A freelancer or one-person business in France is called a sole trader or enterprise individuelle. Since 15th May 2022, sole traders in France must indicate the mention "entrepreneur individuel" or the initials "EI" on their invoices, quotes, tariff sheet, advertising documents, and bank accounts. This includes micro entrepreneurs (auto entrepreneurs) and entreprise individuelle!
What does the law for Entreprise Individuelle states
Decree No. 2022-725 states that from 15th May 2022, all sole traders in France must indicate on their invoices, order forms, tariffs and advertising documents, as well as on all correspondence and receipts concerning their activity, the name used for their professional activity, including their name and surname preceded or followed by the words "entrepreneur individuel" or the initials "EI".
Each bank account dedicated to their professional activity must also contain the name in its heading. This applies to any sole trader, whose business is legally registered under their name.
Which businesses come under sole trader “Entreprise individuelle”
This is you if you are a freelancer or sole trader in France with a micro enterprise, auto enterprise or enterprise individuelle under réel simplifié. All of these actually come under the term “entreprise individuelle” and refer to a business registered under your own name, as opposed to a company (i.e an incorporated business with its own legal entity).
What do I need to do about the EI mentions?
Check all these documents and add “EI” after your name and surname. For instance, Malia Best (yes, this is a fake name) who is a web designer registered as a micro entrepreneur and using the trading name Malia’s Design, would have to add “Malia Best EI” on all documents. She can still use a trading name, but has to add both “Malia’s Design, Malia Best (EI)”
- Price sheet
- Advertising documents
- Legal mentions on your website
- Business bank account (professional or personal account for business)
Why do I have to add EI on my invoices?
This new law is designed to inform potential customers and suppliers about your legal status and to protect your personal asset. In the past, only sole traders having opted for an EIRL could benefit from this protection. This involved having a legal document drawn by a notaire. Other sole traders such as micro entrepreneur or enterprise individuelle, only had protection on their main home (called Loi Macron).
With this new decree from 14th February, all sole traders’ personal asset is automatically protected. By default, the EIRL doesn’t exist anymore.
What is the difference between professional and personal assets?
Your professional asset refers to your customer base, equipment, stock, cash flow and any other asset owned by the business. Your personal asset refers to your home, savings and any other financial asset. With this new law, all your personal asset is automatically protected. This means that debts generated by the business cannot be claimed on personal assets.
What about social charges debts?
This new law states that outstanding debts to URSSAF and CGSS are not included. This means that you will still have to pay them with your personal asset if needs be. Social charges debts are therefore seen as personal debt.
Potential issue of EI being mentioned for bank accounts
For now, only professional bank accounts enable you to add a trading name with your legal status. For instance “Best Designs SARL”. For micro entrepreneurs using a personal account dedicated to their professional activity, this could be an issue.
As a micro entrepreneur with a personal bank account, you will have already seen that you can only use your name and surname for the account title. Many banks, for now, cannot add the EI mention after your name, as their system doesn’t allow it. This is because the account is named after your personal identity.
It may take a few months for this change to happen. Don’t hesitate to let me know whether you managed to add the EI mention on a personal bank account (add the name of your bank in the email).
Update your legal documents to avoid a penalty fee
To summarise, on 15 May 2022, you will have to indicate the words "Entrepreneur Individuel" or "EI" next to your business name on:
- Your quotes, invoices, contracts, terms and conditions, website legal mention.
- Official letters (URSSAF, taxes, etc.)
- Your bank details
As with all compulsory information, you are liable to a fine if it does not appear on these documents. In this case, we are talking about a fine of up to 750€.