From micro-business to company: making the switch at the right time

Quick answer. You leave the micro regime when one of three levers fires: turnover nears the thresholds (83,600 euros for services, 203,100 euros for sales in 2026), non-recoverable VAT starts to weigh, or real costs exceed the flat-rate allowance. There is no automatic conversion: you close the micro-business, then set up a SASU or an EURL.

The micro-business is an excellent starting point: light formalities, ultra-simplified accounting, contributions based on collected turnover. But the regime quickly shows its limits as the activity grows. The real question is no longer how to set up a micro-business, but when and how to switch to a company without interrupting invoicing or losing clients.

This article does not cover setting up a micro or a company in isolation. It deals with the transition: the number-backed signals that justify the switch, the comparison between the micro regime and the actual-expense regime, the choice of target form, then the concrete procedure. For the starting status, see also what you should know about the self-employed status.

The first instinct is to look at the micro regime's turnover thresholds. For 2026 they are set at 203,100 euros for the sale of goods and the provision of accommodation, and at 83,600 euros for services and professional activities (BIC or BNC). For mixed activities, total turnover must not exceed 203,100 euros, of which no more than 83,600 euros for the services portion.

But the turnover threshold is neither the only trigger nor the most common one. In practice, it is often VAT that forces the decision well before reaching these levels. The VAT exemption thresholds are much lower: 85,000 euros for sales and 37,500 euros for services, with higher tolerance thresholds of 93,500 euros and 41,250 euros (law of 3 November 2025). A service provider can therefore become liable for VAT from 37,500 euros, while still far from the 83,600 euros micro threshold.

The underestimated risk. Many freelancers confuse the micro thresholds (203,100 / 83,600 euros) with the VAT exemption thresholds (85,000 / 37,500 euros). These are two distinct scales: you can remain a micro-entrepreneur while charging VAT. Believing the only threshold to watch is the micro one leads to becoming liable for VAT without anticipating it, and therefore having to make corrections.

The switch signals are rarely isolated. Here are the triggers we most often see in freelancers' files.

The note on exceeding the VAT threshold in the micro regime details the immediate consequences, and the way the VAT base exemption works sets out the rules.

Under the base exemption you do not charge VAT, but you cannot recover it either. As long as your purchases are low, this is comfortable. As soon as you invest (equipment, subcontracting, services) or your clients are professionals who recover VAT, the exemption becomes a handicap: you bear non-deductible input VAT that a company on the actual-expense regime could recover.

Our reading. The switch is not just a matter of thresholds. It becomes relevant when one of these three levers fires: non-recoverable VAT costs too much, real costs far exceed the flat-rate allowance, or separating professional and personal assets becomes a concern. As long as none of these is active and costs remain low, the micro often keeps the advantage of simplicity. To structure this reasoning, the legal status decision tree is a good starting point.

Under the micro regime, tax is calculated on turnover after a flat-rate allowance: 71% for sales, 50% for BIC services, 34% for BNC and professional activities, with a minimum allowance of 305 euros. No real costs are deductible and no VAT is recoverable. From 1 July 2026 the professional training contribution applies, at a rate that varies by activity (trader, craftsman, profession).

In a company subject to corporate income tax, profit is taxed at 15% up to 42,500 euros if turnover stays below 10 million euros and the capital is held at least 75% by individuals, then at 25% above (French Tax Code, article 219, I-b). On the actual-expense regime you deduct costs, depreciate investments and recover VAT. The chair of a SASU is treated as an employee and falls under the general scheme; the majority manager of an EURL is self-employed.

Once the decision to switch is made, you still have to choose the form. The two most frequent options for a freelancer going solo are the SASU and the EURL.

Trade-off. In a SASU, the chair is treated as an employee: contributions are higher, but dividends are entirely free of social charges, whatever their amount relative to capital. In an EURL, the majority manager is self-employed: contributions are lower, but the dividend portion above 10% of share capital is subject to social charges. For a freelancer planning regular dividends, the SASU often has the edge; for one who prefers net pay with contained contributions, the EURL can be more efficient. The SASU, SARL and EURL comparison details these differences, and our business tax advisory prices the trade-off for your situation.

It is important to understand that there is no legal conversion of a micro into a company. The micro-business is a sole proprietorship: you close it, then set up a separate company. The sequence is as follows.

1. Confirm the switch is justified: thresholds, VAT, real costs, growth plan.
2. Choose the target form (SASU or EURL) based on pay and dividend policy.
3. Set up the company: drafting the articles, depositing capital in a dedicated account, publishing a legal notice, registering with the RNE and the RCS via the INPI one-stop shop.
4. Where relevant, contribute the micro's goodwill or client base to the company (contribution in kind, with or without valuation depending on scope).
5. Transfer invoicing, client and supplier contracts, the professional bank account and the management tool.
6. Close the micro-business: free deregistration via the INPI one-stop shop, with the related cessation declarations.

Deregistering the micro is free. Setting up the company, however, generates costs: legal notice, registry fees, possible contribution fees and advisory fees depending on scope. Our support for setting up a company covers this sequence end to end, and our bookkeeping and review offering takes over for actual-expense accounting. To review the starting regime's obligations, see the accounting obligations of the micro-business.

In practice. Prefer a switch date at the start of the calendar year to avoid interlocking a micro financial year and a company financial year in the same year. Remember to move invoicing, contracts, the professional bank account and the management tool. Platforms such as Pennylane or Tiime make the transition to actual-expense accounting easier.

• Low-cost activity with individual clients. If you have almost no deductible costs and your clients do not recover VAT, the base exemption remains an asset: the micro keeps the advantage of simplicity.
• ACRE. The partial first-year contribution exemption is not transferable: obtained in the micro, it does not automatically continue in the company. Since 2026, in the micro regime, the ACRE request must be made to Urssaf within 60 days and is no longer automatic.
• Mixed activity. With both sales and services, total turnover must not exceed 203,100 euros, of which at most 83,600 euros for the services portion: you must track both counters separately.

In a recent file, a service consultant came to us at 70,000 euros of turnover, convinced he had to switch because he was nearing the 83,600 euros micro threshold. The analysis showed the opposite: he had already become liable for VAT after crossing the 37,500 euros threshold, but without charging it, exposing his activity to a correction. The priority was therefore not the micro threshold but VAT compliance, then calculating the real gain of moving to a company given his low costs. The decision was made on figures, not on intuition.

• The 2026 micro threshold is 203,100 euros for sales and 83,600 euros for services, but it is rarely the first trigger for the switch.
• The VAT base exemption thresholds (85,000 / 37,500 euros) are distinct from the micro thresholds: you can remain micro and charge VAT.
• The switch becomes relevant when non-recoverable VAT weighs, when real costs exceed the allowance, or to limit liability.
• There is no automatic conversion: you close the micro, then set up a SASU or an EURL.
• The SASU versus EURL choice depends on the target pay and dividend policy.
• A switch at the start of the calendar year simplifies the accounting of the transition year.

This article informs on the framework applicable in spring 2026; a decision suited to your situation requires reviewing your figures, your contracts and the rules in force. We price this trade-off file by file.