Liberal professions

Services adapted to the liberal professions

Personalized support

Whether you are a doctor, nurse, lawyer, or any other liberal professional, Houdart A&C has established an organization and accounting services dedicated to the specificities of liberal professions and their mode of practice.

The diversity of our skills enables us to support you beyond bookkeeping and professional tax declarations, in matters of pension provision, retirement, asset management or simply in the day-to-day management of your business.

With a wide range of clients from various liberal professions who have placed their trust in us, we are well acquainted with the specificities of your activity.

Digitized Services

Thank to our agreements with most major banks, we can set up automatic retrieval of your bank transactions in EBICS format.

Additionally, we have an innovative, efficient, and collaborative accounting production tool—a true open API marketplace—allowing seamless integration with various applications commonly used by entrepreneurs, such as digital neo-banks, revenue monitoring tools, data analysis, and payroll software.

Our Value Added for Liberal Professions

Our offer is based on our determination to provide you with added value through the services provided, to anticipate your needs and to respond to your inquiries with a proactive approach.

For liberal professions, we establish each year the provisional schedule of self-employed social contributions, so that you can anticipate the management of your cash-flow.

We assist you in setting up Madelin contracts to ensure that the life insurance policy or retirement plans in place are tailored to your situation. We connect you with a trusted broker to adjust these contracts if they no longer meet your needs and help you determine each year the deductibility limit to which you are entitled, depending on the nature of these contracts: retirement, health, or insurance.

Particularities of the liberal professions

Nature of Liberal Activity

Liberal professions encompass individuals who habitually and independently carry out a typically civil activity aimed at providing primarily intellectual, technical, or healthcare services in the interest of clients or the public.

Les professions libérales regroupent les personnes exerçant à titre habituel, de manière indépendante et sous leur responsabilité, une activité de nature généralement civile ayant pour objet d’assurer, dans l’intérêt du client ou du public, des prestations principalement intellectuelles, techniques ou de soins.

The liberal activity can be exercised in different forms and within a regulated framework.

Due to the liberal nature of their activity, liberal professionals face specific legal, accounting, and tax constraints that depend on whether their activity is regulated or not. As expert accountants and auditors specialized in liberal professions, both in companies and self-employment, Houdart A&C is well-versed in these technical issues.

Legal Status of Liberal Professional Practice

As a liberal profession, when conducted as a sole proprietorship, the business falls under the BNC (Non-Commercial Profits) tax regime. The business can be subject to either the actual regime, also known as the controlled declaration regime, or the simplified micro regime if the thresholds are not exceeded.

In a sole proprietorship, i.e. under the BNC tax regime for a liberal profession, the business and the entrepreneur are one and the same. However, the activity can also be conducted through a company, and the adopted legal form depends on whether the activity is regulated or not.

In this case, the company can be a fiscally transparent entity, such as an SCP (Professional Civil Partnership), subject to an option to pay  corporate tax. In this case, each partner is taxed individually on their share of profits, determined under the BNC regime.

Alternatively, the structure can be a commercial company or a SEL (Professional Corporation). The exercise of certain regulated liberal professions is incompatible with the exercise of a commercial activity. Legal forms such as SAS, which confer business status on the partners, are therefore outlawed.

In order to enable the liberal professions to carry out their professional activities in the form of a capital company, the SEL (liberal practice companies) were introduced by the Law of December 31, 1990:

Selarl: société d’exercice libéral à responsabilité limitée (Professional Corporation with Limited Liability)

Selafa: société d’exercice libéral à forme anonyme (Professional Corporation with Anonymous Form),

Selas: société d’exercice libéral par actions simplifiée (Simplified Joint-Stock Professional Corporation),

Selca: société d’exercice libéral en commandite par actions.

This legal form allows bringing investors into the share capital. Taxation is under the BIC regime (Industrial and Commercial Profits), but may be under the IR (individual income tax) or IS (corporate income tax) regime, depending on the corporate form and shareholder structure.

Within liberal professions that pool operational resources, the Civil Society of Means (SCM) is commonly used. It consolidates within a single structure common expenses and investments subject to amortization, distributing them among the BNC of each associated liberal professional, in proportion to their capital share in the SCM.

The “Services” Directive of 2006 and the Law of March 28, 2011 opened the way to the capital interprofessionalism of SPFPLs, which are a legal tool for grouping multi-professional liberal practices. Thus, regulated liberal professions can form interprofessional groups by contributing or transferring shares of their operating company to a holding company taking the form of a Financial Participation Company of Liberal Professions (SPFPL).

Social Regime of Liberal Professions

Eligibility for the Social Regime for Independently Self-Employed

Since January 1, 2020, social protection for the self-employed, previously managed by the Régime social des indépendants (RSI), has been integrated into the general Social Security system. Prior to the introduction of this new organization, the self-employed professionals had their own regime: the Régime Social des Indépendants (RSI).

Despite this integration, the calculation of social contributions and the rights associated with the regime of independents remain separate from the general regime.

Those eligible for the self-employed social security regime include individual business entrepreneurs, who are BNC if the nature of their activity is liberal, as well as the majority managers of SARLs or SELARLs. A manager of a SARL who does not hold the majority of the majority share capital may be subject to the self-employed’s social security regime if he is part of a collectively majority management.

Liberal professionals practising within regulated professions may also be required to contribute to the pension funds of the self-employed, which depend on the professions, even if they operate within a SELAS. Social organizations of regulated professions, including retirement funds, consider that a manager of a liberal-type company does not solely have a management function but also performs technical functions related to their liberal activity, in the same way as a self-employed person.

