Are you thinking of setting up your own business and wondering about the distinction between micro-entreprise and auto-entrepreneur? This confusion is common, as these terms are often used interchangeably. Yet understanding their exact relationship is essential to understanding your legal and tax status. In the context of business legal structures, this simplified regime presents some important specificities to master.

What is a Micro-entreprise or Auto-entrepreneur?

Micro-entreprise and auto-entrepreneur now refer to exactly the same reality. Since January 1, 2016, the auto-entrepreneur scheme has merged with the micro-enterprise scheme, unifying two schemes that previously coexisted. The term “auto-entrepreneur” is still commonly used in everyday language, but legally, we now speak only of micro-entreprise.

Micro-enterprise is not a separate legal form, but a simplified tax and social security system for individual entrepreneurs. It is characterized by simplified administrative formalities and a flat-rate calculation of social security contributions and taxes. It is aimed at sole traders whose annual sales do not exceed certain thresholds, and today represents the most popular status for starting up a self-employed business in France.

Sales thresholds to be respected

To qualify for the micro-enterprise scheme, you must comply with certain annual sales ceilings. These thresholds vary according to the nature of your business.

Applicable thresholds in 2024

The sales ceilings are as follows:

• 188,700 euros for the sale of goods, objects, supplies or food to be taken away or consumed on the premises, or for the provision of accommodation (BIC)
• 77,700 euros for commercial or craft services (BIC) and liberal professions (BNC)

Overrun Tolerance Mechanism

The micro-enterprise scheme includes a tolerance mechanism for exceeding thresholds. A one-off overshoot is tolerated without immediate exit from the scheme, provided that the thresholds are not exceeded by :

• 206,570 euros for merchandise sales activities
• 85,470 euros for services and self-employed activities

On the other hand, if these thresholds are exceeded for two consecutive years, the business automatically switches to the actual tax regime on January 1 of the following year. This transition entails more complex accounting obligations, including full bookkeeping and the preparation of annual financial statements.

For mixed activities combining sales and services, total sales must not exceed 188,700 euros, with a maximum of 77,700 euros for services. These specific rules give you a degree of flexibility in managing your business.

The advantages of the micro-business system

The micro-enterprise system offers a number of advantages that explain why it is so popular with business start-ups. In particular, this simplified status avoids the complex accounting obligations and costs of a traditional accounting firm, while benefiting from an advantageous tax system.

Administrative simplicity

The formalities involved in setting up a business are simplified, with no need to draw up articles of association or publish a legal notice. Accounting is limited to keeping a revenue book and, for certain activities, a purchase register. Unlike other businesses, which have to draw up and file annual accounts, no balance sheet is required for a micro-business. What’s more, you don’t have to call on professional accounting services to ensure your basic compliance, which represents a significant saving in the start-up phase.

Tax advantages

Your social security contributions are calculated as a flat-rate percentage of your sales. Social security contribution rates vary according to activity: 12.3% for the sale of goods, 21.2% for commercial or craft services, and 21.1% for self-employed activities.

Subject to a certain level of income (reference tax income of less than €27,478 per unit in 2024), you can opt to pay income tax in full discharge. This option allows you to pay your social security contributions and income tax simultaneously in a single monthly or quarterly payment. In this case, social security contributions are added to the flat-rate tax: 1% for the sale of goods, 1.7% for BIC services, and 2.2% for self-employed activities (BNC).

To optimize your tax regime and declarations, the support of a specialized accounting firm can prove invaluable, particularly in assessing the relevance of the payment in full discharge to your personal situation.

Limits and constraints of the status

Despite its advantages, the micro-enterprise system has certain restrictions that should be anticipated. The flat-rate system, which simplifies management, also has its drawbacks, notably the impossibility of deducting actual expenses. What’s more, although accounting and bookkeeping are simplified, accounting obligations remain, and certain situations call for particular vigilance.

