When you run a commercial, industrial, or craft activity, choosing the right tax and social regime is crucial to optimize your management and obligations. Here are the three main options available for income subject to Industrial and Commercial Profits (BIC).
The Micro-BIC Regime This micro regime is aimed at sole proprietors with a moderate turnover.
Revenue Ceiling:
- €188,700 excluding VAT for sales of goods, catering, or accommodation.
- €77,700 excluding VAT for services.
- €15,000 excluding VAT for non-classified furnished tourist rentals.
Exceeding these thresholds for two consecutive years results in the exit from this regime.
Advantages:
- Ultra-simplified accounting.
- Flat-rate expense evaluation:
- 71% deduction for sales activities.
- 50% deduction for service activities.
- 30% deduction for non-classified furnished tourist rentals.
- Preferential social contribution rates:
- 12.3% for sales activities.
- 21.2% for service activities.
- Withholding tax:
- Allows income tax to be paid directly along with social contributions.
- 1% for sales activities.
- 1.7% for service activities.
- 6% for furnished tourist rentals.
- Eligibility conditions based on the household’s taxable income.
This regime is ideal if your expenses are low and your turnover remains below the fixed thresholds.
The Real Regime Mandatory if you exceed the micro-BIC thresholds for two consecutive years, this regime is suitable for entrepreneurs with significant expenses.
Advantages:
- Deduction of actual expenses, including social contributions, operating costs, depreciation, etc.
- Accounting management adapted to cash flow (income and expenses).
- Taxation and social contributions:
- The taxable profit is determined after deducting actual expenses.
- The profit is the basis for calculating income tax (IRPP) and social contributions. This regime is recommended for businesses with significant expenses or complex expense management.
The Sole Proprietorship with Corporate Tax (EI at IS) This regime allows the sole proprietor to opt for corporate tax (IS) while maintaining the legal structure of a sole proprietorship.
Accounting:
- Based on the accrual principle (revenues and expenses are recognized when they occur).
Taxation:
- Tax rates:
- 15% on profits up to €42,500.
- 25% beyond.
- The entrepreneur’s salary is:
- Flexible, subject to social contributions and income tax.
- Deductible from taxable profit. This regime is suitable if you want to reinvest profits into the business or optimize your personal tax liability.
How to Choose the Right Regime?
- Micro-BIC: Suitable for low expenses and limited turnover.
- Simplified real regime: Ideal for deducting significant actual expenses.
- EI at IS: Recommended if you want to separate your personal income from business profits.
To go further, consider setting up an operating company with a holding company to maximize your investments and tax optimization.
Need help choosing the right regime for your business? Contact our GAMEIRO firm, experts in accounting and tax management, for personalized advice.