Are you planning to set up your business as an individual entrepreneur with limited liability? The EIRL simulation is an essential step before you take the plunge. It enables you to anticipate your tax and social security contributions, compare this status with others , and optimize your remuneration. It will help you avoid unpleasant surprises and make an informed decision about the legal structure best suited to your entrepreneurial project.

What is the EIRL simulation?

The EIRL simulation is a financial analysis tool that accurately estimates the tax and social security consequences of your business. It takes into account your projected sales and operating expenses, and automatically calculates your social security contributions and taxes according to the specific features of the EIRL regime.

In particular, this simulation compares the option of paying corporation tax (IS) or income tax (IR), revealing which system generates the least deductions in your situation. It also determines the optimal amount of your remuneration by identifying the balance point between salary and dividends that minimizes your effective tax rate.

Key elements to include in your simulation

Your projected sales

The basis of any simulation is a realistic estimate of your monthly or annual income. Base your estimates on concrete data: prices charged in your sector, number of potential customers, production capacity. An over-optimistic or over-cautious estimate will distort your conclusions about the viability of the project and the tax optimization opportunities available.

Your deductible business expenses

The EIRL allows you to deduct all your deductible expenses (business rent, equipment, travel, insurance, contributions) from your taxable income. The simulation integrates these expenses to calculate your net profit: the higher your expenses, the lower your tax base.

Choosing your tax system

The EIRL offers you a decisive tax option: remain subject to income tax (IR) or opt for corporation tax (IS). If you pay income tax, your profits are added to your other income and are subject to the progressive tax scale (up to 45%). With corporation tax, you pay a reduced rate of 15% up to €42,500 profit, then 25% beyond that, with a second tax charge on distributed dividends. The simulation compares these two scenarios with your actual data to identify the most advantageous regime according to your level of profit and personal situation.

EIRL social security contributions: a complex calculation

The EIRL’s social security system depends directly on your tax option. With IR, you contribute as a self-employed worker on all your profits, with rates varying between 40% and 45% depending on your activity. With corporate income tax, you only contribute on the remuneration paid, not on reinvested profits, which generates substantial savings.

The simulation calculates these contributions according to the scheme chosen, including URSSAF contributions, pension, provident and professional training contributions. These amounts often represent the heaviest burden for a sole trader.

EIRL compared with other legal structures

EIRL versus EURL

TheEURL social regime is similar to the EIRL, but with some notable differences. The EURL requires the creation of a separate legal entity, while the EIRL remains a sole proprietorship with an assigned patrimony.

From a tax point of view, both structures offer the IS or IR option. The major difference lies in the formalities involved in setting up and running the business. The EURL requires articles of association, share capital and more stringent accounting obligations, often necessitating recourse to professional accounting services. The simulation will help you determine whether this additional complexity is justified in your case.

EIRL versus SASU

The SASU makes the manager subject to the general Social Security system, unlike the EIRL, where you remain self-employed. This difference has a direct impact on your SAS and SARL social security contributions.

The general scheme offers better social protection, but is generally more expensive. Contributions amount to around 80% of net remuneration under a SASU, compared with 40-45% under an EIRL. This substantial difference justifies a thorough comparative simulation before making your choice.

EIRL versus EURL

TheEURL social regime differs from the EIRL in that it requires the creation of a separate legal entity, as opposed to a simple “patrimoine affecté” for the EIRL. For the EURL, this difference means more onerous formalities (articles of association, share capital) and more stringent accounting obligations. The simulation enables you to assess whether this additional complexity is justified for your project.

EIRL versus SASU

The SASU makes the manager subject to the general Social Security system, with contributions of around 80% of net remuneration, compared with 40-45% for the EIRL under the self-employed workers’ system. This substantial difference between your SAS and SARL social security contributions justifies an in-depth comparative simulation, even if the general regime offers better social protection.

Available simulation tools

To carry out your EIRL simulation, you have several options: the free URSSAF simulators for an initial estimate of compulsory contributions and deductions, professional accounting software that incorporates advanced parameters(depreciation, provisions, actual deductible expenses), or support from a chartered accountant who will identify optimization opportunities specific to your situation.

Common mistakes to avoid in your simulation

Your EIRL simulation should avoid three common mistakes that distort the results: 1) Neglecting social security contributions by focusing solely on tax, even though they often represent the heaviest burden; 2) Using obsolete data, as contribution rates and tax scales change every year; 3) Forgetting to take into account your personal situation (marginal tax bracket, other income, family situation), which directly influences the final result.

Optimize your tax situation after simulation

Once you have carried out your simulation, you can take concrete action to optimize your tax situation. If corporate income tax proves advantageous, opt for it as soon as possible. Adjust your remuneration by choosing a balance between remuneration and dividends that minimizes your social charges. You can also take advantage of tax credits, tax reductions, deductible provisions and deductions for professional expenses. These mechanisms significantly reduce your overall tax burden.

Making the right decision for your business project

The EIRL simulation turns your projections into informed decisions, and helps you avoid costly tax mistakes right from the start. It reveals the optimal tax regime (IR or IS), the ideal level of remuneration, and the savings you can make on your net taxable profit. Don’t hesitate to test several scenarios to identify critical profitability thresholds, and seek the support of a chartered accountant to fine-tune your strategy. Rigorous simulation is the basis for optimized, long-term tax planning for your sole proprietorship.