Sole proprietorship: the status in practice

A sole trader operates in their own name: the business is not a company and does not create any legal entity other than your own. Personal and business assets are automatically separated, with a limit for tax and social security purposes. You are generally subject to income tax, with the option to choose corporate tax. Your social security contributions are paid to the Urssaf (French social security collection agency).

This page covers the legal status, taxation, social security, and social protection of sole proprietorships. It does not specify the deadline for opting for corporate income tax (IS) or the filing deadline for income tax returns, as official documents differ on this point. It does not quantify contributions, address disability and death benefits, the accrual accounting method for sole proprietorships, or the business property tax.

What is a sole proprietor?

The public service information sheet specifies that a sole proprietorship "does not lead to the creation of another legal entity".

A micro-entrepreneur is a sole proprietor: he operates alone, as a sole proprietor, with simpler formalities than a company.

Inheritance: an automatic separation

According to the information sheet, the personal and business assets of a sole proprietor are "automatically separated." This separation has one limit: in the event of a failure to meet tax or social security obligations, the tax authorities and social security organizations can recover their debts from both sets of assets.

The details of this separation (primary residence, other assets, seizure proceedings) are covered on a dedicated page. Here, remember the principle and its limitations.

Taxation: Income tax by default, corporate tax by option

Sole proprietors are "generally subject to income tax (IR)." No specific option is required to be taxed under this regime. Under the IR system, they fall under either the micro-enterprise regime or the standard regime. Commercial, industrial, or craft activities are classified as industrial and commercial profits (BIC); non-commercial activities, including liberal professions, are classified as non-commercial profits (BNC) (economie.gouv.fr).

The amounts shown are pre-tax turnover figures. Exceeding the micro-enterprise thresholds is addressed on a separate page.

The option for corporate income tax (IS) exists: IS "can be applied to all forms of business, including sole proprietorships," according to the information sheet on choosing a legal structure. The official pages consulted do not specify the same deadline for exercising this option: it is not published here. The topic is addressed on the page about switching from personal income tax (IR) to corporate income tax (IS).

The social security system and the start of business activity

The individual entrepreneur falls under the "social security for the self-employed, integrated into the general scheme" and pays his social security contributions to the Urssaf.

At the outset, the information sheet on choosing a legal structure indicates that the business owner "pays no contributions for a period of 3 months (90 days)" from the start of operations. During the first two years, when the business owner has no professional income, provisional contributions are calculated on a flat-rate basis of 19% of the annual Social Security ceiling, i.e., €9,131 in 2026. The amount of the contributions is not given in the information sheet: it is not calculated here.

Setting up a sole proprietorship costs €21.74. If you opt for the micro-enterprise scheme, there are no setup fees.

What social protection covers

The fact sheet on social protection distinguishes between artisans and traders on one side, and liberal professions on the other.

This information sheet does not cover disability and death benefits, family allowances, or training. Eligibility requirements for the ATI (Individual Training Allowance) are detailed on a dedicated page.

Sole proprietor: what changes depending on your situation

• Your activity : craftsmen, traders or liberal professions do not have the same compensation limits.
• Your tax regime : micro or real, depending on your turnover and your choice.
• Income tax or corporate tax The option exists, its effects can be measured on your case.
• Your income Daily allowances depend on your annual income.
• Your seniority : in the first year, contributions follow rules specific to the start-up.
• Your additional protections : the information sheet does not cover all risks.

The rule depends on your situation. No results are guaranteed.

Sole proprietor: numerical example (fictitious profile)

Situation. Camille operates a sole proprietorship providing services under the BIC (Business and Industrial Profits) tax regime, under the micro-enterprise scheme. Assumptions of the fictitious profile: her turnover is €60,000, below the threshold of €83,600; her actual expenses amount to €35,000.

Issue. How does the taxable base compare between the micro-enterprise regime and the actual regime?

Strategy. Under the micro-enterprise regime, the standard 50% allowance for BIC service provision applies to turnover. Under the actual regime, the tax base depends on actual expenses.

Result. Under the micro-enterprise regime, the allowance is €30,000 and the taxable base is €30,000. Under the actual expense regime, with €35,000 in expenses, the taxable base is €25,000, or €5,000 less. The two taxable bases are equal when expenses reach €30,000, which is 50% of turnover. This calculation does not include income tax or social security contributions; your tax liability depends on the rest of your situation.

Fictitious profile, hypothetical values. The calculation does not predict your situation.