How to choose the right legal status as a freelancer in France
By Panama Harris, June 20,2022
In what instance should I choose to be a micro-entreprise? This simplified regime is perfect for launching and testing out a business with minimal fuss. It’s also a useful status if you don’t expect your business revenue to surpass the micro-enterprise thresholds, since its social contribution rates are the lowest of all the other options available to you.
What’s the difference between a ‘real simplified ‘and a ‘real normal’ regime? The real simplified regime is for individual enterprises that have a pre-tax annual revenue between €70,000 and €238,000 for services rendered and between €170,000 and €789,000 for commercial activity or offering accommodation. If you go beyond these income thresholds, then the real normal regime applies.
The individual enterprise status is being redefined as the EIRL status comes to a close. It’s set to integrate some of the latter’s key features, like the protection of personal property from seizure, along with the choice to opt into corporate tax.
When should you choose the EI status? This legal status could be a good fit if you’re not looking to set up a legal person for the company and you’ve exceeded the revenue thresholds for micro-enterprises.
There is an exception to this rule if a sole associate of the EURL commits a serious error in the line of duty - in which case, their personal property can come into play. If this is the case, legal action can be taken against them personally, as opposed to the legal entity.
Why choose the EURL? It can be a good compromise between the level of social protections and their associated charges if you want to pay yourself through your company’s net monthly earnings and not out of your company’s annual dividends (EURL dividend payouts are heavily taxed).
Important: in order to receive these social benefits, you have to receive a minimum salary. Dividends an associate might pay out to themselves are exempt from social charges - which works in the favor of choosing a SASU status. It doesn’t count as part of the president’s compensation. ⇒ If you’re exclusively paid in dividends, you’re not contributing to social charges, which means you cannot receive social protection. We recommend that you simulate both instances to find the setup that works best for you. Hiring an accountant will likely save you time and effort in this instance. As a SASU, you also have to emit a pay stub every time you pay yourself.
When should you choose the SASU setup? This legal status can be a good fit if you’re looking for strong social protection, or if you’re looking to pay yourself a low monthly salary with a bigger payout at the end of the year.
When should you choose to have wage portage? It can be a helpful setup if you’re looking to work for yourself, all while having the security of knowing your admin is properly handled.