In this guide, we explain the conditions you need to meet if you want to be both an employee and a micro-entrepreneur, as well as the different consequences of this combination on your social security contributions and taxes.
Conditions for combining salaried employment and micro-entrepreneurship
Some professions, such as the regulated professions, prohibit this combination. Civil servants can be micro-entrepreneurs, but only under certain conditions. Apart from these limitations, there's nothing to stop you setting up a micro-business while working as an employee.
Before registering your business with the CFE (Centre des formalités des entreprises), you need to check that your contract with your employer does not prohibit you from engaging in self-employed activity, and ensure that you comply with the following rules.
The exclusivity clause
This clause applies for the entire duration of your contract. It may prohibit or restrict you from engaging in any other professional activity, whether salaried or not. It can be very restrictive, as it may concern activities that are not directly competitive with those of your employer. According to article L1222-5 of the French Labor Code, this clause may be suspended for one year if you are setting up or taking over a business. It can then be extended if you take a leave of absence or work part-time.
Good to know: if you don't respect the exclusivity clause in your contract, you can be dismissed for misconduct or even serious misconduct.
The duty of loyalty
This is a non-competition obligation vis-à-vis your employer. According to jurisprudence, this means prohibiting an activity that would result in the detour of customers. This obligation remains in force even if you take a sabbatical to set up your own business. If you fail to comply with this obligation, it is considered an offence punishable by dismissal.
Employee payroll taxes
All employees are affiliated to the general social security scheme and are liable for contributions calculated on their gross salary. Some contributions are paid in part by the employee and in part by the employer. Others are the sole responsibility of the employer, such as contributions for sickness, unemployment insurance and family allowances.
Finally, the CSG (contribution sociale généralisée) and the CRDS (contribution au remboursement de la dette sociale) are borne solely by the employee.
Good to know: setting up your own micro-enterprise does not change the amount of these social charges, and you must also contribute as a micro-entrepreneur.
Social charges for micro-entrepreneurs
You are required to pay contributions for health and maternity insurance, family allowances, disability and death, basic and supplementary pensions, CSG and CRDS. Payments are calculated on your sales.
Good to know: you can only receive social security benefits from the scheme that corresponds to your main activity, except for maternity leave, which entitles you to benefits from both your activities.
Your health cover
If you work in a complementary capacity, you will continue to be covered by the general social security scheme:
- reimbursement of your medical expenses;
- your maternity or paternity benefits ;
- your daily benefits if you are off work.
However, if you wish to be attached to a special scheme, you can apply in writing to the chosen fund.
Your retirement
If you have been both a salaried employee and a micro-entrepreneur, your retirement file will be handled by your special scheme. Your pension will be calculated by both funds, and you will receive a payment from each of them.
Good to know: Combining salaried work and a micro-business will not enable you to retire earlier, as you cannot contribute more than 4 quarters per year.
Your taxes
You will be taxed on your salaried income and your income as a micro-entrepreneur. When you complete your tax return, you will be required to enter the latter on form n° 2042 C PRO "Déclaration complémentaire des revenus des professions non salariées", either on the "Revenus industriels et commerciaux" line or on the "Revenus non commerciaux" line.
Good to know: Under certain conditions, you can also opt for a lump-sum payment at source. With this option, your income will not be taxed a second time, but will be taken into account when calculating your reference tax income (RFR).
Deductions are added to social security contributions. They are final and non-refundable and their rate varies according to your activity:
- 1% for purchase/resale activities and the provision of housing, except furnished accommodation;
- 1.7% for BIC services and rental of furnished accommodation;
- 2.2% for services or self-employed activities classified as BNC.
Finally, don't forget that you'll be subject to the CFE, the business property tax. You will be exempt the first year, and will benefit from a 50% allowance the following year. There is also a total exemption if your annual sales are less than €5,000.