Earning a Living

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Best business model

I've been working as an AE for a few years undertaking consultancy work, both here and in the UK. No problems with this way of working. As part of the work I do, IT Services, I'm now being asked to help set up various things e.g. websites, a method of watching UK catch up TV on mobile devices etc which require an outlay for the required software etc. this is similar to someone with purchases of materials for whatever purpose working under the AE system.
My concern is that under the AE accounting/cotisation and tax arrangements there doesn't seem to be any way that I can offset my actual costs against my income, thus only paying contributions on my net earnings, as would be the case in the UK.
Any advice from anyone who has been in the same position would be much appreciated.
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Re: Best business model

AE is a very simplified regime and the charges etc have been calculated such that the AVERAGE business in its category (reselling, artisan or profession libérale) would pay exactly the same level of charges under AE, as they would pay on a réel régime. Eg for prof lib, there is an assumed allowance for expenses and overheads of approx 30 per cent built in to the calculations. So the cotisations you pay, as 25 per cent of a turnover of 1000€, work out exactly the same as you would pay on réel at x per cent of 700€ish. If you look on your tax return, you'll see that a turnover of 10000€ equates to an RFR of 7000€-ish.

So if your expenses and overheads are lower than average you're better off on AE, if they're higher than average you're financially better off on a réel régime where you deduct actual expenses from turnover and pay cotisations on your actual profit. Although if there's not much in it, you might decide that the simplicity of AE and not needing to use an accountant, do TVA etc, still tips you in favour of AE.

The problem with AE is that it does not encourage investment at all - it encourages you to pare your expenses to the bone. But AE was only really intended as a start up or hobby business régime. The expectation is that once you have confidence in your business and are ready to invest and move up a gear, you will move on to a 'grown up' business regime. It sounds as if you've reached that stage, so you need to look at other types of EIRL, SAS etc. There used to be and probably still are business websites where you can put in your data and it'll work out projections of what charges you would pay on various regimes, so you can compare. But probably best to find a good accountant.

Hope this helps.

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