Accounting obligations all freelancers must respect Accounting obligations according to tax regime

Summary

What are your accounting obligations as a freelancer?

8 mins

June 14, 2022

Accounting is often the scourge of freelancers. As a solo entrepreneur, you might know your own industry inside out - you can be the best writer/coder/designer/consultant in the world - but that doesn’t necessarily mean you’re cut out for balance sheets, spreadsheets and financial forecasts. That, after all, is why the world invented accountants, right?

But the law is the law. France has accounting obligations that every business needs to respect, even the lone-wolf freelancer. This article will spell these obligations out to you, so you can stay compliant and protect your business.

We’ll look at the legal bases you must cover, whichever tax regime you’re signed up to. And we’ll cut the jargon wherever we can.

Accounting obligations all freelancers must respect

There are some legal requirements that concern all freelancers, whether they have ‘micro-entrepreneur’ status or they’re running a EURL or SASU company.

You must keep your invoicing up to date

As a freelancer, you have a legal obligation to maintain up-to-date invoices.

That means that if you’ve completed a job for a business client, you must systematically send an invoice for that job. An invoice is mandatory for all B2B (Business-to-Business) transactions.

If you’ve completed a job for a non-business client (let’s say you’ve painted the walls of your elderly neighbour’s apartment), you must send an invoice for any job billed at more than €25 (tax included).

To be legally valid, your invoice must include the following mandatory elements:

the word “facture” (invoice);
the date and the unique reference number of the invoice;
your legal company name, your legal status, your name and your address;
your client’s name and address;
the full pre-tax amount (hors taxe, or HT) as well as the full amount with tax included (toutes taxes comprises, or TTC);
the payment deadline date and any applicable late payment penalties;
the payment method conditions (i.e. how to pay the invoice);
if you are subject to VAT: the VAT amount, the applicable VAT rate and your company VAT registration number.

Important: always double-check your invoices once you’ve drafted them, making sure they include the above information. URSSAF (the organization responsible for collecting your company’s social security contributions) carries out regular checks to ensure compliance with accounting laws. You risk a fine of €15 per false piece of information, which could prove very costly if all your invoices contain the same error...

What about quotes (cost estimates)?

There’s no legal obligation for freelancers to send cost estimates before taking on a job, unless the customer specifically asks for one. However, it’s strongly recommended to send a pricing quote to customers before starting a mission. This cost estimate provides both parties with a clear definition of the scope of the job as well as the price you will charge.

What’s more, a cost estimate signed by both parties carries the same legal weight as a contract. It makes everything clear to both parties: you’ll know exactly what you need to do to get the job done and your customer will know how, when and how much to pay you. Thanks to a signed cost estimate, it’ll be easier for you to take legal action in the event that you don’t get paid. This makes it an important part of your invoicing process.

If you want to make sure that all your invoices and quotes are in perfect shape (and also that they never get forgotten), we recommend you use specialized invoicing software. With Qonto's built-in invoicing tool, not only do you get a business account, you also get a simple way to make sure you issue compliant invoices, that'll help you get paid faster.

Opening a separate bank account dedicated to the business

Freelancers in France are legally required to open a separate account for their business activity if their turnover exceeds €10,000 for two years in a row.

This does not necessarily mean opening a business bank account; it could be simply a new current account alongside your personal account with your current bank. The requirement is that the two accounts are distinct from one another and that the flows of money in and out of the account registered to the business must be kept separate from the flows in and out of the personal account.

However, there are advantages to opening an account that’s specifically designed for business purposes. There are plenty of freelance-friendly features that will make managing your finances quicker and less tedious. With a business account such as those proposed by Qonto, you have access to payment methods that can be adapted to your activity as well as tools that will help you prepare your accounting (such as automatic VAT detection and digitized expense receipts).

Also, if you do encounter doubts, queries or problems, you’ll be able to rely on reactive customer service with reps trained in dealing with exactly those sorts of issues.

Accounting obligations according to tax regime

Which taxation regimes are available to freelancers?

As we’ve seen above, some accounting obligations like invoicing and opening a dedicated account for the business apply to all freelancers. Beyond that, accounting obligations vary depending on the taxation regime (régime d’imposition) that applies to your company.

