The new auto-entrepreneur scheme launched by the government last January has seen more than 2000 business registrations per day. But not only has it generated lots of interest, the scheme has also created a few problems. Here’s a check-list to make sure you’re covered.
Auto-entrepreneur is a pay-as-you earn system that offers an easy registration process and the ability to pay your social charges and income tax based on a fixed rate of your turnover. The purpose of the auto-entrepreneur scheme is to make starting a small business simpler and less financially demanding in the early years. It is also a low risk option to testing your market because if you do not sell anything, you do not pay any social charges.
Auto-entrepreneurs are not allowed to be TVA registered and have a yearly turnover limit of 32,000€ for services and 80,000€ for trade. Social charges represent 18.3% of turnover for professions libérales, 21.3% of the turnover for services and 12% for trade. Income tax will add an extra 2.2%, 1.7% and 1% respectively.
However, the success of the scheme has caused some teething problems. As the number of registrations has been so high the Régime Social des Indépendants (RSI) and URSSAF have a huge back log of new businesses to process. This has resulted in the deadline for the auto entrepreneurs’ first quarterly turnover declaration to be extended until July 31. By this date you will have to declare your turnover to date (quarter 1 and 2, according to your registration date) and pay the relevant social charges (as per the rates mentioned above)
As well, many businesses have been given the wrong activity code prompting them to contact INSEE to have it amended. Each business in France is classified under an APE or NAF code (Activité Principale de l’Entreprise); you will find this reference on your official business papers sent to you by INSEE once registered. For instance hairdressing and beauty treatments would come under 96.02. This reference would be used by all business directories as well as the impôts, urssaf, etc.
You have just completed your registration or are about to do so
If you are an artisan double check whether any qualifications are required for registration by contacting the Chambre de Métiers. Activities such as plumbing, building or hairdressing require a CAP or BEP qualification, the equivalent to an apprenticeship. Alternatively, three years experience can replace your qualification requirements. For someone who is self employed, proof of work such as three years’ worth of pay slips or accounts is sufficient evidence of your experience.
Check whether you are entitled to the social charge exoneration Aide aux Demandeurs d’Emploi Créant ou Reprenant une Entreprise (ACCRE). Under ACCRE, during your first year of business your social charges (cotisations) will be 25% of what you would otherwise pay. In the second year this figure rises to 50% and in the third year 75%. Your first year social charges with ACCRE will be in the region of 1,000€. The auto entrepreneur rates will apply once your ACCRE exoneration is over. So far the exoneration only applies to auto entrepreneurs registering after May 1, 2009.
You are eligible for ACCRE if you:
- are unemployed with benefit
- have been unemployed without benefits for at least six months over the past 18 months
- are a single parent receiving the Allocation Parent Isole (API)
- are receiving the Revenu Minimum d’Insertion (RMI)
The ACCRE application form is available online or at the Centre de Formalités des Entreprises and should be returned to URSSAF within 45 days of your registration. ACCRE will be extended to year 2 and 3, provided you remain within the yearly turnover limit of 32,000€ for services and 80,000€ for trade
Once you have registered your business online you should receive your official papers from INSEE with your SIRET number within two weeks. Then return to the Auto Entrepreneur website and complete the second registration step by creating your account with Net Entreprises. This will enable you to make your turnover declarations and social charges payments in the future.