The micro-entrepreneur is the new name given to auto entrepreneurs since 2014
The goal is to simplify the steps to create a micro-business and evolve legally. Many people want to start in e-commerce, including Dropshipping. Becoming an e-commerce micro contractor requires a certain number of legal specificities to which you will be subjected. So, if you have decided to start in this sector of e-commerce and you hesitate on the status, this article will provide you with all the answers to your concerns.
From auto entrepreneur to micro-contractor, what changes?
With the passage of the auto-entrepreneur regime to the micro-enterprise, some changes have been made:
- Possibility to declare your turnover online;
- Registration of your micro-business in the trade and companies register;
- Reduction of the deadline for the exemption from the Cotisation Foncière des Entreprises (CFE);
- Mandatory creation of a bank account exclusively dedicated to your professional activity;
If being in micro entrepreneur regime is quick to set up considering the rather weak documentation
The low charges, the non-obligation to advance the contributions in case you don’t make any turnover, there are still some disadvantages. For example, it will be impossible for you to recover the VAT, so you have to buy your products including VAT and the social charges are determined according to the turnover and not on the profits generated.
So what does this mean for a micro contractor?
This means that this regime is not suitable for those who start in e-commerce and intend to manage themselves the stocks, deliveries, returns, insurance … In the e-commerce sector, the micro contractor regime is better suited to individuals who practice dropshipping.
Why the micro contractor regime is dropshipping?
If you are planning to work as a Dropshipper, it is advisable to choose the micro contractor regime. In fact, when you start your business, it will take some time to reach your sales targets. Thanks to dropshipping, you will start with little means since you do not buy the products and you do not manage the delivery part.
Once you have acquired a good experience in dropshipping and the products you offer
it will be time to launch a new and more important adventure by buying the items yourself and having them delivered. The creation of the micro contractor regime is very easy and requires the scanning of a few documents since the operation can be done online via the Guichet Entreprises website.
There is one small drawback
however, you must not exceed a turnover of more than 170,000 €. If your activities are so successful that you exceed this threshold, you will have to consider changing your legal status. You can choose between a sole proprietorship (EI), a limited liability sole proprietorship (EIRL), or a limited liability single person business (EURL).
How to declare yourself as a micro contractor?
Declaring yourself as a micro contractor is very simple. The whole operation is done online and the procedure is totally free. Two sites are dedicated to the declaration of the status of micro contractor:
- The official portal of the micro entrepreneur: http://www.lautoentrepreneur.fr/
- A second official portal still dedicated to the micro entrepreneur system: https://www.guichet-entreprises.fr/
On both websites, you will find information such as the conditions for creating your microentrepreneur status, the obligations, the specificities of this status, the obligations and how to declare your social charges.
Once you have declared yourself, you will receive your 14-digit SIRET number as well as your APE number
For your dropshipping activity, the code will be 4791A for “distance selling from a general catalog”. There may be other official portals, but in any case, know that the operation does not require any expense on your part. The whole process is free. As for the case of the microenterprise with dropshipping, remember to indicate in the online form under the heading “field of activity”: internet and specify the activity “internet store”.
Depending on your activity, you will have to fill in different documents, since on this site we are talking about dropshipping and therefore commercial activity, I will explain how to register. Once you have obtained your Siret number, you will have to register at the Trade and Companies Registry (RCS), at the Business Formalities Center (CFE) of your CCI (Chamber of Commerce and Industry).
First of all, you will have to go to your nearest CCI
you will have to find it on the CCI website here. You have 2 forms to fill in:
- the registration file for the RCS Cerfa Number: 15260*01 that you can download via this link
- The declaration relating to the domain name of your website, the Cerfa number: 14943*01 to download via this link
You must then send the registration file with the declaration relating to the domain name and all supporting documents to your CCI.
The legal specificities of a micro entrepreneur
If the regime of micro contractors is adapted to those who want to start Dropshipping, it is necessary to take measures to collect all the information required for its status. The goal here is to avoid any misunderstanding or disappointment that you ignore while you are already in full activity. Unlike for example the SARL (Limited Liability Company), the auto contractor or micro-enterprise system is specific in many points:
Micro entrepreneur and VAT
the status of the micro contractor does not allow you to offer products with VAT. You must therefore invoice without applying VAT. This is advantageous for your customers who will pay for the products at a lower cost;
With the status of micro-enterprise
you can employ only one person, even if it is difficult. Indeed, the annual turnover threshold does not always allow you to deduct the expenses related to the employment of an employee;
The taxes to be paid are determined on the basis of your turnover and not on the profits.
If you create a dropshipping store while making huge expenses for the promotion of your products, it will not be possible to deduct them when paying your taxes ;
However, you will only pay taxes if you generate a turnover.
In the first year of activity, if there is no turnover, there are no charges to pay either;
The maximum annual turnover for a micro-business
Since 2016, the legislation has set a cap for a micro contractor at €82,800 for commercial activities (possibility of reaching the tolerance threshold of €90,900) and €33,100 for service activities (possibility of reaching the tolerance threshold of €35,100). Beyond that, you must change the legal status of your professional activity.
It should be noted that if you start a droshipping activity in August
the turnover threshold will no longer be set at 82 800 €. The ceiling is adjusted according to the time of activity during the year. Thus, your turnover should not exceed 34 000 € at the end of December, i.e. (82 800 X 150) / 365.
How to pay your social charges as a micro entrepreneur ?
A micro-entrepreneur is subject to the micro-social regime and automatically benefits from the tax advantages linked to his micro-enterprise. As soon as your activity generates a turnover, you must pay taxes and social contributions:
- For the social charges
- If it is an activity as it is the case of the e-commerce with the dropshipping, you must foresee 12,8 % of your turnover;
- For a craft activity, 22% ;
- For a liberal activity, 22%.
- Focusing only on dropshipping activities, the micro-entrepreneur must calculate 1% of the turnover for taxes
- Other charges
- To ensure the CFP (Contribution to professional training), 0.1% ;
- For the CFE, you will not have to pay anything during the first year of operation. The payment of this tax differs according to the communes, but also according to your turnover. For example, it differs from 215 € to 510 € for an annual turnover not exceeding 10 000 €;
The rules to respect as a micro entrepreneur in dropshipping
Even if many entrepreneurs are unaware of it, it is important to look at the different rules to respect if you want to avoid certain disappointments with your visitors. The first rule to put in place is to check the existence of a dropshipping contract agreement. It is essential because it frames the supplier and the merchant that you are.
There are several clauses and obligations of each party
In this contract, there are several clauses and obligations of each party in this case the terms of delivery of products, customer relations, management of returns and refunds, means of payment of the supplier …
Article 121 of the Consumer Code recalls in these terms:
“The professional is automatically responsible to the consumer for the proper performance of obligations arising from the contract concluded at a distance, whether these obligations are to be performed by the professional who concluded the contract or by other service providers. This means that for the follow-up of the order, the respect of the deadlines, you are fully responsible before the law.
If the terms of the contract are well established with the responsibilities of each party
You and the supplier will know exactly what to do in case of return or retraction from the customer.
For any commercial activity in e-commerce, dropshipping is well adapted
For any commercial activity in e-commerce, dropshipping is well adapted and allows you to legally evolve towards another status if the turnover exceeds 170 000 €. However, you will only be able to create one micro-enterprise status even if you have a liberal activity coupled with commercial activity.
Moreover, only natural persons are entitled to declare a microentrepreneur status
It is a system that only concerns individuals who wish to work as a sole proprietorship. I hope this article has helped you to register as a micro contractor, if I have forgotten a step, don’t hesitate to tell me in the comments.