CLAMP DOWN ON COWBOYS (and property owners)

[Danny]

Well, at least we have managed to confuse each other .[:)]

My business operates under the micro-entreprise, so therein lies the (or my) confusion I think. I declare my gross turnover and the amount of cotisations I have paid in the year. No other expenditure at all. No profit or loss declared either.

Sorry if my ignorance has not added anything useful to the thread.

Anyway, as you say, it is the turnover that matters as far as the level of charges goes. If one has a high turnover in France, one must be prepared for the higher costs of the social charges. The viability of the business is another matter altogether. If one declares a loss or a very small profit then the business is not very viable anyway. The compulsory element of payments here can be peanuts too if the turnover is low.

OK too much typing, I have money to earn!

Bon Courage
Danny

[Val_2]

Yes a micro entreprise is a  different kettle of fish to a full TVA registered entreprise in all senses. We have to contribute towards our pension and this is evaluated from the previous year's accounts for the following year. Our accountant has already warned us it will be hefty compared to this year and there is no appeal because as you know in France, all workers work towards their pension even doubling or trebling the last ten year's contributions if they can afford to so they have a comfortable income eventually.

[Danny]

[quote user="Val_2"]Yes a micro entreprise is a  different kettle of fish to a full TVA registered entreprise in all senses. We have to contribute towards our pension and this is evaluated from the previous year's accounts for the following year. Our accountant has already warned us it will be hefty compared to this year and there is no appeal because as you know in France, all workers work towards their pension even doubling or trebling the last ten year's contributions if they can afford to so they have a comfortable income eventually.[/quote]

Under the micro system, one has to pay towards the pension too. In fact, it is the largest cotisation. And it is based on previous year's income... So how do you mean a different kettle of fish?

You say "there is no appeal" . If the amount is based on your previous years accounts, what do you mean by appeal? The amount to pay is the amount to pay. Or am I misunderstanding you?

It would appear to me that the main difference between the regimes is the levels of turnover. If a regime 'reel' has a very high turnover, then charges will be very high but if the regime 'reel' has a low turnover (below micro limits) then surely charges will be similar to the levels for a regime 'micro'. There is no exemption  from charges whatever the regime. It is always based on the amount of money coming in.

Danny

[Val_2]

By appeal I mean change of circumstance which happened in our case due to us sacking an employee and leaving us shorthanded which inturn cut the amount earned. Therefore our accountant appealed to AVA stating these changes and we got a little relief but not a lot. Micro system compared to fully TVA is very different, our turnover for one quarter can be than a micro allowance in one year.

[LesFlamands]

Under the micro regime you don't have to account for expenditure. You tell the impots your turnover/receipts and they deduct 52% (for artisans) which is how they arrive at your profit which is then used to calculate next years cotisations. So, as you say, your profit is linked to your turnover and may not be an indication of your actual income. The micro ent. is OK if you are just providing a service (sub-contract labour) as your expenses are unlikely to be 52% of your turnover so you benefit as you have more 'income' than you are paying cotisations on. However, if you are supplying materials, running your own vehicle and buying tools there very quickly comes a point where a micro ent. is really bad news because not only would your allowable expenses be more than 52% of your turnover but also you have no way of reclaiming TVA paid (on materials, fuel, tools etc. etc.). In many cases your clients suffer as well because, whilst you're not charging TVA on your labour you have to pass on the TVA paid on materials. A TVA registered business can often charge 5.5% TVA on both labour and materials supplied to the customer.

[Nick Trollope]

Small point (again); a micro enterprise can be TVA registered (and hence charge/reclaim TVA), it just isn't mandatory. As Charles says, Artisans frequently charge 5.5% (and buy at 19.6%), so registration has benefits for both the Artisan and the client.

But this is getting a bit off the OP's point, isn't it?

 

[Victor Meldrew]

Charles,

I wonder if you know an answer to this?

Would cotisations in the third year be based on BIC which was accounted for the the first fiscal year or the first total year of  business?

I.E if you set up a business in January then by the end of the tax year you would have 12 months accounts, but if you set up later in the year, say March, then you would only have 9 months.

Thanks in advance

Victor        

[Danny]

Victor, in my case I started in June 2005 so the first year was only 7 months. The amount earned was used for the 3rd year (this year 2007) cotisations. So it was the first fiscal year for me. It might be interesting to consider how it might affect your payments.

ask your accountant to confirm this but that is my situation for what its worth

Danny

[Victor Meldrew]

I think that confirms my thoughts, so the best time to start a business must therefore be as late in the year as possible.

Victor

[LesFlamands]

[quote user="Victor Meldrew"]

I think that confirms my thoughts, so the best time to start a business must therefore be as late in the year as possible.

Victor

[/quote]

Unfortunately not as they make up for the underpaid cotisations in the following year so you end up paying your full cotisation and the arrears and, I believe, they charge you the 10% majoration on the arrears

[Victor Meldrew]

Are you saying that they will look to recover cotisations for any period after 1st January (i.e. on basically what has not been earnt), then view these payments as arrears which then incur interest, if you start your business at any point after 1st January?

Victor  

[Danny]

Cotisations in the first year are paid pro rata. If you register on the 1st July, your cotisations will be half the full year amount etc. There may of course be exceptions in certain circumstances but you start paying as soon as you register.

I registered on the 1st June and paid 7/12ths of the full year amounts in the first year. They were paid as I went along in that year. It does not matter when you start for this purpose. You are only liable for charges from the date of registration, not for anytime before. There is no underpayment situation or interest charged unless you are late with your payments. Even if you register on 25th Dec, you will receive a demand for the amount up to 31 Dec that year and the demand will have a date when it should be paid by. You just pay it before that date. For the next year, you will receive demands in due time as normal. If you have a small income the first year you should have smaller cotisations in the 3rd year but the next year will be much higher. It probably all works out about the same in the long run.

Danny  - EDITED slightly

PS as Nick says, this has not a lot to do with Cowboys but it might be useful for some...

[Victor Meldrew]

This was my understanding from when I did the stage at the CdM, however when you read some of the items on the threads on the forum you get a little confused.

From the stage I also was told that at the end of the second year, you will have to either pay a top up between the fixed cotisations charged in the first year and the amount of cotisations actually due which is calculated on profit, or if profit or indeed loss is not enough to cover the fixed cotisations, then a refund will be given.

Victor  

[LesFlamands]

Apologies to those who think this thread has gone too far away from the original post. I think it is important that those who are trying their best to be legal and make ends meet have as much accurate information as possible.

Firstly, as a micro entreprise, you cannot make a loss. Your BIC is going to be 48% of your turnover. If your turnover is very low and your BIC in the first year (or part of the year) is below the 'plafond de securite social' you may well receive a rebate on the cotisations paid in year 1 in year 3. I can't be sure about this as I've not come across this situation, but if you think you've been overcharged you can write to the various 'caisses' and ask them to bring your account and payments up to date (I once got a completely free year of pension paymants by doing this). It used to be that if your first year was only a part year they would calculate you full years earnings on a pro-rata basis to calculate the cotisations due in year 3 but they now seem to take your actual BIC even if you were only registered for for part of the year and use this to calculate the cotisation due in year 3.

My company uses a number of artisans who are registered as micro ents. (not that it makes any difference to your cotisations) and some of these have had something of a cotisation holiday in year 3 due to a low BIC in year 1 and then had trouble paying their cotisations in year 4. The various bodies who collect the charges seem determined to make these anomolies and the way they are dealt with as mysterious as possible and even my very experienced accountant is unable to explain or resolve some of these.