Do you want to start as a freelancer but you don’t know what is the best legal position to do so? As a company, SASU or EURL are the two main legal forms suited to freelance activity. In this article, we will focus on SASU, but we will also look at other possible positions for a successful freelance career!
Benefits of Starting a SASU When You’re a Freelancer
The advantages of a freelancer practicing their activity within a single-person simplified joint stock company (SASU) are many. This position is very popular with self-employed workers who manage an activity with relatively high turnover.
protection of personal property
By practicing under the legal status of SASU, the freelancer gets the benefit of protecting their personal assets (although this is also the case in the EURL).
In concrete terms, the freelancer’s liability is limited to the amount of contribution, as opposed to practicing an activity in one’s own name. So the personal property of the freelancer is protected at SASU.
In the event of mismanagement, the limitation of liability may no longer apply (the manager may be required to indemnify his personal assets with potentially dire consequences).
Maintenance of affiliation to the general plan
The president of SASU benefits from affiliation to the common social security system, Article L. 311-3 of the Social Security Code, due to his corporate office (he must remunerate himself for this). He is regarded as a salaried assimilation worker. Therefore he benefits from a protective social system.
Be careful though, SASU presidents are not covered under unemployment insurance.
For self-employed who are entitled to unemployment benefits due to the end of their previous salaried employment (expiration of a fixed-term contract, dismissal, traditional termination), it is possible to continue to receive these benefits while creating a new business. ,
For this, the President of a SASU must not pay himself any remuneration (knowing that he defines the terms of this remuneration in the statutes). Thereafter he would benefit from the provision of retaining the company’s manufacturing indemnity.
Ease of development SAS . Thank You for
SASU is a fairly flexible and flexible form of company. If your project develops and requires the integration of other partners, it will be easier to evolve towards a Simplified Joint Stock Company (SAS). It only requires simple updating of methods and definition of new operating rules.
In SASU, it is possible to easily adapt the company to the development of the activity (eg the contribution of new professional skills).
Within the framework of SASU, the freelancer benefits from the tax option provided for in Article 239 BIS AB of the General Tax Code. It is subject to corporation tax by default. With regard to his personal taxation, he can opt for income tax subject to certain conditions.
corporate tax by default
In principle, SASU is subject to corporation tax. This is the default setup. Hence profits are taxed at a fixed rate at the company level. Freelancers, on the other hand, will be taxed on remuneration (income tax) or dividends (choice between single-rate taxation and traditional taxation).
Unlike dividends, remuneration constitutes an expense deductible from the SASU’s taxable income.
alternative income tax
It is possible for a freelancer to opt for income tax for a maximum period of five years. In this case, the profits of the SASU thereon shall be taxed individually, without the possibility of deducting the remuneration paid from the tax base.
Disadvantages of Choosing SASU as a Freelancer
Despite its advantages, there are some limitations to the selection of SASU for a self-employed person. Primarily, heavy administrative management and high social security contribution.
As the President of SASU, the formalities to be completed are quite tedious.
From construction to completion, the steps to be taken are relatively complex, especially in the event of the dissolution of SASU. In addition, due to his status as an employee, the freelancer has to establish a salary slip in the event of a declaration of remuneration as well as a social fee.
The administrative and accounting management of SASU should be rigorous, which can be laborious for a self-employed person. It is definitely recommended to stick with professionals: lawyers, accountants and legaltechs.
significant social contribution
Self-employed employee Social Security at SASU represents a significant cost because of its affiliation to the General Plan. It contributes more than other methods, especially in the EURL.
The contribution rate averages 77% of the net salary paid to the corporate office and 17% on any dividends. However, this is a price to pay for higher Social Security.
The topic of social fees is a point of caution for freelancers with SASU status. It is wise to carefully study the question of the amount of expenses to choose the best method of remuneration: remuneration, dividends, a combination of both.
Freelance SASU Position Options
Depending on the project (type of activity, turnover, flexibility needed, etc.), the freelance worker can also opt for EURL or micro-enterprise.
While SASU aims at all types of project without any turnover limit, micro enterprise is more intended for freelancers doing an ancillary activity. It is also an ideal arrangement for testing a new activity to ensure the feasibility and viability of its project, its appetite.
The micro-enterprise regime is subject to compliance with maximum turnover that varies according to the type of activity:
- €72,600 for self-employment activities and the provision of services;
- €176,200 (purchase/resale, sale of food consumed on site and accommodation services).
The advantages of micro enterprise are ease of setup. The process of setting up and operating a micro enterprise is simpler as compared to a company. This is a simplified situation that requires some administrative procedures.
From a tax perspective, the freelancer benefits from the micro-enterprise regime. Below a certain turnover (€34,400 or €85,800 depending on the type of activity) a deductible based on VAT is provided by the General Tax Code pursuant to article 293B. Micro Freelancer – Business is subject to income tax.
The social coverage of the micro-entrepreneur is similar to that of the freelancer at SASU.
However, micro-enterprise not only has advantages. Among its disadvantages are:
- Lack of support for the actual costs required to achieve turnover;
- Impossibility of recovery of paid VAT if a certain amount is not reached
- non-possibility of tax deficit;
- Social Security contributions are calculated based on turnover, not profits.
Finally, the liability of a self-employed person in a micro enterprise is unlimited.
Some activities are not micro-enterprise friendly. This is the case for activities related to agricultural profits as well as real estate VAT.
In order to exercise its activity as a company, the EURL may constitute a substitute for the SASU.
In concrete terms, the two methods are pretty close. Among the general points we can cite the creation formalities, the rules governing the share capital and the limited liability of the sole shareholder.
On the other hand, from the point of view of social security, the sole participant of the EURL is treated as the manager and therefore falls under the social system of TNS (Non-salaried employee). He then contributes to the Social Security of the Self-Employed (formerly RSI). Social charges in EURLs are lower than in SASUs but the coverage offered is less protective.
In EURL, unlike in SASU, dividends are subject to social contributions exceeding a certain amount. If you are entitled to ARE or ARCE, this may affect your rights to unemployment insurance. If you’re looking to collect dividends, SASU may be better.
In terms of taxation, unlike SASU, EURL is subject to income tax with the option of IS. So the independent worker pays the tax according to the progressive scale of the tax family.
In EURL, it is also possible to benefit from the micro-enterprise regime: Micro BIC or Micro BNC. Subject to turnover limits, the freelancer can benefit from various tax benefits. Here again, pay attention to the consequences of income tax on the maintenance of unemployment benefits in the case of an EURL without options.
The choice between SASU and EURL for a freelancer should be studied carefully according to his/her own situation. If at first glance SASU seems most interesting from a social and tax point of view, then the high level of social contribution that it implies should be a point of caution. Also, in a SASU, it is easier to bring in new partners and hence grow the company.
questions to ask
What conditions for complementary activity?
If you already have a core activity and you want to develop a complementary activity, then micro enterprise is best suited as it is a simplified company. However, pay attention to the nature of the activity and the conditions attached to the limit of business. If you want a flexible look at what a project is likely to develop, it would be better to choose SASU or EURL.
Are there activities that are incompatible with SASU?
Almost all activities can be considered in SASU, some related to specific activities such as regulated activities (law, health) as well as insurance, tobacco, agriculture or performing arts,….
What is the status for a freelancer with VTC activity?
SASU is the ideal situation for the creation of a VTC company. In fact, it allows the sole shareholder to benefit from interesting benefits for the profession (limited liability, arbitrage between the distribution of dividends and remuneration, social security and the potential for company growth).