CHOOSE YOUR STATUS

Define your business case
Before talking about the choice of a status, you must define the limits of your business and answer a few simple questions:

  • What do I want to sell?
  • At what price should I sell?
  • What is the acceptable workload per day, per week, per month or per year?
  • Where are my customers?
  • Does my family situation able me to undertake this activity?
  • Is my current professional activity compatible with the planned activity?
  • What is my goal in terms of annual income?

Answer these questions objectively and be realistic.
 

Some examples and advice…
 

Example 1

Questions Response examples Our advice
What do I want to sell ? Internet / Intranet website development in Java (Good level), PHP (Excellent level), MySQL (Excellent level) Objectively define your qualifications.
A reputation is built on several years ... And can be destroyed in a few weeks!
At what price should I sell it?  EUR 1,000 per site
with 4 static pages
5,000 euros for a shop with a base of products in MySQL
Consult websites that publish announcements for freelancers (eg : www.freelance.com). You will soon realize that some students
ask for 300 EUR to create a static website, that creating a complete merchant website represents a budget of 10,000 to
€ 2 million ! And that you can also work solely (that is to say, charge the day or hour worked).
In fact, do your prices exclude taxes or are they VAT?
What is the acceptable workload per day, per week, per month or per year ? 10 hours a week, in the evening, after work

Do not underestimate the relational and commercial part of your business.
To change two words on a web page, you may need to go to your client’s and discuss for a few hours.
Is that compatible with your core business ?

 

Where are my customers ? The merchants of my town
(10,000 inhabitants)
Be realistic and objectively define your market. There must be about 200 merchants in your city. 95% of them do not need a website (try to sell bread on the Internet to see); 4% of them do not have money ... 1% have money but already have their own website !  A web  developer must, instead, be visible on the web and organize his communication to attract shoppers.
Does my family situation able me to undertake this activity ? Yes, my wife accepts the challenge For how long will your wife accept the challenge ? You must immediately plan to take stock together regularly
 (ideally every three months) to assess the economic viability of your project and ensure your spouse’s support.
Is my current professional activity compatible with the planned activity ? Yes, as I will develop outside my working hours Have you made sure that your employment contract does not contain a non-compete clause ?
What is my goal in terms of annual income ? EUR 60 000 the first year Let’s make a quick calculation using the estimates provided above : EUR 60 000 divided by (52 weeks x 2 hours x 5 days) = 115 euros per hour. So you are 104% above market rates (450 euros excluding tax for a junior programmer). If we reverse the reasoning, your maximum sales revenue would be 29,250 euros ? Assuming you have the clients to fill your two daily hours. Is your goal realistic?
 

Example 2

Questions Response examples Our advice

What do i want to sell ?

Reorganization of companies in difficulties

 
At what price should i sell it ?
 
EUR 1.500 excluding tax per day
 

And if your client offers a compensation based on results, coupled with a monthly plan ?

What is the acceptable workload per day, per week, per month or per year? No limit Generally no limits ... For a self-employed or for a contractor (that is to say the one who took the company’s control).  If you opt for a wage portage, you will have to, within the EC or the
EEA, respect the labor laws of the host country.
 
Where are my customers ? Everywhere around the world Beware of expatriation: the planned installation must include a
contribution component with a pension agency / retirement

Does my family situation able me to undertake this activity?

Single without children

Do not hesitate to reconsider the structure of your business’ activity at every stage of your life
Is my current professional activity compatible with the planned activity? I have no other professional activity. I have been active in this business for 5 years already  
What is my goal in terms of annual income? EUR 300 000 Your goal corresponds to 200 days of work, slightly less than the accepted standard (220 days per year). Realistic if you have no family ...

 

The term of consultant covers very many different realities, ranging from the junior who wants to test his business case, to the veteran who is just looking for the best tax and social performances.
Obviously, it is easier to already have one’s first customer.
 

What status for my business?
This is up to you. It depends on your business case and on each country of the European Community (EC) or European Economic Area (EEA).

Each of them offer, more or less, suitable solutions according to your situation :
 

Possible status Advantages / disadvantages Limit expressed in EUR
Self-employed entrepreneur under French law

+ Suitable for a French resident, even for missions abroad
+ Compatible with an employment contract
+ Compatible with civil servant status
+ Very limited formalities
+ Very limited social charges and tax
- Limited to EUR 32 000 excluding VAT per year for service delivery (therefore suitable for testing one’s business case)
- Limited social coverage
Learn more (official website): http://www.auto-entrepreneur.fr/

EUR 32 000 (excluding tax) a year (legal limit)

Wage portage under French law

+ The administrative formalities are supported by the wage portage, against a «management fee» (average of 10% of net sales excluding tax)
+ Right to unemployment benefits recognized since the Law 2008-596 of 06/25/2008
+ Classic salary under French law
- Average profitability: 55% of sales excluding VAT in net salary, before management fee.
- Unsuitable for services provided outside France, nearly in breach with national and European legislation (so-called rules of territoriality)
Learn more: http://www.auto-entrepreneur.fr/portage-salarial.php
If you hire a part-time accountant to manage your administration
and your payslips (40% based on the minimum wage), you will
support a total monthly charge of EUR 600, 7 200 EUR per year.
When reversing the reasoning, sales revenue excluding
tax x 10% = EUR 7 200 : EUR 72 000 excluding tax per year
 
International wage portage

+ Compliant with European regulations
+ Profitability superior to a portage of French law : in the case of a Luxembourg porting, 78% of sales before VAT in net salarybefore management fee
+ Social security ensured in a fully transparent manner in the country of residence and in the country where the wage portage’s headquarters are

+ Taxation on employees income in the country where the wage portage’s headquarters are (particularly interesting in Grand Duchy in Luxembourg for married individuals)
+ Right unemployment benefits in the country of residence under the normal rules of that country
- Legal restrictions: not applicable to a resident of an EC country working in that same country

Differential of 13% of sales revenue excluding tax in favor of the Luxembourg solution. The limit must be established by comparison with the cost of establishing a Luxembourg
corporation under Luxembourg law with locals owned and managed by a public accountant. The company will pay  the consultant (note the notion of majority shareholder):
- Cost of establishing a Limited Company: ± EUR  4 000 amortized over 5 years = 800 € / year
- Domiciliation  = mini EUR 1 000 / month
- Accounting and wage = mini EUR 1 500 / year
- Total annual cost = mini EUR 14 300 / year
Considering an average management fee of 10% of the sales revenue and reversing the reasoning : sales revenue excluding tax x 10%  = 14 300 EUR => 143 000 EUR HT
 

 

You can also choose a self-employed status (please contact the nearest URSSAF center) or create your own company (contact achartered-accountant).
We will not develop these options further, considering the administrative complexity which would make the analysis irrelevant.

Note that the Offshore solutions are effective to optimize one’s performance (an average of 98% of the sales revenue excluding tax for an installation of UK + Gibraltar type), but only for services outside the EC or EEA ... And under condition of accepting to have neither social security or pension / retirement rights, most often in breach of EU and national laws. Therefore to be avoided.
 

For more information, please contact us via our contact form.