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Auto-entrepreneur : the status is attractive… but  presents  certain risks that it is better to know before starting. What are the pitfalls to avoid and  the possible remedies  ?

Operating costs :

Operating expenses are not deducted on the basis of the costs actually incurred but are established on a flat-rate basis. This situation penalizes auto-entrepreneurs whose activity generates significant costs or who have to deal with heavy investments (tools, IT, travel expenses, etc.). The situation is all the more problematic as operating expenses absorb all of the turnover. In this case, the auto-entrepreneur does not generate profits but remains taxable on his turnover.

Unlimited liability:

The auto-entrepreneur is liable in an unlimited manner on his personal assets for the debts contracted in the exercise of his professional activity. This is a risk to be taken into account for activities requiring loans.

An image problem:
In use, it has been observed that the absence of registration and the exemption from VAT for auto-entrepreneurs can cause the mistrust of certain customers.

The disguised employee:
Be careful not to place yourself in a disguised employment situation. Some employers try to convince their employees to resign and then continue their activity under the status of auto-entrepreneur.
They therefore work for a single client (their former employer) who can end their relationship without notice. They therefore have no recourse and, failing to contribute to the unemployment insurance scheme, receive no compensation.

The turnover ceiling:
Some auto-entrepreneurs find themselves trapped for having miscalculated the authorized turnover ceiling to within a few hundred euros. They can leave the system without realizing it. It is therefore necessary to anticipate the exit from the regime and think about the next status to adopt if the activity were to develop.

In terms of insurance, there is no specificity for a self-employed entrepreneur: as for any business, there are compulsory insurances and recommended insurances, in terms of professional civil liability.
Depending on the activity carried out, there are compulsory insurances such as the ten-year civil liability insurance which concerns the building trades.
With regard to vehicles used in a professional context, it is mandatory to cover them with a civil liability guarantee, whatever their use: transport of products or people.
Moreover, even if it is not strictly compulsory, it is strongly advised to take out professional liability insurance. Indeed, like any professional, the self-employed person is liable for damage caused by himself, his premises and his professional equipment as well as by objects sold, manufactured, repaired or installed.

DAMY law firm , Nice, Update 2022