A sole proprietorship is a very interesting status that offers entrepreneurs the possibility of exercising in their own name and benefiting from the micro-enterprise tax regime. Easy and quick to set up, the sole proprietorship is the preferred legal form for professionals who wish to carry out their activity alone. What are the characteristics of IS? What are the pros and cons of this status? Answers!
The exercise in sole proprietorship is sometimes called exercise in one's own name. Thanks to this status, it is not necessary to create a legal entity. In the context of a sole proprietorship (EI), both the company's assets and the personal assets are combined. A natural person can only have one sole proprietorship. It is not required to provide share capital. In addition, there are no statutes to write within an IE.
The liability of an entrepreneur who has chosen to operate in his own name is total. To reduce the risks relating to personal assets, he can provide funds that he will use if necessary or that he will add to his cash flow. The IE contractor is not obligated to pay himself a salary. He uses his profits as he wishes by making withdrawals. Both fiscal and social taxation are calculated on the declared profit. Finally, an entrepreneur who operates in his own name can make all the decisions.
A person who chooses sole proprietorship as their status can set up the organization they want. It is possible to opt for:
The micro-enterprise regime, the entrepreneur benefits from a simplified tax regime. To qualify, annual revenue (excluding taxes) must not exceed the following thresholds.
In the context of an IE, the operator has no accounting obligations. It is therefore not required to keep annual accounts, commercial accounts or to make a declaration of results. He just has to keep a recipe book. The profit of the IE is subject to income tax. The entrepreneur can opt for the discharge payment.
In the context of an EIRL, the operator's liability is limited to the assets affected. With this status, it is possible to choose income tax or corporate tax. To take advantage of this device, a declaration of assignment is to be made. The professional must also have a bank account dedicated to his activity.
Sole proprietorship under the micro-enterprise regime has many advantages. The first is that this format allows you to carry out small projects without being bothered by legal and accounting constraints.
The EI is based on flat-rate calculations. These are a major asset for the entrepreneur who can anticipate the amount of his social security contributions and his taxation. They are proportional to turnover.
Exercising in your own name offers the possibility of not applying VAT. In this case, the operator must include the following statement on its invoices:"VAT not applicable, art. 293 B of the CGI”. Generally speaking, running costs are reduced.
Sole proprietorship also has some limitations. The first is that it is almost impossible to combine benefits and unemployment benefits. Also, from the start of the activity, the operator must be efficient at the risk of suffering a loss of income. He can anticipate this inconvenience by providing sufficient funds to start his activity.
In the event of bankruptcy, personal assets may be impacted. To reduce the risks, you must opt for the status of EIRL and declare professional assets. Income tax is the only possible tax. It's the least advantageous!
Finally, there are few opportunities for development. Exercising in your own name does not allow you to associate. To develop you have to change your status.
Setting up a sole proprietorship is very easy! There are no statutes to write, no share capital to declare or legal announcements to publish. Simply complete the P0 form and attach the requested supporting documents!
