Everything I Learned (the hard way) about Running a Business in France
It was starting a business that allowed me to stay in France. I’ll warn you, if I knew what I knew now, I probably wouldn’t be here. But I am, and I’ve learned a lot of lessons along the way—many the hard way. This post only covers the business side of things, not the residency side of bureaucracy. You can read about that in the post French bureaucracy explained.
Even though this mundane guide to running a business is France-specific, you may find it makes you think differently about running a business whenever you may be. I’m sure there are many things I’m still not doing in my business. My goal in putting this post together is not to claim I’m perfect, but attempt to help others on a journey that’s not always so obvious.
Disclaimer: Consult a professional before accepting anything I say as truth. My terms and definitions are lose at best. Much of the challenge of living and working in France is knowing the right questions to ask. I hope what follows can be a jumping off point for you to ask better questions.
Please share any additional insights and experiences in the comments of this post. What did you wish you knew when starting out?
FREELANCE + SELF-EMPLOYED STATUS
In France, work is about status. It’s about having boxes to fit everyone in. You can’t work if you don’t have a status, and that goes for French people too. My challenge has always been that I don’t always fit into the nice little boxes that France creates—both because I’m a foreigner at the core, but also because I like to think differently about what it means to work, the kinds of projects I take on, and how I use the internet to make the world a little smaller. I’m a “slasher” who wears many hats (designer / writer / etc.) — 0r as they say in hip France now, une slasheuse.
In order to work as a freelancer in France you need a SIRET number. This number is linked to the type of work you do. For me it was a challenge to define the various “activities” I do under one umbrella term, so I went with “design and communication” as an attempt to cover my bases. SIRET numbers haven’t really kept up with the times and our work from anywhere and nomadic nature. Every time you move your number (last digits) get updated.
Some companies will work with foreigners when they have a business set up abroad. However, for me, knowing I was living in France, many organizations wouldn’t even talk to me
The SIRET number needs to go on the top of every invoice. I even have to create invoices for jobs that don’t “need” invoices— my passive income from teaching, or say royalties for a book. I make an invoice for everything.
The French system of business is organized into different levels of status. (These are my definitions, so cross check with a professional before jumping into anything. I’m sure there are more too!)
- Auto-entrepreneur was created as a secondary status for those who have a full-time job. The upside is that it has a lower tax rate than some of the statuses below (the original idea is that it is not a full time status but freelance work , but it does not have have the same perks/reductions of business expenses.). In the past AE status had a salary cap of ~32k€, but more recently it has been raised.
- Maison des artists is an artist status for non-commercial artists with a lower tax rate. If you’re considering selling physical goods with your illustrations, be warned, you likely will need to create another status for that side of your business.
- Profession liberal – independent worker status (my status). I write off a lot of expenses, but it also comes with significant social charges. With this status I also have a TVA intercomunitaire number which exempts me from that 20% on many purchases depending on what I’m buying and from who. Note: As a foreigner, before I became French I had the right to work other than salaried (a salaried job would mean I was taking a job from a French person). Certain “activities” are salaried only (ahem, teaching in a university). Just know, a lot of times things are more complicated than they should be.
- SARL / EURL – Bigger business status. Some freelance friends have these statuses as solopreneurs, but everyone I’ve consulted regarding my situation hasn’t advised me that direction. Your status really depends on the type of work you’re doing and your business goals. Every situation is different.
- CDI / CDD – These are NOT freelance statuses. These are full-time and part-time work contracts. Social charges come out automatically. As a non EU foreigner you may or may not be eligible to work in one of these statuses depending on your visa/carte de séjour. Do not assume just because you are highly qualified for a job that you have the right to work in France. Also, if you’re looking to hire employees in France, it can be expensive; even more expensive to try to fire them. The “good” news is there is a trial period (period d’essaie) for both sides. The “bad” news is when you want to leave a job, depending on the status, you may have to give three months notice.
Of course everything in France is a Catch-22. You can’t start a business if you don’t have residency, and you can’t get residency if you don’t have a business (or some other ticket in). Of course if you’re an EU citizen, you’re golden (but it’s still TBD what’s happening with the Brits…).
Every situation and working style is different so I highly advise talking to people, meet with accountants and professionals. You can also consider scheduling a meeting at URSSAF. I am definitely not the best person to ask. 😜 (You may also enjoy my post on French bureaucracy explained about living and working in France. Because just because you have the right to live in France doesn’t always mean you have the right to work.)
ORGANISMES (WHERE YOUR MONEY GOES)
Depending on your working status, you’ll likely encourage different variations of these organismes, a French word I haven’t quite been able to find an equivalent for. All you know is that depending on your status, there are a handful of them, and they are all happy to take your money.
