This is probably the question I get asked most often. Read my 6 practical tips on freelancing in France before launching your activity. Covers tax regime, health cover to bookkeeping.
Tip #1 - You need to have a legal entity before you start working
This might be a big surprise to you, but you do need to be legally registered in France before you can start working and invoicing as a freelancer. This means getting a SIRET number which is your legal business identity. You will be given this number within 7 to 15 days of registering your business.
The easiest setup in France is the micro entrepreneur, which is a sole trader, i.e. business registered under your name - you are the business! To find out more about the micro entrepreneur, download my micro entrepreneur factsheet.
Tip #2 - Choose the easiest system to start with
If you are new to France or this is your first freelancing experience, you want to start with the easiest system to set up and manage, so you can concentrate on:
- Understanding the French system - who does what for your business?
- Controlling how much taxes you will be paying,
- Testing and fine-tuning your activity.
If you have low running expenses or little investments to start with, this régime will be the micro entrepreneur as it will enable you to:
- Get in the French system - business number, French social security number, carte vitale, set up for the tax office and URSSAF for social charges.
- Pay a fixed percentage of social charges based on your actual sales, i.e. no sales = no taxes.
- Have the minimum accountancy to deal with on your own, with most declarations being done online.
Tip #3 - Know how much taxes you will be paying
We have all heard horror stories about freelancers or small business owners owing huge amounts of taxes to URSSAF or Impots. Chances are that these people were wrongly advised, or chose a regime that they didn't understand, hence not saving enough along the year for their social charges contributions.
Régime refers to the way your social charges are calculated. It can either be based on a fixed percentage of your sales, as per the micro-entrepreneur. Or it can be based on your profit called régime réel simplifé. Now you can see where it can easily go wrong. If you don't know what your profit is going to be (since you have to wait for your loss and profit account), how can you ensure that you save enough? Especially if you don't understand how this calculation is done. This is why I recommend doing a provisional plan with an accountant to assess your social charges if you go for régime réel simplifé. This way you will know how much to save every month based on your projections.
The micro entrepreneur is a good fit for first-time freelancers in France as you pay your social charges on a fixed percentage of yourselves - no bad surprises!
Tip #4 - Follow through your health cover setup
Registering a business in France will automatically generate a health cover and the creation of your French social security number if you haven't been in the French system before. You will become affiliated with CPAM, also called Sécurite Sociale or La Sécu for your health cover.
However, this is a slow process if you are new to France, as a French social security number has to be created for you. This process can take 4 up to 6 months as your identity has to be checked by a national body. This is why you have to take time to follow through with your health cover setup every month until it is fully complete, i.e you have your green Carte Vitale in your hands.
Ignoring letters from CPAM or URSSAF and not sending documents in time, is one of the main reasons why some people still don't have a carte vitale after a year. It is then very messy to fix, even worse if you move to a different department or region.
Tip #5 - Know the accountancy expectations
I know that nobody likes to talk about bookkeeping when you are brainstorming about your freelancing activity in France. But it is best to know what is expected of you:
- Which kind of bookkeeping do you need to keep based on your legal structure?
- Which information do you need to put on your quotes and invoices?
- Which declarations do you have to complete and by which deadlines?
- How long do you need to keep these records for?
- Do you need a dedicated bank account?
- If you have an accountant what does he or she expect you to do on a monthly basis?
Tip #6 - Don't second guess
You have invested a lot of time and effort to develop your freelancing or business idea. You are also very likely to be self-financing your project, so don't rush into picking a legal structure without fully understanding the impact it will have.
Looking at the legal structure you chose, ask yourself:
- How much social charges will you be paying?
- What is your personal liability?
- Can you easily move up or down to a different legal structure?
- How much are you relying on external advice to understand and manage your activity?
I always say to my customers that in France, it’s easier to start small and grow with your business. Starting with an incorporated business might sound great, but it has a higher setup and running cost, while it can also be very stressful when you don't understand the accountancy regulations and you might feel like you don't control your business.
Start small, provided you don't have high running expenses or high investments, test your market, then move up to a different legal structure. The micro entrepreneur is ideal to test your market and you can move up to a standard sole trader called entreprise individuelle under régime réel simplifié with the start of a new calendar year. Or you can move to a French incorporated business at any time in the year, by closing your micro entrepreneur and registering a EURL/SARL or SAS/SASU.
Finding out more about your choices
To find out more about the micro entrepreneur, download my micro entrepreneur factsheet, or sign up for my online course on How to freelance in France as a micro entrepreneur.
To discuss your options book a Power Hour with me. We will discuss your activity’s regulations in France, your business setup options and taxations so you can decide what works best for you.