What is a Micro-Enterprise?
You have likely heard of the micro-enterprise, a regime that attracts thousands of French citizens annually seeking professional independence. This status, both accessible and flexible, is designed to meet the needs of entrepreneurs who want to start their activity quickly and without excessive constraints.
But what exactly is a micro-enterprise? What are its advantages and limitations, and how do you create one?
In this article, we will explore this simplified regime in detail, its strengths, obligations, and everything you need to know before diving in. Ready to learn more? Let’s dive straight into the essentials!
Introduction to the Micro-Enterprise
Why Does This Regime Attract So Many Entrepreneurs?
Since its creation, the micro-enterprise has significantly transformed the entrepreneurial landscape in France. This regime, designed to alleviate administrative and fiscal constraints, has enabled thousands of independents to launch their businesses with minimal effort.
The ease of creation, combined with a taxation system proportional to revenue, makes it a favored choice for freelancers, artisans, traders, and other professionals. Indeed, who hasn’t dreamed of pursuing their activity while avoiding the complications of heavy and costly management?
This simplicity is one of the main assets of this status, attracting both beginners and seasoned entrepreneurs looking to test a new business idea.
A Simplified Framework for Independents
The micro-enterprise is designed as a “turnkey” solution for those wishing to venture into entrepreneurship without significant investment or mastery of complex administrative subtleties.
This regime allows you to:
Invoice legally for services.
Develop a supplementary activity alongside salaried employment.
Test a business idea before scaling up.
Although this simple and accessible framework comes with some limitations, such as revenue caps, it remains an ideal gateway to professional independence.
Definition and Characteristics of a Micro-Enterprise
What Is a Micro-Enterprise?
A micro-enterprise is not a legal status in itself but rather a fiscal and social regime tailored to individual entrepreneurs.
It simplifies administrative management while providing a legal structure to carry out professional activities. This regime is designed for entrepreneurs who want to start without complex formalities, offering lightened accounting obligations and revenue thresholds adapted to small structures. In short, the micro-enterprise is an ideal framework for starting with minimal administrative constraints.
Difference Between a Micro-Enterprise and Other Legal Structures
Unlike structures such as SASU (Simplified Joint-Stock Company) or EURL (Single-Member Limited Liability Company), a micro-enterprise does not require capital creation or elaborate legal statutes.
It operates on a simple declaration basis, providing maximum flexibility. However, this simplicity comes with unlimited liability in case of professional debts, unless the entrepreneur opts for the EIRL (Limited Liability Individual Entrepreneur) status, which protects personal assets.
Who Can Create a Micro-Enterprise?
Activities Compatible with This Regime
The micro-enterprise regime covers a wide range of professional activities, making it particularly attractive for various profiles. Here are some examples:
Artisans: Professions such as electricians, carpenters, or plumbers.
Trade: Selling products online, in physical stores, or at markets.
Service Providers: Web developers, graphic designers, consultants, etc.
Liberal Professions: Lawyers, coaches, trainers, among others.
However, some regulated professions require specific qualifications or prior authorizations. It is therefore essential to verify if your activity is compatible with this regime before starting.
Revenue Thresholds for Micro-Enterprises
To benefit from the micro-enterprise regime, certain revenue thresholds must be respected:
€188,700 for commercial activities, such as selling goods.
€77,700 for service provision or liberal professions.
These thresholds are regularly updated and represent a limit not to be exceeded to retain the advantages of this regime. If these thresholds are exceeded for two consecutive years, the entrepreneur will automatically transition to a standard regime, requiring more complex management.
Advantages and Disadvantages of the Regime
Key Strengths
Administrative Simplicity: Simplified management tailored to individual entrepreneurs.
Favorable Taxation: Charges are calculated based on revenue, minimizing surprises.
VAT Exemption: For entrepreneurs below the thresholds, no VAT needs to be charged or remitted.
Accessibility: No need for start-up capital to get started.
Limitations
Revenue Caps: Once exceeded, the entrepreneur must consider a more complex regime.
Personal Liability: Without opting for EIRL, professional debts affect personal assets.
