… 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 the previous posts, I covered some of the mandatory things that you have to go through as a micro-entrepreneur, such as paying the social contributions as well as other taxes; but there are additional obligations that you have to abide by, when you become a micro-entrepreneur.
Now, it might be worth explaining that many things about the status of micro-entrepreneur depend on the nature of your business activity. Briefly, there are two distinct categories of activities: commercial/craft versus liberal. Why is this important? Because many of the requirements depend on the type of activity you pursue. For example, I have mentioned earlier a 72,600 € per year turnover limit; well, this limit depends on the type of business activity as well. If you are selling goods or materials (i.e. for commercial activities, including accommodation services), the thresholds is 176,200 € instead.
My declared activity is service based (see Becoming a micro-entrepreneur); accordingly, my ‘micro-enterprise’1 belongs to the liberal category. Beware, all what I describe in this mini-series apply to this category only!
A dedicated bank account
Here comes the small detail that would be the source of so much trouble.
When I did become a micro-entrepreneur, one the main obligation was to get a separate bank account within a year after your registration. This is not the case anymore if your turnout is below 10,000 € per year. As leaked in the previous post, I didn’t pay one of the tax because my turnover was (way) below 5,000 €. So, why to mention this obligation then?
You must open, within one year of your registration, a bank account dedicated to your micro-entrepreneur activity (separate from your personal bank account).
Quite simply because this very obligation is essential for my story – a key element indeed for what is coming next2. In fact, I could stop this post here, the rest being not relevant for my story…
Accounting
The status of micro-entrepreneur is about simple tax and accounting rules; yet, “simple” does not mean “exempt”. You may not need to prepare a set of annual accounts, but you are still required to maintain a ledger, if only for your credits. In itself, this is not a problem. However, back then, in order to fight against the VAT fraud, the French government wanted to impose the use of an anti-fraud software. Even on micro-entrepreneurs that are exempt from VAT! Fortunately, keeping your records on paper, instead of using a spreadsheet, is enough to get exempt from this extra, and what is more not cheap, requirement.
The micro-entrepreneur benefits from a VAT exemption: no invoicing or VAT recovery.
Needless to say, writing down my one-time income in the credit column of my ledger was not that demanding.
To be continued…
1 Let me remind you that micro-entrepreneur is actually a specific tax status that benefits from simple tax and accounting rules; it is NOT a legal business structure. ^
2 I will have a very complicated end of the year (see Back to normal?), and to deal with the situation, I will have to interrupt this mini-series during the holiday season (i.e. the next two posts). You will have to wait a little bit to know what this story is really about. ^