I was very hesitant to write this section because there is so much I don’t know any understand still, but I wanted to help put a few things on your radar to think about. I’m probably grouping them together in a way that the French may not (so you’ve been warned!). Under my profession libéral status, I pay into the following:
- URSSAF: Manages social charges and is the group where I first went to set up my business. The amount I pay to URSSAF is significant.
- RSI: This covers my healthcare/social security. Mine is managed by another association who I send my money to (by check still!). I believe there are some changes to RSI that have happened or are happening soon, so it all may be changing.
- CIPAV: This is the group that manages retirement for my status. It is a very hefty chunk. You can ask to be downgraded, but it affects other returns. I find it very interesting that in France—at least under my status—independent workers are required to pay into retirement. It’s actually really smart because from a US perspective, I know retirement is an afterthought for many people I know. However, as my banker explained it to me, currently 2-3 people pay into what retired people receive. By the time I retire, there will only be one person paying into it. Hence, my renewed interest in business, and seeing that everyone is successful in the future, so I can receive the same benefits I’ve paid into.
- Centre des Impôts: Impôts is the French word for taxes. My accountant files my business taxes (which includes a couple other random charges for running a business—which I’m happy to let them handle), and I file my personal taxes every May. These are a large amount of what I pay. I highly recommend setting up monthly or quarterly payments so you don’t get hit as hard at the end of the fiscal year. I believe everyone is required to pay taxes online now. The design of the website leaves a lot to be desired.
- TVA: In English this is the VAT (value added tax) aka sales tax of Europe which also gets paid to the Centre des Impôt. On all my French invoices I’m required to charge the 20% sales tax. Depending on what you offer, sometimes the tax is 10% or 5%. Not every freelance status is subject to charge the TVA. However, because I charge it, it also means I (ahem, my accountant) can deduct it.
- Mutuelle: Technically not required, this is like additional health insurance. Initially I didn’t see the need for it as healthcare is already so much more affordable in France in the U.S., but there are benefits. However, as I’m self-employed, I realized if anything major ever happens to me where I’m unable to work, I wanted to have another level of protection. I purchased mine through my bank. Salaried employees will have a different version available to them depending on their employer.
- Assurance: I probably wouldn’t have liability insurance had it not been required by one of the companies that employed me as a contractor. While I’m no longer working for them, I’ve kept my assurance (insurance) because it just feels like the smart thing to do, and in the grand scheme of things is not a lot of money. To get mine I went into one of the insurance shops in my neighborhood and told them what I needed. I ran it by the employer, who checked with their lawyer, before I officially paid.
- Pôle Emploi: This is the French unemployment office. What is offered to unemployed workers is dependent on working status and agreement (voluntary or not) you had with your previous employer. I don’t have first hand experience with this, but adding it to the list as it’s part of the overall ecosystem of working in France. If you’re on employment, they’re the group that pays you.
The good news is that over the years, many of these organizations have gained a better online presence where you can even declare and pay online! URSSAF now requires an appointment which you can schedule online. The Centre des Impôts now requires everything is done online. With my RSI payments, I still have to pay by check. It’s like a revolving door of paying organizations money, so watch your cash flow!
I always keep more money in my business bank account to make sure there is enough money to pay for the charges. I will admit, over time I’ve become less cognisant of when and how much money they’re taking, and have let automated processes take hold. When you’re starting out, I highly recommend watching it closely so you can know how to best prepare. It’s also why I recommend working with a professional (there’s a whole section on that coming!).
My secret to success early on was going to these organismes in person when I had something that needed to be resolved. Even for non complicated things, I found I managed to perplex workers more often than not. Then my accent automatically makes me a foreigner, who is perceived as clueless in the eyes of the worker. On the phone I could never get a sense of who was helping me, but face to face I felt more at ease. One of the biggest risks in France is people don’t always volunteer information. By going in person I felt I increased the liklihood that I’d learn something I should know. I also built allies who would recognize me on subsequent visits, which made getting things done much more enjoyable.
One thing to be aware of at the end of the year is régularisation. Your payments throughout the year are based off of your previous year’s earnings. As a freelancer or small business owner this may fluxuate more than a salaried position. Always be aware of your cash flow because one year I got a massive bill for +10k€ at the end of the year, and each group listed above asked for a very significant amount of money. Ouch! Sometimes I wonder how anyone is actually able to save money here because the more you make, the more you take.
I’m probably the only person in all of France who has gone to the tax office to try to give them money before it was due to avoid the painful amount in full. Seriously, the worker I asked had to go ask his boss! I’m probably backwards, but I’d much prefer to overpay than have hidden charges come and haunt me later.
