Optimising your accounting as an auto-entrepreneur

You’ve registered as an auto-entrepreneur (France’s micro-business status) and you’re starting to invoice your first clients. Then comes everyone’s favourite task on this earth: accounting. If, like me, it doesn’t exactly thrill you, you’re in the right place. In this article, I share my tips as a freelancer who’s been there to help you optimise your accounting. We’ll talk VAT thresholds, reducing your taxes and the versement libératoire (flat-rate income tax payment).

Accounting can seem complex (even though it’s ultra-simplified for the auto-entrepreneur status), but there are simple ways to organise it and manage it efficiently.

Understanding accounting for auto-entrepreneurs

When you become an auto-entrepreneur, you only need the basics of accounting. Accounting means recording and tracking your business’s financial transactions, such as sales, purchases and expenses.

Knowing your way around accounting will help you make the best financial decisions, manage your cash flow efficiently and meet your tax obligations. It will also help you better understand the financial health of your micro-business and identify areas where you can improve your profitability.

As an auto-entrepreneur, you don’t charge VAT, and each of your invoices must carry the statement “TVA non applicable – article 293 B du CGI” (VAT not applicable – article 293 B of the French General Tax Code). But that’s only the case if you stay below the VAT threshold. Let’s see what that means!

VAT thresholds and their impact on your micro-business

As an auto-entrepreneur, you’re subject to turnover thresholds that determine whether you have to charge VAT to your clients. These thresholds are set by the tax authorities and vary depending on your activity.

If your turnover stays below the first threshold, you’re treated as a VAT-exempt business (franchise de TVA), which means you’re not required to charge VAT to your clients and you can’t reclaim VAT on your business purchases.

Your turnover excluding tax must not have exceeded a certain threshold. For 2023 to 2025, the threshold is:

• €188,700 for the sale of goods, food for on-site consumption and accommodation (excluding furnished rentals other than classified holiday lets or bed & breakfasts)
• €77,700 for services falling under industrial and commercial profits (BIC) or non-commercial profits (BNC)
• €15,000 for unclassified furnished holiday lets

Exceeding these thresholds doesn’t automatically mean you can no longer keep your auto-entrepreneur status. If you exceed it for just one year, you can keep the micro-business tax regime. If, however, you exceed it two years in a row, you lose the tax regime at the start of the third year.

What’s the practical consequence? From a legal standpoint, none, although you can, if you wish, switch to a company structure. From a tax standpoint, you move from the micro-entrepreneur regime to the ****actual-profit tax regime for industrial and commercial profits (BIC), or to the déclaration contrôlée regime for non-commercial profits (BNC). And from a social-security standpoint, you’ll no longer be able to pay your contributions monthly or quarterly as you do today on the URSSAF (France’s social contributions collection agency) website.

I hope you don’t have a headache yet, because we’re now getting to the part you’ll be interested in: how do you optimise all of this?

Tips to optimise your accounting as an auto-entrepreneur

There are several ways to optimise your bookkeeping as an auto-entrepreneur. Here are a few practical tips:

• Invoice your clients wisely: don’t re-invoice your expenses. Since you pay tax on your turnover and not on your profit, invoicing expenses would only increase your turnover, and therefore your tax.
• Use the support available: when you launch your auto-entrepreneur business, you can benefit from the ACRE (a start-up relief scheme). This scheme exempts you from contributions in the first year, but be careful, you must apply for it with the URSSAF within 45 days of registering.

How the flat-rate income tax payment works

The versement libératoire is a simplified option that lets you pay your income tax directly every month or every quarter, without having to file an annual tax return. This option is available to auto-entrepreneurs whose income is below a certain threshold.

• Your tax household’s reference taxable income (RFR) from two years earlier must not exceed €28,797 per household tax share. For a couple, the threshold rises to €57,594, and for a couple with one child, it stands at €71,992.
• Your turnover excluding tax for the previous year must not exceed the thresholds mentioned above.

The advantage of the versement libératoire is that it simplifies your tax obligations as an auto-entrepreneur. You don’t have to worry about preparing and filing an annual tax return, which can be a complex and time-consuming task.

By opting for the versement libératoire, you pay your income tax at the same time as your social contributions. The tax amounts are calculated based on your turnover and debited directly from your bank account.

It’s worth noting that the versement libératoire isn’t compulsory. You can choose not to opt in and keep filing an annual tax return. However, many auto-entrepreneurs find it a practical option that simplifies managing their tax obligations (and I’m one of them).

Recommended accounting tools and software for auto-entrepreneurs

There are many accounting tools and software packages designed specifically for auto-entrepreneurs. These tools can help you manage your accounting efficiently and meet your tax obligations.

To keep things easy, I recommend Surindep, my favourite among the various software options on the market. It’s an online platform designed specifically for auto-entrepreneurs to simplify their admin. The tool offers essential features such as automated turnover declarations to the URSSAF and VAT returns, invoice creation and expense tracking. Thanks to real-time syncing with the administrative bodies, SuperIndep lets you manage your cash flow easily while reducing the risk of issues (delays, payment errors, etc.). Personalised human support is available to answer questions and resolve any problems. The subscription costs €19 excl. VAT per month, which makes it an accessible, comprehensive solution to lighten auto-entrepreneurs’ admin burden.

Accounting as an auto-entrepreneur

Accounting can seem complex at first, but by understanding the basic principles and using the right tools, you can manage your accounting efficiently as an auto-entrepreneur. It’s worth remembering that nothing beats a good accountant, and that human follow-up and support are often well worth it!

Now that you know how to handle your books like a pro, feel free to get in touch with us to find engagements! At digitags, we’ve built a hub of more than 1,500 freelance digital talents and support companies in staffing talent for engagements of any length. Discover how we work.