Impossibility of deducting actual expenses

You cannot deduct your actual business expenses (rent, equipment, travel). Unlike companies operating under the “régime réel”, which can deduct their actual expenses, the flat-rate calculation of the micro-business system can be disadvantageous if your expenses are high. A flat-rate deduction is applied: 71% for purchase-sale activities, 50% for BIC services, and 34% for BNC.

Restrictions on Cumulations

The combination of auto-entrepreneur and SARL is possible, but requires particular attention to tax and social security rules. In particular, you need to check that it is compatible with your salaried activity or your status as a manager.

It is generally permissible to combine your micro-business with other employment statuses (employee, civil servant, pensioner, job-seeker), provided you meet certain conditions. In the case of salaried employees, you must check that there is no exclusivity clause in your employment contract, and respect your duty of loyalty to your employer. Social security contributions are due on each activity, according to the rules specific to each scheme.

Civil servants must obtain prior authorization from their administration to engage in self-employment. Retired people can combine their pension with income from a micro-business, but income ceilings may apply depending on their situation. A personalized analysis of your situation will help you avoid any risk of conflict or adjustment.

No VAT recovery

As a micro-entrepreneur, you benefit from basic VAT exemption as long as your sales do not exceed certain thresholds: 36,800 euros for services and liberal professions, or 91,900 euros for the sale of goods. Under this system, you do not charge VAT to your customers, but you cannot reclaim VAT on your business purchases either.

There are also higher tolerance thresholds: 39,100 euros for services and 101,000 euros for sales. If you exceed the basic threshold but remain below the increased threshold, you retain your exemption for the current year. Above the increased threshold, VAT liability becomes compulsory, even for micro-businesses.

This VAT exemption presents a significant competitive advantage when you work with private customers, since your prices are automatically more attractive without VAT. On the other hand, it can be a handicap if you work mainly with VAT-registered professionals, who cannot reclaim VAT on your services and often prefer suppliers who charge VAT.

From Micro-entreprise to Classic Sole Proprietorship

As your business develops, you may need to exit the micro-entreprise regime. Switching from micro-enterprise to EI under the actual regime can be a wise decision if your professional expenses are high, or if your sales approach the thresholds.

This transition allows you to deduct your actual business expenses and reclaim VAT, but it also entails more onerous accounting obligations. You’ll need to keep full accounts and draw up annual financial statements.

Social aspects and contributions

Social security contributions for micro-enterprises are calculated on the basis of sales, not profits. This distinguishes the system from other forms of sole proprietorship, and is a key factor in its administrative simplicity.

Contribution calculation and rates

The amount of your social security contributions is determined by applying a flat rate to your sales. This system offers the advantage of predictability: you know the amount of your social security contributions as soon as you receive your revenue.

The rates vary according to the nature of your activity: 12.3% for the sale of goods, 21.2% for the provision of commercial or craft services, and 21.1% for self-employed activities classified as BNC. These rates include all compulsory contributions: sickness-maternity, family allowances, basic and supplementary pensions, disability-death and CSG-CRDS.

Declaration and Payment

You must declare your sales and pay your contributions either monthly or quarterly. This declaration is made online via the URSSAF website. If you have no sales, you must still make a declaration, indicating a zero amount.

Payment is made at the same time as the declaration, generally by direct debit. This synchronization considerably simplifies administrative management compared with conventional schemes, where provisional contributions are adjusted after the fact.

Régime Social des Indépendants

You are covered by the Sécurité Sociale des Indépendants scheme. Your contributions cover health and maternity insurance, family allowances, basic and supplementary pensions, as well as the disability and death scheme.

For certain self-employed activities, notably non-professional NICs, social security contributions follow specific rules that need to be carefully examined.

Régime Social des Indépendants

You are covered by the Social Security system for the self-employed, with the same health coverage as employees. On the other hand, pension rights are proportional to declared sales, and may be limited in the event of low activity. Unlike other self-employed people, there are no minimum contributions to pay in the absence of sales, which is an undeniable advantage in the start-up phase, but may penalize your pension rights in the long term.

To validate a pension quarter, you need to achieve a minimum sales figure that varies according to your activity: around 4,137 euros for the sale of goods, 2,412 euros for commercial or craft services (BIC), and 2,880 euros for self-employed activities (BNC). These amounts are revised each year.