I find it highly entertaining that while you have a basic idea of what you will have to pay in taxes when you file in May, taxes have to be paid in September, the month after every French person has taken a month long holiday and hasn’t worked! It doesn’t seem to stop anyone from their vacations though.
Another thing to remember is that before Christmas the taxe d’habitation (housing tax) comes out. I mentally like to think of it as a 13th month of rent. Depending on which area you live in and the size of your apartment, this can be nearly your rent. The strange perk of living in my tiny chambre de bonne apartments was that the spaces were too small to be taxed!
I will warn you, it can often feel like the government takes ALL your money, so you’re going to want to make sure you save a significant portion of the money you bring in. It’s really easy to get annoyed at these organismes, but at the same time they help ensure you have health coverage, ways to get around, retirement, and interesting (free) cultural programming in the city. While many of these fees feel high, I feel like at the end of the day I’m probably paying about the same I’d pay in the U.S. The big perk I have in France is that when I went to the Emergency Room it was 7€ vs. the hundreds or more likely thousands it may cost me in the U.S. Trade-offs happen everywhere, so that’s why educating yourself on how each status works will benefit you.
HIRE AN ACCOUNTANT
When I started out I was 1) naive 2) dirt poor and 3) stubborn. I had this mentality that I needed to understand accounting myself before paying someone. I also had no idea where to start. (In hindsight, it was probably better I didn’t overwhelm myself trying to know everything—I really could have used this post at the time.).
With a recommendation from a photographer friend I signed up for an association de géstion which is an association that works with independent workers—in France they tend to be organized by the type of work or industry. In essence the association de géstion is a watch dog that would guide me through my accounting, answer questions, and review my taxes. (I believe it also gave me a better tax rate).
I took all of their free accounting workshops—some even multiple times. If you haven’t picked it up yet, I find one of the biggest challenges in France is that no one volunteers information. I can’t ask the right questions if I don’t even know what it exists. It was a painful time, but highly worthwhile. Regardless who you are or where you are, there’s always going to be a learning curve for something regarding running a business.
One of the most entertaining parts of these accounting workshops they offered were how unstructured they work. When the instructor asked us to raise our hand if we were using the computer software (a slight, but worthwhile investment in my mind at 250€) only a few of us raised our hands. The large majority of the class was still doing their accounting in paper notebooks! Mon dieu! To be fair it all depends on the kind of business you’re running, the expenses you have, and how many different balls in the air. But for me, doing things manually was not what I was looking for c. 2011.
For me, my requirements were that I worked with my next accountant was to find someone who:
- Could explain “easy” accounting concepts to me and not make me feel like an idiot.
- Believes in using technology as a tool to make life easier.
I kept asking around, and thankfully found someone fairly quickly who fit the bill via a friend. The next big question was if the “cheap” bank account I was using would sync up with their computer software which automatically tagged most of my expenses. Thankfully it did, and my life was saved in that moment. (I eventually switched to a more mainstream bank after some transaction charges that weren’t mine on the original one, and meeting a banker who actually was interested in helping me better understand my finances and future planning. It also synced better with the software.).
Like any relationship, it helps if you can build a rapport with your accountant. I needed to be able to ask dumb questions and not feel dumb. When it come to running a business in France, the range of activité (kinds of work) I’m offering isn’t always typical, so I needed someone I could ask. While I don’t ever think I’ll feel like an expert when it comes to the money side of business, it feels good that the time I spent in the initial workshops was rewarded by compliments from the group I’m currently working with.
Compared to the association de géstion, I pay a lot more for my accountant (which I’m really paying for the awesome software). However, the price of having my sanity back is life changing. The thing about business is when you can clear up some of the annoyances you have from dealing with the day to day, it leaves more time and energy for being able to do the real work you enjoy. The small act of investing in an accountant led to big returns in my business.
Finally, I will note that as an American abroad, I’m also required to file US taxes. You get an automatic 2-month extension from living abroad. If I was a salaried employee my declarations would be more straight forward, but as an independent worker, deductions vary. To save my time and sanity, and that software isn’t really designed for global citizens I hire a professional to take care of this. Yes, it’s another expense, but being successful in business is also about protecting your mental health. Americans are also required to file an FBAR form if at any point during the year there is more than $10k USD in a foreign bank account. (If any other country in the world is your home, you’ll get to ignore this paragraph. The US and Eritrea are the two countries in the world that require double taxation.)
BANKING & INVOICING
It’s required to have a separate business bank account when you have a business in France. It may seem like a pain and added expense, but trust me, it’s one of the best things you can do for your business. Otherwise, trying to separate your personal and business accounts is a nightmare (I had to do it one year and it was agony!). It’s a good idea a running list of automatic payments through your bank should you ever need to change banks (which many people do when buying a home in France in order to get a better interest rate).
