Being properly legal - advice please

[Penny29]

Hi All,

I've had an idea for a business but I've no real idea of the income it will generate, possibly only "pin money" in the first year or so. My earnings could realistically be anything from E300 - E13,000 in the first year (but more likely a low figure).

I've checked out the tax situation & understand about thresholds, & that ALL income (even if not liable to tax) has to be declared on my French tax return.

But there are three areas I'm not so sure about and don't want to ask officially in case I end up being steam rollered into registering a business which isn't worth opening in the first place!

1. Is it true that ANY commercial enterprise, where goods or services are exchanged MUST be registered with the Chambre de Metiers, irrespective of amount earned, size of business etc.

2. Is it also true (this is the one that worries me) that monthly cotisations MUST be paid if I am running any sort of business, again regardless of small earnings (in the UK very small businesses can apply for a year by year exemption from paying NI if the expected annual income is below a certain level). From my understanding of the rules, even if I only earn E1 per week from my business I am liable to pay about E100 per month in cotisations from the moment I start trading, although I may get the money back in the form of a rebate after 3 years. Is this true or have I got it wrong?

3. Lastly, assuming the answer to (2) is yes, then does the 70% health cover in France also start from the day you start trading. If not, how do you cover yourself for healthcare bearing in mind that any non-working E forms (E106 etc) issued by Newcastle cease to be valid once a person starts working.

I know all these questions have probably been asked before, but (IMHO) they haven't been asked this clearly before!

Penny

 

 

 

 

 

[Will]

1. No, the Chambres de Metiers are for artisans - from what you indicate you would more likely need to register with the local Chambre de Commerce.

2. There are often ways of delaying (rather than avoiding) payment of cotisations, these have been mentioned on the forum before - as I see, in the topic about starting a boarding kennel, you have advised somebody else to use the search facility it must be working for you (it doesn't for some people.)

3. I'm told that you can work with an E106 under some circumstances, but never having had an E106 I have no experience. It's not 70% for everything - medicines, for example, are reimbursed at 65% or 35% and you often get only a tiny fraction of some dental or optical charges. But if you have a good topup insurance that's irrelevant.

Exactly what your idea entails will govern the actual answers to your questions, registration requirements vary considerably. Sometimes you don't have to register at all if your income is less than 15% of the current social security threshold, but this doesn't apply to most of the sort of businesses that would normally register with the Chambre de Commerce. It also helps a lot if you can become officially unemployed in France before starting to set up your business, but this can be extremely difficult to achieve for a non French person.

You may find answers to your questions at www.apce.com, www.urssaf.fr and www.expathealthdirect.co.uk (for E106 etc). The first two are in French, though APCE has a few English pages, and can be very heavy going and difficult to follow.

[Nick Trollope]

[quote]Hi All, I've had an idea for a business but I've no real idea of the income it will generate, possibly only "pin money" in the first year or so. My earnings could realistically be anything from E300 ...[/quote]

Firstly, on an income of 13K€/year, tax will not be an issue! Social charges will.

1. Is it true that ANY commercial enterprise, where goods or services are exchanged MUST be registered with the Chambre de Metiers, irrespective of amount earned, size of business etc.

It is true that any enterprise (with a couple of exceptions - B&B for one) must be resistered. Who it is registered with depends on what it is. Ch de Metiers deals with Artisans or practical trades. A gardener would register with the MSA, a software designer with the Chambre de Commerce.

2. Is it also true (this is the one that worries me) that monthly cotisations MUST be paid if I am running any sort of business, again regardless of small earnings (in the UK very small businesses can apply for a year by year exemption from paying NI if the expected annual income is below a certain level). From my understanding of the rules, even if I only earn E1 per week from my business I am liable to pay about E100 per month in cotisations from the moment I start trading, although I may get the money back in the form of a rebate after 3 years. Is this true or have I got it wrong?

In the first year, cotistations are about 3.500€, depending on what you register as and with whom. They are payable quarterly (in arrears - again depending on what/whom). If you can't afford the cotistations, then some organisations will reduce them (AVA, the pension people, for example, give you an exemption for income of less than 4.500€ in a financial year, in that year). As a minimum, allow 2.000€ in yr 1. 2nd year payments are about 5.000€, 3rd year about 47% of your profit (in year 1!), plus any catch-up.

3. Lastly, assuming the answer to (2) is yes, then does the 70% health cover in France also start from the day you start trading. If not, how do you cover yourself for healthcare bearing in mind that any non-working E forms (E106 etc) issued by Newcastle cease to be valid once a person starts working.

Yes it does, but it isn't 70%! It's 35-100% depending on what it is for, assuming you don't take out private "top-up" insurance. E106's are a nightmare for workers (and in general). Best advice is to ask a French accountant - this is usually true for any self-employmane and mandatory for most.

I hope that this is clear! Based on my own (current) experience ans that of my accountant.

 

 

[Nick Trollope]

Typical! In the time it takes me to type my reply, Will gets in. It seems one has to get up early to catch him!

At least he agrees with me. I think

 

[Will]

Sorry Nick

I think we are in agreement - and so we should be, the number of times we have both answered questions a bit like this.

Good advice about seeing a French accountant. Make sure it's a good one though, capable of a bit of creative thought. Many are merely book keepers who will fill in the tax return for you. It helps if you can do as much homework as possible in advance, then you know some questions to ask. The APCE website is very good for initial research.

From the sort of money you are talking about, micro bic seems like the appropriate tax regime, and that makes the actual accounting very easy. But if you have a lot of overheads, spend a lot on stock, or would benefit from being able to charge and reclaim TVA it may not be the best answer. Either way, it still needs to be properly set up.