Setting up a micro enterprise

[jehe]

We will be setting up a micro enterprise - the problem we have is when to do so.

We are setting up a fishing business and whilst most U.K. owners of such businesses remain registered in the U.K. we would like to set up as a French micro enterprise for the first few years, or at least until turnover reaches a level that it would be necessary to change to some other business format. The problem is that if we register now and commence advertising the chances are that this years earnings will be little if any at all - most bookings taken now will be for next year. This being the case it appears that by simply registering we will be liable to social charges of around 3000 euros's even if our earnings this year are nil. If we advertise this year without registering it could be seen as possible 'working on the black' so we are reluctant to risk upsetting the local mayor,etc.

Any suggestons as to the most cost effective way of solving this problem would be appreciated.

Thanks,Jim.

[Nick Trollope]

Register, then ask for your cotistations to be reduced, because you have no income. You should be able to get them below 1000€, whilst retaining your health cover. Surely you built the cost of running your business with no income in the first year into your business plan, didn't you?

Or work illegally - which is what your competitors are doing, by implication.

[jehe]

Thank you Nick.

The problem with this years business is that due to unforeseen problems we were not ready to advertise the business at the end of 2005 when most anglers are looking to book their holiday for 2006 so in effect we have lost the battle for business in the first half of the year. The World Cup has also had a dramatic effect on the angling holiday business with many well established fisheries well down on bookings for this year. Yes we have made provisions for lack of business in first year but that does not mean we are prepared to pay more than we have to in social charges.

As for your final advice I thought I had made it clear in my original post that we wanted to operate within the French system. I did not imply that competitors were operating  illegally but rather they have set up English business's to operate their French fisheries. At the moment this is quite legal but it appears that the French authorities are looking closely at the situation.

[Eslier]

[quote user="jehe"]

. . . but rather they have set up English business's to operate their French fisheries.[/quote]

As Nick said, in all liklihood operating illegally !

If your business is in France and you are resident in France then you must register in France one way or another - even if it is only as a branch company of a British company and this will still attract the usual cotisations etc.

[Jc]

Can be worthwhile doing it legally;a friend with a small farm injured his shoulder working on the farm and while he was unable to work(about 9 months),the state paid for a farm worker to run the farm-you wouldn't get that on the black;you'd be bankrupt.

[jehe]

As said earlier we will be setting up our business as a French business, however there are many similar business's that are run from England with full knowledge of the French authorities. I am not sure of the full operating status of said business's but am aware that the authorities are starting to clamp down on what they see as a 'loophole' in the system.

All said and done I am not really interested in how or where other fisheries are operating but am interested in a solution to my present problem - how to reduce my social payments during a period of nil income. Thanks.

[Nick Trollope]

OK, point taken.

To work legally - including marketing and advertising - you must register & therefore pay cotistations. In fact, you can (it is normal) pay your cotistations quarterly, in arrears. So, if you register today, you will not be expected to pay anything until 1st September. If, just before that point, you contact your pension & health care people, you will be able to get the payment reduced or defferred. In the meantime, of course, you will benefit from the French health system. You can't do this as a self-employed person in the UK, although I appreciate that the payments are lower - but taxes are higher, etc etc!

If, however, you don't want to pay (anything) simply because you are not earning, then I'd suggest that you are not going to be able to operate within the system.

As has been said so many times before, your competitors are operating illegally - if they are operating as you describe. There is no (and never has been a) loophole. The rules may change (after an EC descision last week, but that will take years).

Good luck - and don't forget that telling tales on your competitors to "the social" is normal bevahiour here!

 

[jehe]

Thanks again Nick.

At present we have French health care due to my U.K. social security payments plus we have private top up insurance until the end of the year. Could we register the business so we can advertise for next year but have 1st March as official start up date for potential earnings  and social charges,etc.?

I must say that I do find the mode of operation of similar business's rather confusing especially in the light of your information. One fishery I know has the local mayor as a regular social visitor but runs his business as a British enterprise paying taxes in the U.K. He is looking to run the small shop side of the business as a French micro enterprise to help with matters such as having services connected. The vast majority of similar British owned carp fishery business's are registered as U.K. companies and pay their dues in the U.K. There are those that operate outside the system but I believe that the French authorities are clamping down on these operations.

[Nick Trollope]

There is as limit on how much notice you can give to start a Micro - don't know what it is, but I don't think it is 9 months. You are expected to register when you want to start operating... In your case, I would suggest 1 Jan 2007 (so do it in Oct/Nov), to take into account your failing health .... cover.

 

[Eslier]

As it was explained to me by my accountant, the minute you start advertising your business it should be registered. Once you have registered your business, your E106 cover will cease and you will require the cover provided by the cotisations you will be paying. The key thing here is that you will be resident in France and therefore subject to the French system 100%.  You really need an accountant to guide you through all this to ensure that everything you do is done to your best advantage. Accountants fees in France are much lower than what you would expect to pay in the UK. If you post details of where you are located then I'm sure you will receive some recommendations of good English speaking French accountants.

[jehe]

Thanks again for replies - we are in the Indre region near Buzancais (25 miles from Chateauroux) if anyone knows of an English speaking acountant.

[jehe]

Sorry about spelling - yes it should be 'accountant'

[irnbru]

I am confused as to what might be illegal here. If I have a small one-man enterprise selling second hand books, my permanent address is in the UK where I am registered self-employed, pay the appropriate National Insurance (Class IV I think it is) and pay income tax in the UK, can I not legally trade in France? For instance would I need any kind of registration before (literally) setting out my stall in the local markets?

[Nick Trollope]

It depends on where you live. If in France, then yes you must be registered. If the UK, then probably not.

Simplistic explaination, the reality is much more complex!

 

[irnbru]

Thanks Nick. I will be a UK resident and dependent on EU health card plus insurance to cover medical needs when in France so the whole business of cotisation seems irrelevant.

I will write to the Chamber of Commerce in Perpignan for clarification.

French bureaucracy and clarity? Now there's an oxymoron.