So, how do you know which tax regime your business is subject to?

The different tax regimes for businesses in France are based on the kind of profit the businesses make, including:

Bénéfices Industriels ou Commerciaux (BIC) for commercial, industrial or artisanal businesses. In most cases this means reselling physical products, providing food or accommodation, or using skilled manual labor.
Bénéfices Non Commerciaux (BNC) for other professional operations, including ‘liberal’ professions and the provision of ‘intellectual’ services.

Tax regimes for BIC-generating companies:

the micro-enterprise regime (régime de la micro-entreprise, formerly auto-entreprise). More specifically, this is known as the Micro-BIC regime.
the real simplified tax regime (régime réel simplifié)
the real normal tax regime (régime réel normal)

Tax regimes for BNC-generating companies:

the micro-enterprise regime (régime de la micro-entreprise, formerly auto-entreprise). More specifically, this is known as as the Micro-BNC regime.
the controlled declaration regime **(régime de la déclaration contrôlée)

So what about you, a freelancer? The vast majority of freelancers are considered self-employed workers who propose ‘intellectual’ services to companies (i.e. concerning strategy, writing, photography, coding, design, coaching, illustration etc.). As such, most freelancers’ revenue is classified as BNC. This means that two tax regimes are open to you:

the micro-enterprise regime (Micro-BNC)
the controlled declaration regime

We’ll now look at the accounting obligations for those two ‘freelancer’ tax regimes.

Accounting obligations for freelancers with ‘micro-entrepreneur’ status

Most freelancers choose to start out under the micro-entreprise taxation regime (formerly auto-entreprise). Why?

Basically, because this system imposes fewer restrictions and because micro-entrepreneurs enjoy a greatly simplified taxation regime. It is appealing to self-employed workers who are just starting out and who don’t wish to spend too much of their time on admin (who does?). The tax regime is simple to the point that it can be done alone, without the need for an accountant.

There is a ‘but’. The micro-entrepreneur status is not available to everyone. To qualify, your annual pre-tax (hors taxe) turnover for the previous year must not exceed €77 ,700 if you provide the kind of ‘intellectual services’ (professions libérales) mentioned above.

The micro-entrepreneur (formerly auto-entrepreneur) has two accounting obligations: to keep an up-to-date Revenue Ledger (livre des recettes) and an up-to-date Purchase Log (registre des achats). Let’s examine them more closely.

Keeping an up-to-date Revenue Ledger

A revenue ledger is an accounting document that brings together all your items of revenue (for example, client payments) classified in chronological order. Keeping one is an obligation for all micro-entrepreneurs.

Exactly how you present it is up to you, as long as it contains the 4 following pieces of information:

the amount of the item of revenue;
the origin of the item of revenue (i.e. who sent the payment);
the payment method (card, check, cash...);
the reference number of the invoice (hence the importance of sending an invoice with a unique reference number after every job).

Helpful Tip: we advise you to present your revenue ledger in table form for better readability. If you receive lots of payments and items of revenue, we recommend you use accounting software to keep them all neatly organized. URSSAF provides a template for the Revenue Ledger on its website.

2. Keeping an up-to-date Purchase Log

The purchase log (or purchase ledger) is an accounting document that records all items of expenditure, classified in chronological order.

In theory, this only applies to micro-entrepreneurs who re-sell products or merchandise or who provide furnished accommodation. Freelancers who provide an ‘intellectual service’ are not legally required to keep a purchase log.

In practice, however, keeping an updated record of your spending is recommended for all micro-entrepreneurs, especially if your activity demands that you make regular business expenses (buying equipment, paying for software and subscriptions, maintaining a website, coworking fees, travel expenses etc.)

Typically, any purchase item recorded in the log should include:

the payment date for the purchase;
the amount and the nature of the purchase;
the reference number of the associated invoice or receipt;
the identity of the vendor;
the payment method for the purchase.

Accounting obligations for freelancers under the “controlled declaration” tax regime

The “controlled declaration” regime concerns all freelancers who don’t have micro-entrepreneur status. Here, the accounting obligations are slightly more complex. But still, they’re manageable. Let’s look at what this group of freelance workers needs to do with their books.

