Aide à la reprise ou à la création d’entreprise): This assistance is aimed at business recovery or creation and allows you to receive 60% of the remaining amount of your benefits, disbursed in two instalments.
- NACRE (Nouvel accompagnement pour la création et la reprise d’entreprise): By applying for NACRE as a self-entrepreneur, you may access support for your entrepreneurial endeavours.
- ACRE (Aide aux créateurs et repreneurs d’entreprise): Tailored for business creation and takeover, ACRE offers an exemption from social charges during the first year of activity. Specific eligibility criteria, such as being a job seeker or a young person under 25, must be met to qualify for this benefit.
Do I have to pay the CFE in micro-enterprise? The Business Property Contribution (CFE) is applicable to all self-employed individuals. However, there are exemptions in certain cases. In the year of your micro-enterprise’s creation, you’re exempt from CFE. If your first year turnover is zero, you might be exempt in the second year. Additionally, if your turnover is below 5,000 €, you qualify for CFE exemption. Specific exceptions apply. For detailed information, refer to our guide on CFE and self-entrepreneurs.
Should I get insurance for my micro-business? Securing professional liability insurance is highly recommended. Note that in certain sectors like transport, health, well-being or construction, this insurance is obligatory. For construction-related activities, ten-year insurance (or ten-year guarantee) is also a legal requirement.
Can I transition from micro-enterprise to SASU (Simplified joint stock company)? Directly transforming a micro-enterprise into a SASU isn’t possible. To switch to this social form, you’ll need to close your micro-enterprise first and then proceed with creating a SASU.
How can I terminate a micro-business? Ceasing your self-employed activity is a straightforward process. Simply complete an online declaration of cessation of activity.
Service Public – Auto-entrepreneur: This official French government website provides detailed information on the auto-entrepreneur status, which is synonymous with micro-enterprise. Visit the website.
URSSAF micro-entrepreneur guide: URSSAF is a key agency for social security contributions in France. Their guide offers extensive information on the micro-entrepreneur regime. Visit the website.
CCI France – Starting a business in France: The chamber of Commerce and Industry in France offers valuable resources and advice for those starting a business, including micro-entrepreneurs. Visit the website.
Auto-entrepreneur.fr: This website is a dedicated platform for auto-entrepreneurs (micro-entrepreneurs) and offers a wealth of information, tools and forums for discussions. Visit the website.
Running a business in France?
Navigating the intricate world of French business regulations can be a daunting task. Ibanista is here to help! Our Starting a Business in France series of articles covers all the bases from starting a micro enterprise to the kind of visas you need to start a business in France. Read our articles here.