Which tax system should I choose for my business?

It's important not to confuse the type of taxation (income tax or corporation tax) with the tax regime. The tax regime, the subject of this article, determines the rules that will apply to the taxation of your company's profits, taking into account your sales, the category of your profits (BIC or BNC) and your sector of activity. There are therefore several different tax regimes. Which of the four should you choose?

The micro-BNC or micro-BIC tax regime

This regime applies to very small businesses (VSEs), usually micro-enterprises with sales of up to €176,200 for the sale of goods or the provision of accommodation, or up to €72,600 for the provision of services.

Your company's profit is calculated by taking your sales and applying a flat-rate allowance that varies according to your activity:

  • 71% on your sales if you're in the business of buying and selling, including food for consumption on the premises, or providing accommodation (except for furnished rentals other than furnished tourist accommodation and bed & breakfasts). This is known as BIC (bénéfices industriels et commerciaux).
  • 50% for services (BIC).
  • 34% for non-commercial activities.

If you carry out mixed activities, deductions are calculated for each fraction of your sales. The deduction cannot be less than €305 for a single activity and €610 for mixed activities.

The profit calculated in this way will be subject to income tax as part of your household income. This system is attractive if your business generates few expenses. You can also opt for payment in full discharge if your reference tax income (RFR) for the year N-2 is less than or equal to a certain threshold calculated on the basis of your number of family quotient units.

Simplified real-estate regime

The simplified tax system is reserved for companies in the BIC category. It is applied automatically if you are not eligible for the micro-BIC scheme because your sales exceed the authorized limits for this scheme, and if you meet the following conditions:

  • Sales of less than €818,000 for sales, catering or accommodation, or €247,000 for services.
  • VAT liability not exceeding €15,000 in the calendar year preceding the financial year.

Under this system, tax is determined on the basis of your actual profit (your expenses are deducted from your sales).

You are subject to simplified accounting and reporting obligations. For example, you can opt for cash accounting. You record only receipts and disbursements. Receivables and payables are recorded at year-end, and you don't need to draw up any notes. Finally, the balance sheet you have to submit to the tax authorities is a simplified balance sheet.

Good to know: if you are covered by the micro-enterprise scheme, you can also opt for the real simplified taxation scheme.

The normal actual regime

It applies automatically to companies in the BIC category with sales (excluding VAT) in excess of €818,000 in the case of sales of goods for resale, catering or accommodation, or €247,000 in the case of services. It is also possible to opt for this system. As with the simplified actual tax system, tax is calculated on the basis of profit.

If you choose this system, you must keep accounts based on supporting documents that you can provide. You are subject to commitment accounting, also known as receivables and payables accounting. This takes place in two stages. You must record the invoice issue date (when the payment obligation arises), then the date of collection (when the invoice is actually paid).

Your accounting requirements include: a balance sheet, income statement and notes, a journal and general ledger, plus an annual inventory.

The controlled declaration regime

This system is reserved for companies with non-trading profits (BNC), such as the liberal professions, if their sales exceed €72,600. Taxation is based on actual profits, and invoices must include VAT.

They are obliged to keep cash accounts, but may opt for a cash commitment system.

If your activity makes you subject to this regime, you must keep a complete set of accounts including :

  • a journal book detailing income and expenses;
  • a register of fixed assets and depreciation, showing the date of creation or acquisition, the cost price, the amount of depreciation applied, and, if applicable, the date and price of disposal.

Since 2016, keeping an inventory book is no longer mandatory.