1. Keeping up-to-date Revenue Ledger and Purchase Log

Just like their micro-entrepreneur counterparts, freelancers under the controlled declaration regime must keep an updated Revenue Ledger. However, in this case the Purchase Log is not optional, but rather a legal obligation.

The mandatory information to be included in these documents is identical to that mentioned above for micro-entrepreneurs.2. Keeping an up-to-date Fixed Assets and Depreciation Register (registre des immobilisations et des amortissements)

Under the controlled declaration regime, freelancers must also create and maintain a register of all fixed assets and their depreciation, known in France as le registre des immobilisations et des amortissements.

A fixed asset (une immobilisation) refers to something of value such as a car or property that the business owner possesses and uses for work. In the case of freelancers, it might also be machinery or a computer.

Depreciation (amortissement) means the loss in value of this asset as it becomes used over time.

Let’s use an example to illustrate.

Imagine you’re a freelance photographer and that you’ve just bought a brand new camera to use for work. In accounting-speak, this is an asset: something you’ll use again and again to do your job. You paid €1,000 for the camera on the day you purchased it. Two years later, you’re still happy with your camera but even if you’ve taken the greatest of care of it, it’s no longer new and will have lost a little value. If you sold it online, for example, you may only get €500 for it. This loss in value is known as the asset’s depreciation.

Calculating an asset’s rate of depreciation can prove tricky. Yet, in the accounting world, you must be precise. There are various formulae that will help you make the calculation based on the asset’s life span, which varies depending on the nature of the asset. However, given the complexities of the calculation, it’s highly recommended you seek the help of either a professional advisor or accounting software.

All your assets and and depreciations must be recorded in a specific register in your accounting. There is no single, mandatory way of presenting the data but you will need to stipulate the following:

the date of purchase and the nature of each asset,
the amount of the depreciation.

Fulfilling your accounting obligations as a freelancer is not complicated as long as you’re clear about what you must do and are organized enough to do it on a regular basis. Opening a dedicated account for your business and keeping up-to-date invoices and financial records are all manageable tasks. There’s also plenty of software on the market to take some of the complexity out of the admin process for you, giving you more time to focus on completing the missions that bring the money in.

Are you a freelancer needing to open an account for your business? Learn more about how a Qonto business account can help you focus more on your missions and less on bureaucracy.

🗣 Glossary of French accounting terms for freelancers

Micro-entrepreneur (formerly auto-entrepreneur): Legal status for a company created and managed by one self-employed person.
Bénéfices Industriels ou Commerciaux (BIC): income generated by commercial, industrial or artisanal businesses.
Bénéfices Non Commerciaux (BNC): income generated by other professional operations, including the provision of ‘intellectual’ services and liberal professions.
Régime d’imposition - a tax regime or tax system, of which there are several in France.
Régime de la micro-entreprise: the tax regime that applies to micro-entrepreneurs and that entails reduced accounting obligations. To qualify, turnover for the previous year must not exceed €77,700 for providers of services. Applies to companies generating BNC income.
Régime réel simplifié: ‘Real, simplified’ tax regime that entails reduced accounting obligations. To qualify, turnover for the previous year must not exceed €264,000 for providers of services. Applies to companies generating BIC income.
Régime du réel normal: ‘Real, normal’ tax regime that entails full accounting obligations. For service-providing companies with a turnover of more than €264,000 in the previous year. Applies to companies generating BIC income.
Régime de la déclaration contrôlée: ‘controlled declaration’ tax regime. Applies to companies generating BNC income with turnover of more than €77,700 for providers of services. Applies to companies generating BNC income.
Le livre des recettes: A Revenue Ledger - an accounting record of all incoming items of revenue.
Le registre des achats: A Purchase Log/Ledger - an accounting record of all a company’s expenditure items
Le registre des immobilisations et des amortissements: Fixed Assets and Depreciation Register - an accounting document recording a company’s fixed assets and their depreciation in value over time.

ABOUT THE AUTHOR

Mark Davis

Mark worked for 12 years in broadcast journalism before making the switch to business audiences. A Qontoer since 2021, his focus is on writing copy that speaks frankly and directly to customers.

Ready? Let's go.

Whether it's to examine the specific needs of your business, or to go over the benefits of Qonto's tools and features, we're here for you.

Open an account

Talk with our sales team