Determination of social charges for self-employed  professionals

Professionals fall into the category of non-salaried workers and are therefore required to affiliate with the following entities:

• Urssaf (for family allowances)
• Social Security for Self-Employed (formerly RSI) (for health insurance, now managed by Urssaf)
• The pension fund corresponding to their profession.

Social contributions for liberal professions, like all self-employed people, are calculated based on the company’s profits, including the portion reinvested in the company, in case of taxation under the Income Tax (IR) regime, i.e., in the case of operating as a sole proprietorship or within a fiscally transparent structure.

In the case of a liberal professional operating under a corporate tax regime (IS) and who has opted for the IS, social contributions are calculated based on their net remuneration. This remuneration includes the portion of dividends they have received if they exceed 10% of the value of the affected assets or 10% of the net annual profit, if this profit exceeds the assigned assets.

Taxation of self-employed income

Liberal Profession under BNC: Micro Regime or Controlled Declaration

An entrepreneur engaged in an activity classified as Bénéfices Non Commerciaux (BNC), whose gross revenues do not exceed the micro-enterprise threshold of €72,600, falls under the micro-BNC regime and is not required to maintain accounting records or establish tax return. The revenues, without applying any deductions, are directly reported in the appropriate section of their income declaration. An abatement of 34% of the turnover is applied to the BNC for operating expenses, and the remaining 67% is subject to progressive income tax rates. It should be noted that this abatement is only for tax purposes and does not apply to social contributions. These contributions are determined as a fixed rate of approximately 22% of the turnover. If the BNC’s non-commercial revenues (income and not profits) exceed €72,600 excluding taxes, they must establish accounting records and file an annual tax return (cerfa 2035). If the revenues are below this threshold, the liberal professional has the option, like any individual BNC business, to choose the actual profit regime (controlled declaration system).

The controlled declaration regime is particularly advantageous when:

• The actual professional expenses incurred by the BNC to generate its activity revenues exceed the 34% flat-rate deduction of the micro regime,
• The BNC has incurred a deficit, which can only attributed to other activity incomes by subjecting it to the actual profit regime.

Under the controlled declaration system, the taxpayer is taxed on actual profits. This means that BNC accounting must be carried out by a chartered accountant familiar with this type of activity, such as Houdart A&C.

Liberal Professional in a Company

If the liberal professional has established a company subject to corporate income tax (CIT), the fiscally opaque company will be taxed on its own profits, while the remuneration of the non-salaried self-employed professional, deductible from the company’s profits, will be declared and taxed in the category of wages and salaries on their personal income tax return.

Accounting Specificities of Liberal Professions

BNC’s Cash Receipts and Disbursements Accounting

The accounting obligations of liberal professions depend on the form of operation adopted for their business, especially based on their tax regime described above. A self-employed operator, i.e. one who carries out a non-commercial and essentially intellectual activity, whether as a sole proprietor or within a legally transparent entity, will be subject to the BNC regime.

No distinction is made between the profit of the sole proprietorship or fiscally transparent entity and the professional’s remuneration. They are subject to declarative obligations based on the applicable tax regime, either the micro regime or the controlled declaration.

Given this tax constraint, the accounting for BNC is then maintained using the cash receipts and disbursements method. An expense is deductible from the result only if it was disbursed during the considered accounting period. Similarly, revenues are included in the receipts of the considered period when they have been actually received during that period.

Accrual Accounting for Operators in a Company

When the liberal professional operates a fiscally opaque company, the company is subject to corporate income tax (CIT) on its profits, and the operator is taxed only on the remuneration he receives, which, together with the related social security charges, constitutes a deductible expense in the company’s operating account.

In this scenario, the company’s accounting is conducted using the accrual accounting method. According to this method, revenues and expenses are recorded in the accounting records when they are earned (for revenues) or incurred (for expenses), even if they relate to transactions that have not been settled financially, i.e., even if  they haven’t been received or paid out.

The main deductible expenses in the accounting of a Liberal Profession or a professional practice company

Overhead expenses are deductible only to the extent that they are directly and clearly related to the profession practiced and their amount is effectively justified by accounting documents. The Liberal Profession or the operating company must therefore be able to produce all supporting documents attesting to the nature and amount of these expenses. Otherwise, no deduction for these expenses, even on a flat rate basis, can be claimed.

Furthermore, for expenses to be deductible, they must not be abnormally high, in which case the expense would be considered excessive and deemed to be luxury spending. Deduction is allowed when the expenses are incurred in the interest of the operation, are duly justified, and are in a normal proportion to the operator’s activity and the benefit expected from it.

On the other hand, expenses of a personal, excessive, or luxury nature cannot be accepted as deductions.

Mixed expenses, such as the portion of personal rent and local charges attributed to the operation, may be accepted as deductions.

Additionally, the determination of representation expenses cannot result from the application of flat rates, except for exceptions explicitly provided by the BOFIP, notably mileage allowances and laundering expenses.

The main recurring expenses in the operating result of a liberal profession’s company are :

• Purchases of products/raw materials for resale,
• Interest related to any loans taken out for the acquisition of clientele or the purchase of assets used in the course of the activity,
• Meal expenses incurred at the workplace when it is distant from the home,
• Travel expenses related to the liberal profession’s activity,
• Telecommunications expenses,
• Rents and rental charges,
• Equipment maintenance expenses,
• Professional insurance costs,
• Advertising expenses,
• Professional training expenses,
• Expenses related to professional clothing under certain conditions,
• Social security contributions, except for the non-deductible portion of the CSG-CRDS contributions.

The cost of acquiring a BNC’s clientele is not an expense but an intangible asset. However, the acquisition costs of this clientele (legal fees, registration fees, formalities costs, etc.) can be either deducted as expenses or capitalized as part of the cost of the related intangible asset, at the discretion of the operator.