The Different Statuses of IT Freelancers

The Micro-Enterprise

The micro-enterprise is probably the simplest and most accessible status when starting as an IT freelancer. Creation is done directly online on the CFE and URSSAF websites. Once the declaration is made, you can start working as a self-employed individual and invoice as soon as you receive your SIRET number.

Since 2016, the terms auto-entrepreneur and micro-enterprise have been merged. The micro-entrepreneur is subject to the micro-tax regime, meaning they are taxed on their turnover, after deducting a flat-rate allowance of:

34% for service activities;
71% for merchandise sales activities;
50% for liberal activities.

This turnover is then subject to the progressive income tax scale.

If their reference tax income is below a certain threshold, the micro-entrepreneur can also opt for the liberating flat-rate payment. In this case, they will pay a fixed percentage of their turnover (CA) monthly of:

1.7% for companies providing services;
2.2% for non-commercial profit holders.

For contributions, the micro-entrepreneur belongs to the microsocial regime. They are affiliated with the social security of micro-entrepreneurs with a simplified regime. Each month or quarter, they must declare their CA to URSSAF, which then applies a flat rate of:

12.8% of the CA for merchandise buying and selling activities;
22% for commercial or craft service activities and liberal activities covered by the social security of independents (SSI) or CIPAV.

These deductions allow micro-entrepreneurs to contribute for retirement, health-maternity insurance, disability-death, family allowances, CSG, and CRDS.

They can also opt for a liberating flat-rate payment of social charges.

Advantages:

A very easy-to-access status
Simplified accounting limited to invoicing and keeping a revenue book
The choice between classic taxation or a liberating flat-rate payment
Reduced and simplified social charges

Disadvantages:

A limited turnover threshold (€176,200 for commercial activities,
€72,600 for liberal activities and service provision)
No possibility of deducting charges from turnover
No invoicing or VAT recovery on purchases (below a certain threshold)
No protection of personal assets

The EIRL

The EIRL, or Individual Limited Liability Company, allows you to start freelancing while protecting your personal assets. With this status, you can make a declaration of EIRL patrimonial assignment, which prevents the seizure of your personal assets in case of debt.

Except for this additional declaration, creating an EIRL is as simple as creating a micro-enterprise. Besides, if you are already a micro-entrepreneur, you can simply make the patrimonial declaration to transform your micro-enterprise into an EIRL.

Similarly, an EIRL can benefit from the simplified tax regime and the microsocial regime of the "micro-enterprise" or opt for corporate tax (IS). The EIRL with IS is then fiscally assimilated to a single-member LLC (EURL) with IS. This option is then irrevocable.

Advantages:

Protection of personal assets
The possibility of opting for IS without having to create a company or retain the micro-enterprise regime
The ability to create reserves not subject to social charges if the EIRL is with IS

Disadvantages:

More formality with the patrimonial assignment declaration, which notably involves using a notary if real estate is contributed
Few possible evolutions with the impossibility of having partners
High taxation on dividends

The SARL and EURL

The SARL is a limited liability company that, as its name suggests, protects the personal assets of its partners. It remains a simple and easy-to-create legal form while limiting potential losses to the actual amounts of contributions. If you want to create your company alone as an IT freelancer, you will have to opt for a single-member LLC (SARL), better known as EURL.

The EURL is not subject to the same profit taxation: SARLs are subject to corporate tax, whereas the EURL manager is subject to income tax unless they are a legal entity.

Advantages:

Limited liability to the contributions of the partner(s)
Flexible taxation with the possibility of opting for IS
Generally lower social charges

Disadvantages:

Rigid and strictly regulated operation by law
The possibility of opening its share capital to new partners
Weaker social protection for the manager compared to that of salaried employees

The SAS and SASU

The SASU is a status often favored by IT freelancers because it is a form of commercial company that offers many advantages. Previously reserved for large organizations (SAS), the SASU can now be created by a single partner without a mandatory minimum capital.

However, creating a SASU is a bit more complicated as it involves drafting statutes. Then, the more demanding and complex accounting usually requires the services of an accountant.

Advantages:

Limited liability to the contributions of the partner(s)
Flexible taxation with the possibility of opting for IS
Generally lower social charges

Disadvantages:

Rigid and strictly regulated operation by law
The possibility of opening its share capital to new partners
Weaker social protection for the manager compared to that of salaried employees

To start as an IT freelancer, you are free to choose your status. Each has its advantages and disadvantages. If you have doubts about which one may suit you or have questions regarding your situation, feel free to seek advice from experienced freelancers on our IT forum!

Umbrella Company Employment

If you want to become a freelancer in IT but do not plan to create a company, umbrella company employment allows you to combine independence with the benefits of an employment contract.

In umbrella company employment, you continue to look for assignments and set your Average Daily Rate (TJM) with your clients. Once the assignment is secured, you can call on the umbrella company to manage the service contract and invoicing with your client. On your side, you will generally have the choice to opt for a fixed-term or permanent contract in umbrella company employment, offering the advantages of traditional fixed-term and permanent contracts such as:

unemployment benefits;
paid leave;
retirement contributions;
a complementary company health insurance.

In return, the umbrella company will deduct a commission from your turnover.

magipik

Posted reply 24 May 2024 10:51