Invoices need to have your name, address, and SIRET number clearly written. Every invoice should have a date, and be numbered with a description of the job and name + address for the client. I include all my banking information at the bottom of my invoice so the client has no excuse not to pay me. You’ll also want to check with your accountant regarding any fine print you need to include on the bottom of your invoices, for instance if you are exempt from the TVA, or if you’re a member of an association.
In France the majority of clients tend to pay you via wire transfer. When you first start working together they’ll ask you for your RIB (the small sheet you get from your bank with all your account information, which can also be emailed). It typically works pretty smoothly, but keep in mind most full-time employees in France only get paid once a month (not bi-weekly as is common practice in the US). You’ll want to talk to your contact to find out when you need to submit your invoice by in order to get paid that month.
If you’re freelancing or doing contract work, it’s also worth pointing out that getting paid isn’t always predictable. Recently, I did work for a big French company. Once I completed the work I was able to invoice. I not only had to email my invoice, but also mail in a physical copy by post. That company pays out at +60 days. This all is to say just because the internet and technology makes things instantaneous, there are a lot of processes in running a business that are anything but fast and efficient. I share these stories, because even 7+ years into business, I learn something new about the business side with every project.
Now to the fun stuff! Depenses pro. Business expenses. One of my favorite things about having a business are expenses. I realize this is a dangerous mentality because it encourages you to spend more, not less. But I do enjoy that if I want a business book, need a stack of Post-It Notes, or want to travel for a conference I can write it off as a business expense (aka lowers what I pay in taxes). Business expenses are one of the ways I ensure I keep investing in myself/business to keep growing and doing better work.
It’s good to have an accountant to figure out what you can and cannot write off as deductions, as not every self-employed status allows you to expense stuff. Or there may be stuff you never considered writing off. In France, many employees receive tickets restos which are meal tickets (full-time employees pay into it, but so does the company —it’s a great deal). A freelancer does not receive those benefits, so under some working statuses, a portion of some meals can be deducted. It’s a random amount, so it’s another good case for using software and working with an accountant.
You’ll need to keep receipts (particularly for larger purchases). I use an accordion folder with a space to put receipts for each month. They’re not well organized, but they’re there. And any big purchases already have digital receipts which I save to my computer and upload to my accounting platform. It’d probably be smarter if I had a shared folder online (GoogleDocs, or Dropbox) so I can access it anywhere—I’ll get there. Apps like TurboScan are good for “scanning” your receipts as you get them.
Learning a little bit of organization, and the pieces you need to be keeping track of, and you’ll make your life a million times easier.
I know this post is a lot to take in. But if I can do it, so can you! YES YOU CAN! (But only if it’s something you really want. 😉) It’s about taking it one step at a time, and educating yourself along the way. (Don’t worry, all this stuff completely confuses French people too, so you’re not alone!) If you want it enough, it’ll be worth it. Break it down into smaller steps, and check off one thing at a time. Block off time for admin in your work week, and build in extra time for things to go wrong. This post is everything I wish I would have know starting out. I knew NOTHING. So even if you’re wanting to start a business and feeling completely overwhelmed after reading this, rest assured, you’re already 500 steps ahead of where I was when I started by reading this. It takes time, patience, and dedication. I’m rooting for you! 💪
So this, my friends, wraps up the mega edition of “everything I learned about running a business in France the hard way”. I’ll leave you with some parting tips:
- Do things in person. I know we live in a digital age, but I find that doing things in person (at least in France) helps make some of these processes feel more human. I also feel like I’m more likely to talk to the right person.
- Make peace with the fact that there are no dumb questions. Everything in business is not common sense. Keep asking questions to get where you need to be.
- Invest in you and the experts. Software and technology is your friend. It may cost money but it also may protect your mental health and sanity.
- Keep a running file of how to do certain business related tasks, as well as a list of key sites and contact information. When you only have to do something once a year, it’s easy to forget.
- Make friends with people in a similar situation as you that you can go to with questions. Every business works differently, so it helps to find someone doing something close to what you’re doing. Their situation may be a bit different, so cross check what you know with a professional (accountant, lawyer, etc.).
I’ve done my best to share a bit of everything and anything I’ve picked up over the years. I welcome you to share any insights you’ve learned (the easy, or hard way) in the comments below. If you have any specific questions, please leave them in the comment of this post rather than sending them via email. In general I find comments best so everyone can learn from questions you may have.
I do not take on business consulting for those looking for help starting a business in France as I am not an expert in the field—it’s better to talk to someone who knows the specifics of that. However, if you have a creative project—let’s talk! I love doing 1-on-1 creative consultations to help get you unstuck or moving forward!!