Your contributions also include the Contribution à la Formation Professionnelle (CFP), which entitles you to subsidized training. For certain self-employed activities, notably non-professional BNC, social security contributions follow specific rules that need to be examined carefully.

Advanced Tax Considerations

Beyond the basics, there are a number of tax issues that deserve special attention in the micro-business context.

Tax Returns and Obligations

As a micro-entrepreneur, you have to make two separate declarations that should not be confused:

1. Declaring your sales to URSSAF: you must declare your sales monthly or quarterly (depending on the option chosen when you registered) to calculate your social security contributions. This declaration is made online via the URSSAF website. Penalties of 52 euros per missing declaration may be applied. Repeated failure to declare may result in cancellation of the scheme.

2. Annual tax return: you must declare your sales on your annual tax return (form 2042-C-PRO), even if you have opted to pay income tax in full discharge. Sales must be entered in specific boxes according to your business category:

• Boxes 5KO, 5KP or 5TB for activities involving the sale of goods (BIC)
• Boxes 5KP, 5NP or 5TE for commercial or craft services (BIC)
• Boxes 5HQ, 5IQ or 5JQ for self-employed activities (BNC)

The declaration deadline corresponds to the general tax calendar, generally between the end of May and the beginning of June, depending on your département and the declaration method (paper or online). Failure to comply with this obligation may result in surcharges ranging from 10% to 40%, depending on the seriousness and recurrence of the delay.

Costs incurred prior to creation

A frequent question concerns the reimbursement of expenses incurred prior to setting up a business. In micro-enterprises, these expenses are generally not deductible under the flat-rate system, as opposed to the actual system.

Costs incurred prior to creation

A frequent question concerns the reimbursement of expenses incurred prior to setting up a business. In micro-enterprises, these expenses are generally not deductible under the flat-rate system, as opposed to the actual system.

This limitation is due to the simplified way in which expenses are calculated: the flat-rate deduction applied to your sales is intended to cover all your professional expenses, including those incurred during the start-up phase. If you anticipate major expenses before launching your business (equipment, training, set-up costs), it may be a good idea to directly consider the actual sole proprietorship system, which allows more detailed accounting and the deduction of actual expenses.

Tax returns

As a micro-entrepreneur, you are subject to several separate tax obligations. You must file an annual tax return using form 2042-C-PRO, even if you have opted to pay income tax at source. This declaration enables the tax authorities to calculate your taxable income after application of a flat-rate allowance for professional expenses.

At the same time, your sales must be declared to URSSAF on a monthly or quarterly basis, in order to calculate your social security contributions. This declaration is made online, and must be completed even if there are no sales (zero declaration). Failure to comply with these reporting obligations may result in penalties and loss of entitlement to the micro-tax system.

Making the right choice for your business

The micro-enterprise system is particularly suited to certain types of entrepreneur. It’s ideal for self-employed consultants, freelance graphic designers, web developers, copywriters and coaches whose expenses are mainly limited to the time they work. Dropshipping or low-stock e-merchants, home services (tutoring, administrative assistance), and digital activities (content creation, community management) also benefit from this simplified scheme. It’s also ideal for testing out a new business, generating additional income alongside a salaried job, or running a part-time business without administrative complexity.

On the other hand, this status is less suitable if you’re planning to make substantial material investments (purchase of machinery, business vehicles, business premises), incur high costs (raw materials, major subcontracting, substantial travel expenses), or have ambitions for rapid growth that would quickly take you over the thresholds. Activities requiring VAT recovery to remain competitive (B2B trade in particular) or those where the “micro-business” label could damage your credibility with major professional accounts are also worth considering.

Before opting for the micro-enterprise system, make a precise assessment of your situation: projected expenses, expected sales, need for professional credibility, and medium-term development prospects. This structuring decision will have a lasting impact on your tax situation and obligations. The support of a tax lawyer enables you to analyze your project in its entirety and optimize your choice of legal and tax status from the outset, anticipating future developments in your business.