From micro-entreprise to the régime de la déclaration controlée
In early 2018, I changed from the micro-entreprise system of charges paid quarterly based on actual turnover to paying on account based on my previous year's profits despite not having gone over the limits for turnover as a micro-entreprise. Here's what I had to do and why I did it.
I've been running my business in France as a micro-entreprise since the end of 2013, but with hardly any clients as I still had my limited company in the UK and hadn't been focussing on it at all. However at the end of 2017 I realised that it would be better for me all told if I moved everything across to France and billed my UK clients from here.
I had been a bit reluctant to do it when I first moved over as I thought there might be a psychological barrier to working with a French-based marketing consultant, but in fact none of my clients seem to find it a problem that I live out here. I found a way of allowing them to pay me in pounds sterling in a UK bank account, whilst still keeping it separate from my personal account, and took the plunge.
I decided not to stay as a micro-entreprise even though the new turnover limits which came in just as I was making the change meant that I could have done. I have quite a high level of costs as I go to the UK fairly frequently, hiring a car when I am there and often staying overnight in hotels or guest houses and it is better for me to prepare proper accounts and pay charges and tax on the actual profit rather than the turnover minus an assumed level of costs which is what the micro-entreprise system allows.
So, I went to the tax office and had a conversation with the man in charge of my area, who typed up a letter for me asking to move to the régime de la déclaration controlée and register for VAT; something that I also wanted to do given that, at least until Brexit, I can claim back any VAT incurred on my trips to the UK.
My first VAT declaration doesn't take place until May 2019 and from then on I will do an annual declaration with two payments on account in July and October each year. This is good in some ways, but bad in others as it means putting any money received aside for up to 15 months this year. I think I prefer the quarterly system that I was on in the UK, although as most of my clients are UK-based and exempt from being charged under the reciprocal rule, I shouldn't have too much to pay.
What I didn't realise is that the tax office don't contact URSSAF. In January I suddenly realised that the fact that I hadn't heard from them and was still showing as a micro-entreprise meant I needed to get in touch with them. I rang and was told to write in which I did and in due course received a demand from them for cotisation payments. The payments are very low, which is due to the low turnover I had last year. That's good for me at the moment as the cash flow is only just getting going in France, but will no doubt come back to bite me next year. Apparently one of the barriers to setting up immediately as self-employed whether profession libérale, EI or EIRL/EURL is that they ask for large social charge payments upfront based on turnover predicted by them not you, so setting up as a micro-entreprise for a couple of years first actually helps you get charged realistically and shouldn't cause such a burden on the cash flow.
Next step was to register with an association de gestion agréée which means that you avoid paying a 25% surcharge on your tax. These organisations oversee your accounts and check them before they get sent on to the tax office. Membership costs around €200 per year. I also bought a copy of BNC Express which is an accountancy package for small businesses recommended by my AGA and also by my good friend Lise, a translator who has been running her own BNC for years. More details on all of that in another post.