Making the Most of Your Income: Starting a Part-Time Business While Working Full-Time in France
If you’re a single Pinoy expat in France earning the minimum wage (SMIC), you may find it challenging to live comfortably, especially with the high cost of living in cities like Paris. Even as a couple with combined incomes, meeting your financial goals can be tough. That’s why many Filipinos in France are looking for ways to supplement their income, and starting a part-time business is an attractive option.
But before you dive into entrepreneurship, it’s important to understand the legal requirements, processes, and tax implications involved in running a business alongside your full-time job. Here’s what you need to know to ensure everything is legally compliant and financially beneficial.
Requirements and Process for Starting a Part-Time Business
Choose the Right Business Structure
The most common structure for a part-time business in France is the micro-entrepreneur regime (formerly known as auto-entrepreneur). This regime is popular due to its simplified registration process and straightforward tax reporting. It’s ideal for individuals who want to run a small business alongside their full-time job without getting bogged down in complex accounting and administrative tasks.
For more detailed information on the micro-entrepreneur regime, you can visit the official Auto-Entrepreneur website.
Registering the Business
- Centre de Formalités des Entreprises (CFE): To legally establish your business, you’ll need to register it with the CFE. This is the first step, and the CFE will forward your registration to various government bodies, including tax authorities and social security.
- Chamber Registration: Depending on your business activity, especially if it involves trades, crafts, or certain professional services, you may also need to register with the relevant chamber, such as the Chambre des Métiers et de l’Artisanat.
For more information on registering a business, you can consult Service-Public.fr.
Maintaining Eligibility
To remain eligible under the micro-entrepreneur regime, your annual turnover must stay below specific thresholds:
- €91,900 for service activities
- €188,700 for commercial activities
Exceeding these limits will require you to transition to a different business regime, which involves more complex tax and accounting obligations. You can verify these thresholds and get more information at the Official French Tax Website.
Social Security Contributions
Once registered, you’ll be required to make social security contributions based on your business’s revenue. These contributions cover health insurance, pensions, and other social benefits. The rate typically varies:
- 22.7% for service-based activities
- 13.1% for sales-based activities
Details on social security contributions can be found on the URSSAF website.
Tax Implications
Income Tax
Income from your part-time business will be taxed as part of your personal income. You’ll need to declare this income on your annual tax return using the appropriate forms (e.g., form 2042-C PRO). The taxable income can either be calculated using actual income minus specific deductions or under the simplified micro-entrepreneur system, where you declare a percentage of your turnover as taxable income.
For more guidance on income tax, visit the French Tax Authority.
Value Added Tax (VAT or TVA)
Under the micro-entrepreneur regime, you are generally exempt from charging VAT to your customers if your turnover is below the specified thresholds. However, opting out of this exemption might be beneficial if you deal with clients who can reclaim VAT or if your business expenses are substantial.
For more information on VAT in France, you can check the French Customs and Indirect Taxation website.
Corporate Taxes
If your business grows beyond the micro-entrepreneur thresholds, or if you choose to establish a more formal structure like a limited liability company (EURL or SARL), you will be subject to corporate taxes instead of personal income tax. As of 2022, corporate tax rates in France are 25%, with reduced rates for small businesses.
You can find more details about corporate taxes on the INSEE website.
Local Taxes
You may also be liable for the Contribution Économique Territoriale (CET), which includes:
- Cotisation Foncière des Entreprises (CFE): Based on the rental value of the premises you use for your business.
- Cotisation sur la Valeur Ajoutée des Entreprises (CVAE): Based on the added value generated by your business.
For more on local taxes, refer to Just Landed’s Guide.
Balancing a Full-Time Job and a Part-Time Business
Starting a part-time business while holding a full-time job in France can be financially rewarding, but it’s crucial to manage your time effectively. Ensure that your employment contract does not prohibit you from running a business. Some contracts include clauses that restrict employees from engaging in external commercial activities, particularly if it could lead to a conflict of interest.
For those who can balance the demands of a full-time job and a side business, the extra income can significantly improve your financial situation, making it easier to save, invest, and achieve your long-term goals.
Final Thoughts
Starting a part-time business in France is an excellent way to increase your income and build financial security, but it’s important to understand the legal and financial implications. Always stay informed about your obligations, and consider consulting with a tax advisor or accountant familiar with French business regulations to guide you through the process.
By taking the right steps and making informed decisions, you can successfully run a part-time business that complements your full-time job and helps you achieve a more comfortable and financially secure life in France.