Here we look at how to stop being an auto-entrepreneur and why. You can also see our guide to setting up as a micro/auto-entrepreneur if you want to know how to start being one!
There have been some significant changes to the system for micro-entreprise in 2018.
Why you should stop being a micro/auto-entrepreneur
I can hear you ask “Why on earth would anyone want to stop using the system unless they are forced to because the business is doing incredibly well and they have reached the turnover limit two years running?”.
Well, although it is simple, (fairly) easy to set up and you don’t have to pay social charges if you don’t earn anything, there are some circumstances where it is beneficial not to be an auto-entrepreneur, especially if you have been one for a couple of years and so have turnover figures to point to.
Higher than average level of costs in the business
The tax regime is based on turnover and not profit. If you have a high level of costs in the business, you will benefit by presenting accounts to the French Revenue Service (Service Impôts des Entreprises) and paying charges and tax only on the profit and not the turnover.
You can find out the charges to which you will be liable by looking at the URSSAF site and calculating it on your profit after costs have been removed. Don’t forget that you will have extra costs like an accountant, or at the least accountancy software. It can help to join an association de gestion agréée for freelancers – they are not that expensive to join and they check your accounts before they go to the Revenue. Using one or an accountant also entitles you to avoiding a 25% charge on your tax bill. They also provide training on what you are allowed to declare, as part of the fee. If in doubt talk to an accountant.
Very low turnover
If you are running the business as a secondary income and not turning over enough to qualify you for pension rights, then you will be better off declaring your profits rather than your turnover and paying charges on that.
How to stop
There are two things to do:
- Contact your tax office and let them know that you want to opt for the régime de la déclaration contrôlée des résultats. You can either send them a letter or go in and see them in person.
- Write to URSSAF and let them know that you want to stop being a micro-entrepreneur and opt for the régime classique.
You need to do this at the end of the tax year (i.e. in the December so that the changes take place on 1st January).
You will then be moved over to the standard system for the next tax year. You will have to pay monthly contributions based on what you earned the year before. They will be adjusted once your income has been declared the following year.