Complete guide to auto-entrepreneur accounting
The auto-entrepreneur (or micro-entrepreneur) status appeals to many self-employed people thanks to its simplified accounting. However, it still requires you to follow certain essential accounting rules. Are you wondering how to manage your auto-entrepreneur accounting? Here's our step-by-step guide. Would you like to learn more complex auditing and management control techniques? Discover our Master's degree in Audit and Management Control to learn how to steer the financial management of an organization.
What is a micro-business?
Micro-entreprise, formerly known as auto-entreprise, is a simplified system for individual entrepreneurs who want to start up their business in a light-hearted way. Adopted by many freelancers, craftsmen, shopkeepers and service providers, this status offers streamlined administrative procedures and simplified accounting management, while benefiting from an official legal framework.
With a defined sales ceiling, micro-entrepreneurs can concentrate on their core business without being overwhelmed by complex formalities. This system is particularly attractive for people embarking on a complementary activity, or wishing to test an entrepreneurial project with limited risk. But behind this apparent simplicity, it is essential to understand the accounting and tax obligations that accompany this status.
The micro-entrepreneur's accounting obligations
Keeping a recipe book
One of the first accounting obligations of a micro-entrepreneur is to keep a revenue book. This register must include all income received during the year, specifying for each revenue :
Date of collection.
amount.
origin (identity of customer or company).
nature of transaction (sale, service, etc.).
It's essential that this revenue book is accurate and up-to-date, as it forms the basis of all accounting management. In the event of a tax audit, the tax authorities may ask to consult this document to verify the conformity of sales declarations.
Purchase register (for certain activities)
For activities involving the sale of goods or supplies (such as those of merchants), the micro-entrepreneur is also required to keep a purchase register. This register must record all expenditure relating to the acquisition of goods intended for resale. The information to be included is similar to that in the revenue book: date, amount, supplier and nature of purchase. Although this register is not mandatory for all micro-businesses, it remains a good practice to adopt to better manage expenses and control profitability.
Facturation
Another essential obligation for micro-entrepreneurs is invoicing. For each transaction, the micro-entrepreneur must issue an invoice that complies with certain legal standards. A proper invoice must contain the following information:
Full contact details of the micro-entrepreneur and the customer.
The micro-entrepreneur's SIRET number.
The date of the transaction.
Details of the service or goods sold.
The total amount invoiced, excluding tax and including VAT (even if the micro-entrepreneur is exempt from VAT).
It's important to note that the words "TVA non applicable, article 293 B du CGI" must appear on every invoice, as micro-entrepreneurs are exempt from VAT as long as their sales remain below the legal thresholds. Failure to do so, or issuing invoices that do not comply with the regulations, may result in penalties in the event of an audit.
Tax system and declarations
The micro-enterprise system simplifies tax obligations, thanks in particular to a simplified declaration system and the absence of VAT, under certain conditions. However, it is crucial to understand these mechanisms to avoid errors and comply with legal obligations.
The micro-entrepreneur's tax regime
The micro-entrepreneur benefits from a micro-tax regime based on two essential elements: sales and a flat-rate allowance applied according to the nature of the activity. There are two main types of activity:
Sale of goods: the maximum sales threshold to benefit from the micro scheme is €188,700;
Provision of services or liberal professions: the threshold is €77,700.
These ceilings determine whether you remain under the micro-enterprise scheme. If these thresholds are exceeded for two consecutive years, the entrepreneur leaves the micro regime and automatically switches to another, more complex tax regime.
Sales declaration
The sales declaration is an essential step for all micro-entrepreneurs. This can be done on a monthly or quarterly basis, depending on the choice made when the company was set up. Each declaration must accurately reflect the amount of sales received over the period concerned. It is essential to :
declare even if you have no sales, indicating "nil" on the declaration.
Respect deadlines, otherwise you may be subject to sanctions and penalties.
The amount of the declaration is then used to calculate social security contributions (the calculation of which is detailed in the next section). These are deducted directly from declared sales, which means that micro-entrepreneurs only pay social security contributions on what they actually earn.
Payment in full discharge of income tax (optional)
Under certain conditions, micro-entrepreneurs can opt to pay their income tax in full discharge. Under this system, income tax is paid at the same time as social security contributions, in a single deduction. The option is available if the household's reference tax income does not exceed a certain threshold.
