A dedicated bank account

… continuing the story.

Whatever the amount of money you make (and the way you earn it), you have to declare all your incomes . . . the best option ended up creating an independent activity as a micro-entrepreneur.

In last week’s post, I explained that if you have no turnover for two years, you lose the status of micro-entrepreneur. I also reminded you that getting a dedicated bank account, within a year, was one of the requirements when you become a micro-entrepreneur. From a chronological point of view, the latter obligation should come before the former, right? Oops1, I have not addressed yet what will be the running threat of this mini-series, i.e. a dedicated bank account.

The legislation vs. the reality

You must open, within one year of your registration, a bank account dedicated to your activity as a micro-entrepreneur (separate from your personal bank account).

Let me underscore that the bank account should be dedicated to your activity as a micro-entrepreneur and separate from your personal account. That is it. There is no mention of a professional account. Indeed, in law, there is no need for the bank account to be anything other than a personal account in your name. Accordingly, I could have simply turned to my bank and open a new personal account dedicated to my activity.

This bank account can be professional or personal.

No “business” bank account required

Again, the law does not stipulate that it is mandatory to have a professional bank account. These so-called pro accounts are indeed intended for companies; they come with many specific features or benefits. More importantly, at least as far as I am concerned, the fees charged by the banks for such “business” accounts are much higher than the ones for personal accounts.

The only legal obligation is to hold two bank accounts. In fact, the rates for professional bank accounts are often far too high to be borne by a self-employed entrepreneur.Capitaine Banque

However, in practice, the French banks do not hear it that way! Most of them have a pro account offer and the latter is much more profitable for them than a personal bank account… Unfortunately, many banks simply refuse to open a regular account for micro-entrepreneurs and force them to subscribe to pro accounts. While it should be possible to open an account without specifying its purpose, there is nothing to prevent the bank from subsequently closing2 the account once it has realized it is used for professional operations.

“So, how to comply with the legislation keeping in mind my limited budget?”

PayPal

The situation has improved since, but when I had to deal with this issue, there were not many alternatives. To make a long story short, I knew only about one: PayPal – with no hidden fees and no monthly commitment, as stated on their website. Admittedly, their transaction fees were, and still are, not favorable (3.4% + 0.25 € or 5% + 0.10 € if less than 10 €), but the absence of a subscription fee – even for a professional account – was key in my decision. Besides, I had to open a Business PayPal account to implement the buttons that you can see, and perhaps even use, in the footer of this blog (see One last thing about being a micro-entrepreneur).

There was one concern, though. Was PayPal a bank? Now, the word “bank” is not even mentioned in the legislation. Briefly, Article L613-10 states that the dedicated account should be opened in one of the institutions mentioned in Article L. 123-24 of the Commercial Code. As for the latter, it only stipulates that the account should be opened in a credit institution. After double-checking that PayPal was indeed a credit institution, my concerns vanished.

Paypal Europe is a credit institution (in Luxembourg) therefore valid according to Article L. 123-24 of the Commercial Code.

To be continued…


1 Given my lack of income (see One last thing about being a micro-entrepreneur), there was no rush in getting one. For your information, this is not a requirement anymore – except if your annual turnover is more than €10,000 for two consecutive years. Anyway, back then I had to… ^
2 They can refuse to open a customer’s account without justification, just as they can close a bank account arbitrarily with a minimum of one month’s notice. Don’t believe me? Sorry, but I don’t want to spoil the suspense… ^

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