Fixed Charges: Even with low revenue, social contributions remain due.
The Fiscal and Social Regime of a Micro-Enterprise
The Micro-Fiscal Regime Explained
In a micro-enterprise, taxes are calculated based on your revenue, with specific rates:
1% for commercial activities.
1.7% for service provision.
2.2% for liberal professions.
These rates also include social contributions if you opt for the withholding tax system. This system avoids deferred tax payments by integrating them directly into revenue deductions.
Simplified Social Regime
The micro-enterprise’s social regime is based on contributions proportional to revenue. There is no need to declare profits; only receipts are considered. This method offers transparency and ease of management appreciated by entrepreneurs.
However, contributions are due even if your activity is paused or generates no revenue.
VAT and Exemption
Below certain revenue thresholds, micro-entrepreneurs benefit from a VAT exemption. This means they do not charge VAT to their clients but cannot recover VAT on professional purchases. This rule is advantageous for businesses primarily dealing with individuals but may be less suitable for those with VAT-subject suppliers.
How to Create a Micro-Enterprise
Step 1: Declare Your Activity
Creating a micro-enterprise is a fast and largely digital process. Simply declare your activity online on the official auto-entrepreneur website or with the competent Business Formalities Center (CFE). Provide information such as your identity, address, and a precise description of your activity.
Step 2: Choose Your APE Code
Each micro-enterprise receives an APE code (Principal Activity Code), reflecting the nature of the activity performed. This code determines specific fiscal and social obligations for your field.
Step 3: Select a Tax Regime
During the declaration process, you can choose between withholding tax or the standard regime. This decision depends on your personal and professional income. While withholding tax is practical, it may not be advantageous in all situations.
Step 4: Open a Dedicated Bank Account
Although the law requires this only for entrepreneurs exceeding €10,000 in revenue for two consecutive years, opening a separate bank account is strongly recommended. This distinguishes professional transactions from personal ones, simplifying financial management.
Step 5: Affiliate with Independent Social Security
Once your micro-enterprise is created, you are automatically affiliated with independent social security (formerly RSI). This covers your social contributions and your social protection as an independent professional.
Obligations and Responsibilities of a Micro-Enterprise
Maintain Simplified Accounting
While the micro-enterprise regime is lightened, it imposes certain accounting obligations. You must:
Keep an up-to-date revenue book where all sales and services are recorded.
Retain invoices and documentation related to your professional activity.
Manage Social and Fiscal Declarations
Regularly declare your revenue on a monthly or quarterly basis. This declaration serves as the basis for calculating social contributions and taxes, if applicable. Good organization is essential to meet these deadlines.
Respect Revenue Thresholds
Exceeding the thresholds for two consecutive years will automatically transition your micro-enterprise to a standard business regime. This involves heavier accounting and fiscal obligations and the loss of VAT exemption.
Questions & Answers about the french micro-entreprise status :
Is the micro-enterprise subject to VAT? Micro-enterprises benefit from VAT exemption if their revenue remains below regulatory thresholds. This means no VAT is charged to clients, nor can it be recovered on professional purchases. Exceeding thresholds requires VAT declaration and invoicing.
What VAT rate applies to a micro-enterprise? Exceeding exemption thresholds means applying standard VAT rates for your activity: 20% (standard), 10%, or 5.5% (reduced rates for specific goods/services).
What is the difference between a micro-enterprise and an auto-enterprise? The terms “micro-enterprise” and “auto-enterprise” are often used interchangeably. “Auto-entrepreneur” was the term used until 2016, officially replaced by “micro-entrepreneur” to harmonize terminology.
Can you be both a micro-entrepreneur and an employee? Yes, combining salaried work with micro-enterprise activity is possible. However, restrictions may apply, such as exclusivity clauses in employment contracts or direct competition with the employer.
What is the difference between revenue and profit in a micro-enterprise? Revenue (CA) is the total income generated by the activity, while profit is the amount left after deducting expenses (social contributions, various costs). In a micro-enterprise, social contributions are directly calculated on revenue, without accounting for profit.