Payment in full discharge involves applying a fixed percentage to sales:
1% for sales of goods.
1.7% for commercial and craft services.
2.2% for liberal professions.
This system simplifies administration and improves cash management. However, it may be less advantageous if the household income is relatively low, in which case the traditional tax system could result in lower taxation.
VAT exemption
Most micro-entrepreneurs are exempt from VAT, which means they don't charge VAT to their customers, and don't have to pay it to the government. This exemption is subject to compliance with the sales ceilings specified above. It is also important to mention the exemption on invoices with the phrase "TVA non applicable, article 293 B du CGI". On the other hand, if sales exceed the legal thresholds (€42,900 for services and €91,900 for sales), the micro-entrepreneur will have to pay VAT, while remaining under the micro-enterprise scheme.
Managing social security contributions and taxes
Calculating social security contributions
Micro-entrepreneurs must pay social security contributions covering health insurance, retirement, professional training and family allowances. These contributions are proportional to declared sales, and vary according to the activity carried out:
12.3% of sales for the sale of goods.
21.2% for the provision of commercial and craft services.
21.2% for self-employed activities affiliated to the Sécurité sociale des indépendants.
21.1% for self-employed activities covered by the CIPAV (pension fund for certain self-employed professions).
These percentages are applied directly to gross sales, i.e. before any expenses are deducted. That's why it's vital to manage your income and expenses rigorously, to avoid any nasty surprises when you file your quarterly or monthly tax returns.
Contribution to professional training
In addition to traditional social security contributions, micro-entrepreneurs must pay a contribution to professional training. This levy is relatively low, but it gives access to professional training financed by the collecting bodies, which is an important asset for skills development. The applicable rates for this contribution are :
0.1% of sales for commercial activities.
0.2% for craft activities.
0.3% for liberal professions.
Common mistakes to avoid
Despite the simplicity of the micro-enterprise system, it's easy to make mistakes that can have financial or administrative consequences. Here are the main mistakes to avoid to ensure sound management of your business.
1. Confusing personal and business accounts
One of the most common mistakes made by micro-entrepreneurs is to mix personal and business finances. Although the system does not require you to open a business bank account, it is strongly recommended that you have an account dedicated to your business. This makes it possible to clearly separate business-related income and expenses, facilitating management and accounting follow-up. A separate account also makes it easier to manage cash flow, avoid confusion when filing tax returns, and prevent problems in the event of a tax audit.
2. Failure to keep accounting records up to date
Accounting for a micro-entrepreneur is simplified, but that doesn't mean you have to neglect rigor. Failing to keep your receipts book up to date, or forgetting to keep supporting documents (invoices, proof of payment), can quickly lead to errors. In the event of an audit by the tax authorities, these documents will be required to be up-to-date and easily accessible. It is therefore essential to regularly update your accounts and carefully organize your accounting documents to avoid oversights or errors.
3. Forgetting to declare your sales
Micro-entrepreneurs must declare their sales on a monthly or quarterly basis, even if they are zero. Forgetting to declare sales can lead to late payment penalties and complicate your company's tax management. That's why it's important to set up reminders to make sure you don't miss these deadlines. In the case of zero sales, simply indicate "nil" on the return. Failure to do so may result in fines or increased social security contributions.
4. Failure to anticipate tax and social security charges
Some management errors are due to a lack of foresight. Many micro-entrepreneurs forget that social security contributions and, in some cases, income tax are deducted on the basis of sales. They don't take these levies into account when setting their prices or cash flow strategy.
To avoid being caught unprepared, it is advisable to set aside a percentage of sales each month to cover social security and tax charges. Good preventive management helps avoid cash flow problems when payments are due.
5. Underestimating the importance of compliant invoicing
Issuing incorrect invoices can be a costly mistake. Failure to include all the legal information (such as SIRET number, date of service, details of services, VAT exemption) can result in administrative penalties.
Whether you're just starting up or well established, it's crucial to master the basics of accounting to ensure the long-term future of your business. If you want to go further and acquire in-depth expertise in management, EDC Business School offers a Master's degree in Audit and Management Control, particularly recommended for those wishing to specialize in financial management.