For many people, setting up their own business represents the realization of a dream, a project close to their hearts that is finally taking shape. Once you've chosen your legal status, registered with the RCS, RM or commercial court registry, and completed all the necessary administrative formalities, it's time to look at the various obligations - particularly tax obligations - incumbent on young entrepreneurs.
We're going to take a look at the three main tax obligations faced by entrepreneurs in their first year of business.
Declaring profits
First of all, we need to distinguish between different types of professional income:
- Industrial and commercial profits (BIC) from a commercial, craft or industrial activity;
- Non-commercial profits (BNC) from self-employed activities;
- Agricultural profits (BA) for farmers.
Secondly, the types of tax regimes, determined according to sales, the nature of the activity and the category to which the profits belong:
- The micro-enterprise scheme (annual sales excluding VAT of less than €188,700 or €77,700);
- Simplified actual sales (sales excluding VAT between €188,700 and €840,000 or between €77,700 and €254,000);
- Normal sales (sales excluding VAT exceeding the above thresholds) ;
- The controlled declaration regime (only for BNC whose revenues exceed €77,700 excl. tax).
Declarations differ according to the type of income and tax regime.
Micro-entrepreneurs or micro-BNCs enter their gross sales on the 2042C-PRO income tax return, respecting the declaration dates for private individuals.
Companies subject to income tax under the "régime réel" (normal or simplified) will be required to file an income tax return, and by the 2nd working day following May 1st of the following year, they will be required to electronically file their "liasse fiscale" (tax package). This includes all the tax documents required by the tax authorities (the tax return, balance sheet, income statement and appendices). It is mandatory.
Companies subject to corporate income tax are also required to file their tax returns online on the same date as companies subject to corporate income tax or, if the financial year ends during the course of the year, within three months of the end of the year (for BIC only).
Lastly, agricultural professions subject to the flat-rate income tax system file their returns no later than April 1 of year N+1.
Value-added tax
All companies carrying out transactions subject to VAT are required to pay it. VAT is a tax collected by the company from its customers. Under certain conditions, it can be reclaimed from the amount paid to suppliers. The balance between collected VAT and deductible VAT, which is normally a debit in the accounts, corresponds to the amount to be repaid to the State.
The timetable for declarations and payments varies depending on whether the company is subject to the simplified or the normal actual regime:
- Simplified actual system: annual VAT return and payment of two instalments (in July and December);
- Standard actual system: monthly VAT return and payment
One or other of these systems applies automatically, depending on annual sales. The upper limit for keeping the simplified actual regime is €818,000 for sales activities and €247,000 for service activities. In addition, annual VAT must be less than €15,000.
However, it is still possible to opt for the normal actual system, even if sales do not reach the thresholds set by the tax authorities.
The annual declaration is intended to summarize all transactions for the previous year, including VAT. It must be filed by the second working day after May 1st at the latest, together with any balance due after adjustment. The following year, advance payments, calculated by the tax authorities, are sent out twice a year.
Under the standard actual system, the accountant is responsible for calculating the amount payable each month, based on customer and supplier invoices.
Territorial economic contribution (CET)
This often unnoticed tax is not insignificant. It is made up of the "cotisation financière des entreprises" (CFE) and the "cotisation sur la valeur ajoutée des entreprises" (CVAE).
Business start-ups are not required to pay CFE tax for the first year. They simply have to complete the 1447 C declaration, sent by the local business tax office (Service des Impôts des Entreprises - SIE), before December 31 of the year of creation.
From the following year, however, CFE will be due, regardless of status, tax regime or activity. Micro-entrepreneurs are therefore also affected by this tax, unless they have sales of less than €5,000.
The CVAE declaration concerns companies with sales in excess of €152,500. Form no. 1330 must be submitted electronically no later than the 2nd working day following May 1st. Payment will be made in two instalments, on June 15 and September 15. This tax, introduced for the benefit of local authorities, will be definitively abolished in 2024. It was only payable by companies generating sales in excess of €500,000 excluding VAT from their second year of existence.
Possible exemptions
There are a number of tax breaks for new businesses located in certain geographical areas (AFR, QPV, ZFU, etc.), those that innovate or join an approved organization, or for the takeover of ailing industrial plants. Exemptions may apply to taxable profits or to the CET.
Personal income tax reductions are also available for entrepreneurs making cash contributions to their company's share capital.
In most cases, jobseekers benefit from a partial exemption from social security contributions. To obtain this, they must submit an ACRE application via their Pôle emploi.