Micro-enterprise or company?

PROs Vinted
1

Hello everyone,

I have been operating as a micro-enterprise since the beginning of my activity as a professional seller on Vinted.

My turnover is increasing month by month, and I’m wondering if switching to a company structure wouldn’t be more beneficial.

I anticipate a monthly turnover of approximately €5,000.

Thank you for your feedback.

2

Comparative advantages.

Micro-enterprise:

  • Simple to manage: just monthly turnover declaration
  • Low taxes. No VAT under €25k. URSSAF levy of 12.1% of turnover. Tax deduction of 71% (so taxable income = 29% of turnover) and possibility of withholding tax via 1% of turnover

Company (SASU, SARL), if subject to Corporate Tax (IS)

  • Deduct all kinds of expenses (e.g., IT, rent, travel/mileage, accountant, etc.).
  • Recoverable VAT (= you buy without paying VAT)
  • Losses can be carried forward to subsequent years, i.e., tax optimization in case of large income variations (I will detail if requested)
  • Transfer, resale of the business

Disadvantages

Micro-enterprise

  • Turnover limit.
  • No actual expenses, no transfer

Company (SASU, SARL), if subject to Corporate Tax (IS)

  • More complicated to set up. Service providers handle it for a few hundred euros. If you do it yourself, it costs about €100 and a day’s work, given all the steps.
  • Detailed accounting required, often through an accountant (finding the accountant, paying them, convincing them to include certain expenses in the accounts…)
  • Administrative declarations: VAT every month, IS, annual tax return (the accountant can handle it)
  • You only get the money by paying yourself a salary => out of €100 of gross salary including social charges / employer cost, about €57 in cash is paid, on which you have to pay income tax.
3

–> “No VAT under €25k” the law hasn’t passed yet :blush::crossed_fingers:

5

Indeed, at present, it’s still 85k
The enforcement of the law is postponed until the budget (so given the current events, it’s not certain it will remain a priority) and a repeal law has passed the assembly (but not yet the Senate).

Recoverable VAT, to be an advantage, depends on the margin you make. Basically, if you make less than two, it’s an advantage; if you make more than 2, it’s a disadvantage.
To illustrate:
€100 purchase for €150 sales gives: €20 to recover, €30 to remit, so €10 to pay in the end
€100 purchase for €200 sales gives: €20 to recover, €40 to remit, so €20 to pay in the end
€100 purchase for €300 sales gives: €20 to recover, €60 to remit, so €40 to pay in the end
With VAT exemption, it’s always €20 to pay on purchase, so as soon as the margin of 2 is exceeded, it’s more interesting not to recover it. Of course, you also have to consider that it’s different if it’s resale of used goods purchased from individuals (I don’t know that very well).

However, it is possible to recover VAT on operating expenses, which is indeed an advantage. So that nuances my previous statement. But you really need to calculate everything carefully before deciding.

But the same reasoning actually applies from the choice of status. The micro-enterprise scheme is interesting for high margins and when there are few operating costs. Especially when we talk about revenue that remains below the ceilings.

Basically, for €5,000 in monthly revenue, working from home and with less than €2,500 in purchases, there’s no real advantage to setting up a company.
Personally, I much prefer to stay with the micro-enterprise scheme; there are a few disadvantages, but the administrative simplicity largely compensates for them.

3 Likes
6

Hello,

It is also possible to be in SARL/EURL and VAT exempt, which is my case.

7

yes, obviously, franchising is possible with all statuses.
Real question, what interest do you find in it compared to a micro-business?

8

I have two very different activities in my company: a second-hand clothing store and pet-sitting services.

Since I have few investments and purchases for the start of my business, I have no major interest in reclaiming VAT on my purchases.

I chose to set up a company for social security/pension contributions because I am 54 years old.