Which legal status should you choose to become a freelancer?

The main legal structures for freelancers

There are two major categories: the sole proprietorship (EI) and company structures. Each has its own tax and social system. Choosing the right one is essential.

The Sole Proprietorship (EI): The simple option

The Sole Proprietorship is the sole trader status. Its creation process is very light and it’s the ideal option for freelancers who are just starting out. The EI is the basic status, and it can operate under two schemes: the Micro-enterprise regime or the real tax regime (“classic EI”):

1. The auto-entrepreneur freelancer status (Micro-enterprise)

This is the most popular option among young freelancers. The auto-entrepreneur status is simply a highly simplified version of the EI. It’s perfect if you want to minimize admin and risk when starting out.

Key points:

• Zero revenue = Zero contributions: Your contributions and taxes are calculated by applying a fixed percentage to the amount you receive. You only pay if you earn! Independent workers declare their revenue easily.
• Revenue thresholds to watch: Be careful — this regime has strict limits (currently €77,700 for service-based activities). If you exceed them, you switch to classic EI.
• Easy follow-up: URSSAF simplifies everything. A monthly or quarterly declaration, and your contributions are paid in one go.
• Target audience: Ideal to test your business alongside a job or as a complementary activity with moderate revenue.

2. The Classic Sole Proprietorship (EI)

Your activity is growing and your revenue has exceeded the micro thresholds? You have many professional expenses to deduct (equipment, costly software)? Then the classic EI becomes your natural option.

Key points:

• Description: Since 2022, the EI offers full separation between personal and professional assets.
• Deduction of expenses: Unlike the micro regime, you can deduct actual expenses from your taxable income. No more standard allowance!
• Target: Freelancers who have exceeded micro thresholds and/or who have significant expenses to write off.

One-Person Companies: The freelancer’s credibility boost

These statuses are for you if you want more credibility, higher capital, or tax flexibility. The social protection regime changes significantly here.

1. EURL: Security and TNS status

The EURL (Single-Member Limited Liability Company) is a company with a single shareholder. It offers strong legal security.

Key points:

• Maximum protection: Your liability is limited to your share capital contributions. Your personal property is therefore protected!
• TNS status: You are affiliated with the Social Security of the Self-Employed (SSI). This coverage is often less expensive than that of employees.
• Flexible taxation: Default taxation under personal income tax (IR), but you can opt for corporate tax (IS).

2. SASU: Flexibility and employee-equivalent status

This highly flexible structure is the favorite of entrepreneurs who love freedom and want better social protection.

Key points:

• Total flexibility: This is its main advantage. You freely set the operating rules in the bylaws.
• Assimilé salarié (employee-equivalent): As President, you’re affiliated with the general employee system. This is more protective (health, retirement) than the TNS regime, but social contributions are higher.
• Taxation: Corporate tax (IS) by default.

Pros and Cons of the main freelancer statuses

According to INSEE, the auto-entrepreneur status remains the most popular entry point for freelancers, representing over 60% of new independent registrations in 2023. But company structures (SASU/EURL) are quickly adopted once revenue exceeds a critical threshold.

To make things clear, here’s a summary of the main pros and cons.

The decisive criteria: Which status is right for you?

To make the best decision, ask yourself these three questions. They’re the heart of your legal choice!

1. Impact of Revenue and Earnings

Your earnings are the first indicator. The higher your revenue, the more advantageous a company structure becomes.

• If your earnings are low or irregular: We recommend the micro regime. Why? No revenue = no charges. It’s the ultimate simplicity!
• If your earnings are high and stable: The EURL or SASU allow you to deduct actual expenses and control your salary. This is the best option for optimizing your taxation with corporate tax.

2. Level of liability and asset protection

This is crucial: what happens if you face financial difficulties? Your personal assets must be safe.

• Maximum protection with company structures: This is the major advantage of SASU and EURL. Your liability is limited to your capital contributions. Your personal goods (house, car) remain secure.
• Protection under EI: The EI now protects personal assets (since 2022). However, protection is full and integrated right from the creation of a company.

3. Social Protection: Coverage and unemployment rights

This choice directly affects your future security: health insurance, retirement, etc.

• Unemployment insurance, the weak point: In micro-enterprise, EURL, or SASU, you do not pay into the classic unemployment insurance system. It’s the price of independence.
• Keeping your ARE: If you have ARE rights, you can maintain them or convert them into capital (via ARCE, see section VI).
• SASU vs EURL: The employee-equivalent regime (SASU) offers better protection but costs more than the TNS regime (micro and EURL). It’s a trade-off between cost and quality of coverage.

Formalities Guide: Creating your chosen status

You’ve made your legal choice? Great! Now it’s time for action. The creation process differs considerably depending on the status.

1. Micro-enterprise creation guide: 3 simple steps

It’s fast and simple. You can manage everything yourself with just a few clicks.

• Online declaration: Go to the INPI’s Guichet Unique portal (mandatory to start your activity).
• SIRET number: Once validated by URSSAF, you’ll receive your SIRET — the legal identity of your activity!
• ACRE application: Don’t forget ACRE (business creation incentive)! This will give you partial exemptions on your contributions when starting out.

2. Key steps for SASU and EURL: More complex formalities

Here, rigor is essential. The support of an accountant is highly recommended.

• Drafting the bylaws: This is the contract that defines your company’s operating rules. It is crucial.
• Deposit of share capital: You must deposit the funds (even small) into a dedicated professional bank account.
• Legal notice publication: A creation announcement in an approved legal newspaper (JAL).
• Registration: Submit your complete file to the INPI’s Guichet Unique.

Taxation: Personal income tax (IR) or corporate tax (IS)?

This is the major lever for optimizing your income.

IR and IS are two very different systems:

• Personal Income Tax (IR): Your profits are taxed along with your other personal income. EI and EURL are taxed under IR by default. The more you earn, the higher the tax rate.
• Corporate Tax (IS): Your company pays taxes on its profits. You then pay yourself (salary or dividends), which is taxed separately.

IS is more advantageous when you earn a lot and do not need to withdraw all profits immediately. Leaving money in the company for reinvestment means it is taxed at a lower fixed rate compared to personal IR.

ARCE aid: Convert your ARE rights into capital

If you have ARE rights, ARCE is an excellent safety net when launching your freelance business.

ARCE is financial assistance from France Travail that pays part of your remaining ARE rights in the form of capital.

Condition/Effect: You must first obtain ACRE. If so, you will receive 60% of your remaining ARE rights in two installments (at launch, then six months later). It’s an excellent way to secure your starting cash flow!