Starting on January 1st, 2015, auto-entrepreneur businesses must have a dedicated bank account for their financial accounting related to their professional activity. This account must be separate from their personal bank account so that all professional transactions will be recorded distinctly from their personal ones. Up to now, only those auto-entrepreneurs that carried out a sales activity were subject to this requirement.
The new rule doesn’t specify that the bank account has to be a professional one (that usually carry higher fees than personal ones) so it may be possible for the business owner to keep two personal accounts, one for the AE business and one for the home.
Concerns for the future of the auto-entrepreneur system
Small business owners fear that this is just another notch on the road to merge auto-entrepreneurs into other existing smal businesses schemes. In a recent article by L’Express, it was noted that the INSEE, the National Statistics Institute, has recently published a report that showed auto-entrepreneurs listed in the same item as small business that function as micro-entreprises, a move that incited a reaction from the Union des auto-entrepreneurs (UAE).
The reason that small businesses are keen to protect their auto-entrepreneur status is that prior to this system, a small business was charged a maximum fixed percentage of their turnover in social charges. The auto-entrepreneur system charges small businesses a “pay-as-you-go” percentage of their actual turnover in social charges and French income tax, which eases the start-up costs in the delicate early months of any new venture. A simplified business registration process also resulted in (slightly) less paperwork for small business owners. Another advantage of the system up to 2013, was a tax exemption of the CFE Cotisation Fonciére des Entreprises for individuals opting the auto-entrepreneur self-employment status during the first fiscal year of operation plus the following two years (total of 3 years). This exemption has been subsequently phased out.
The INSEE justified merging together the two regimes under the same listing sayiing that the new law Pinel served as a sort of “fusion” of the two fiscal and social schemes auto-entreprise and micro-entreprise. The jury is still out on whether or not the INSEE will revise the report.