What's the difference between micro-enterprise and auto-entrepreneur?

Difference between micro-enterprise and auto-entreprise

It's important to know that since January 1, 2016, there is no longer any difference between these two names. A new single regime called micro-entreprise brings together the former auto-entreprise and micro-entreprise regimes.

For auto-entrepreneurs who registered before 2016, they automatically became micro-entrepreneurs, with no changes other than the name of the status. They continue to enjoy the same benefits.

Before 2016

The Pinel law of June 18, 2014 put an end to the distinction between the micro-enterprise regime and auto-entrepreneur status, as they were in fact one regime and one status. Indeed, auto-entrepreneur status was simply an option to practice as a micro-enterprise, offering an even more simplified approach.

There were some social and tax differences between operating as a micro-entrepreneur or auto-entrepreneur:

• In social terms, the micro-entrepreneur was subject to the classic regime for non-salaried workers (TNS), while the auto-entrepreneur was subject to the simplified micro-social regime, under which contributions were calculated on the basis of a percentage of sales.
• From a tax point of view, micro-entrepreneurs were subject to income tax (IR) without the option of paying tax in full discharge, while auto-entrepreneurs benefited from the simplified tax system, with the option of paying tax in full discharge.

After 2016

The new micro-enterprise scheme combines the elements of the former auto-entreprise, such as :

• Payment of social security contributions as a percentage of sales, with no regularization;
• The possibility of opting for the simplified tax system with payment or withholding at source.

It also incorporates certain elements of the former micro-business, such as :

• Obligatory registration,
• The need to have a bank account dedicated to the business, but not necessarily a business account,
• The obligation for artisans to complete a pre-installation training course, although the latter requirement has been abolished in 2019.

The evolution of micro-business

The micro-business regime is constantly evolving. For example, thanks to the Sapin II law, EURLs have been able to opt for the micro-enterprise regime. With successive Finance Acts, sales thresholds have been raised, ACRE (Aide à la Création et à la reprise d'Entreprise) conditions have been tightened, and in some cases the opening of a business bank account has been made compulsory.

More recently, in 2022, a single status was created for sole proprietorships, with the option of opting for the micro-social and micro-tax regimes. It is no longer possible to create an EIRL to protect personal and professional assets, but this new form of sole proprietorship guarantees systematic separation of assets, offering equivalent protection.

The advantages of today's micro-business

The micro-enterprise scheme remains advantageous, offering the possibility of starting up a self-employed business quickly and cheaply.

Thanks to the "guichet unique" portal hosted by INPI, setting up a company is free of charge, and can be registered online in just a few clicks. Accounting is limited to keeping an income/expense ledger and all invoices. Social security contributions are calculated on the basis of sales, which means that they are zero if there are no sales.

Characteristics of micro-business

Being a micro-entrepreneur offers a number of advantages in terms of tax, social security and VAT. Indeed, one of the specific points of this regime is the basic VAT exemption, which means thata micro-entrepreneur does not have to invoice or declare VAT as long as his or her turnover does not exceed certain thresholds (€101,000 for sales and €39,100 for services and liberal professions). However, VAT cannot be deducted from purchases.

As far as taxes are concerned, profit is not taken into account, as there is no conventional accounting system. Instead, gross sales are used, to which are applied flat-rate deductions of 71% for commercial activities, 34% for craft activities and 50% for liberal professions.

Micro-entrepreneurs can also opt to pay their income tax in full discharge, enabling them to pay it at the same time as their social security contributions. The choice of this option depends on the amount of tax due. If this option is chosen, a deduction of 1% of sales is made for commercial activities, 1.7% for services covered by BIC (industrial and commercial profits), and 2.2% for services covered by BNC (non-commercial profits).

From now on, the terms "micro-entreprise" and "auto-entrepreneur" are interchangeable and refer to the same thing. However, legally speaking, only the term "micro-entreprise" is recognized as an official scheme.