I want to become a freelancer - which statutes exist and which one should I choose?

A freelancer is a person who carries out a professional activity without being an employee of a company, and is directly responsible for the performance of his or her task and the way it is done. He or she is not bound by an employment contract with the company or person for whom he or she performs the task.

When you start out as a freelancer, you discover that freelancers can use different legal statuses depending on their activity, their needs and their situation... Here is a presentation of the different solutions available to you to become a freelancer!

The various legal forms available for an independent worker/freelancer:

1. The micro-entrepreneur (auto-entrepreneur) status

2. Portage salarial

3. Sole proprietorship

4. Setting up a company

1/ Auto-entrepreneur

Since 2016, the names "auto-entrepreneur" and "micro-entrepreneur" have merged into a single status called "micro-entreprise".

The micro-entrepreneur is a simplified regime, which was set up to make it easier to set up and manage an activity, while benefiting from minimal social protection. This status can be useful if you are starting up or want to test an activity, or in the case of a complementary activity (student, employee, retired person, etc.).

Three types of activity can be carried out by a self-employed person under the micro-enterprise status: commercial activities (purchase/sale of goods), craft activities (manual work, creation of decorative objects, etc.) and liberal activities (advice, training, etc.).

The main advantages of micro-entrepreneur status are:

- The cost: the creation of the legal status is free and does not require any capital contribution,

- Creation is quick: creating a micro-enterprise is easy and can be done directly online,

- Administrative tasks are simplified: you do not need to call on the services of a chartered accountant, nor do you need to draw up annual accounts (balance sheets, profit and loss account, cash flow, etc.),

- The calculation of contributions is based on turnover: with this method, you only pay charges if you obtain a turnover. In short, if you do not make a turnover, you will not pay taxes or social security contributions.

The main disadvantages of micro-entrepreneur status are:

- Turnover is limited: you cannot exceed an annual turnover threshold

- It is impossible to recover VAT: you cannot deduct VAT when you make purchases (raw materials, goods, supplies, etc.), unless you exceed the VAT thresholds,

- The calculation of expenses: based on turnover and not profit, it is impossible to deduct your various expenses. For example: if you spend €300 on raw materials to provide a service that is invoiced at €1,000, the charges are calculated on the €1,000 (and not on the €700 actually earned).

2/ Portage salarial

Freelance administration is a tripartite contractual relationship in which an employee of a Portage salarial company provides a service on behalf of client companies. On the one hand, an employment contract is established between the portage employee and the company. On the other hand, a service contract is established between the freelance administration company and the client company.

Portage salarial is regulated by French labour law with some specificities/flexibilities linked to the collective agreement of portage salarial:

- Employment contract between a minimum of 1 month and a maximum of 18 months on a fixed-term contract

- Permanent contract possible.

- No minimum working hours and a maximum of 40 hours per week

- The wage: includes the basic wage, paid holidays and the 5% business contribution bonus.

- The employee is covered by unemployment insurance. Furthermore, it is possible to combine the back-to-work allowance (Allocations chômages) with income from an activity under the status of portage salarial if it is not full-time.

- The employee also benefits from all the advantages of this status: pension, provident fund, illness, old age, training...

- The minimum professional qualification is level III, or at least 3 years' significant experience in the same sector of activity.

The ported employee is autonomous in the organisation of his or her schedule for the accomplishment of the mission. As a result, they can modify their working hours and set their own schedules by adapting them to the requirements of the current assignment or their new assignments, in compliance with legal and regulatory requirements. Each month he/she must fill in a monthly activity report indicating the days and half-days worked if the working time is calculated in days. If it is calculated in hours, it also specifies the hours worked.

You can combine freelance status with other statuses!

The status of portage salarial can be combined with other statuses such as auto entreprise, EI, SAS, SASU and SARL if the manager is not an employee.

It can also be combined with classic salaried employment, student or retired status and job seeker status registered with the Pôle Emploi.

If you want more information about Portage Salarial, please click here.

3/ The individual company

The individual enterprise (IE) is a simplified form of business. In concrete terms, it refers to entrepreneurs who carry on an activity in their own name. There is an extension, namely the sole proprietorship with limited liability (EIRL), which allows entrepreneurs to protect their personal assets against any debts of their company.

The main advantages of an individual company are:

- Cost: no capital contribution is required.

- Creation is quick: all you have to do is go to your CFE (Centre de formalités des entreprises), or complete the formalities directly online.

- There is no turnover threshold: unlike the micro-enterprise scheme, you do not have to meet any thresholds.

- The tax is based on profits: if you choose the simplified real regime or the normal real regime, the tax is based on the profits and VAT made during the financial year.

The main disadvantages of an individual company are :

- More rigorous accounting: you have to keep a book of receipts and expenditure, and declare your accounts each year (balance sheet, profit and loss account and notes). However, you can benefit from simplified accounting by opting for the simplified real estate regime.

- It is not possible to have a partner: as its name suggests, the individual business implies that it involves only one natural person.

- It is not possible to sell the business: from a legal point of view, the entrepreneur and the individual business form a single entity. It is therefore impossible to sell it to someone if the business stops.

- The exposure to risk is high: the entrepreneur is responsible for the debts of the business, which can be paid out of his or her personal assets. Nevertheless, sole proprietorships created after 15 May 2022 benefit from a more protective regime for their personal assets.

Their liability is limited to the assets needed for the business activity. Individual companies created before 15 May 2022 can also benefit from this limited liability for all claims incurred from 15 May 2022 onwards.

4/ Companies

There are several legal forms for creating a company: EURL, SARL, SASU, SAS, SA, SNC, SCS, SCA.

Several criteria should be taken into consideration when making your choice. The number of partners, the amount of contributions, the taxation of profits and the social and tax regime of the partners are all important criteria.

The main advantage of these structures is security: the financial risks are lower, because the company's assets are separate from the entrepreneur's assets. Nevertheless, the formalities for setting up a company and the accounting are more cumbersome and costly.

If you would like to know more about setting up a company, please visit the government website: https://entreprendre.service-public.fr/vosdroits/F23844

You now know the different ways to become self-employed!

It is up to you to choose the one that best suits your project, your needs and your personal situation. And don't forget that, depending on the choice you make, some statutes can be combined and modified!