Did you know that you can bill clients for certain expenses? This is called deductible expenses (frais de débours). They do not allow you to unnecessarily inflate your turnover by purchasing the equipment needed to properly perform your services. This way, you don't pay premiums for these expenses. This is important information for Micro-Entreprise because this regime does not allow you to deduct professional expenses. In what case is this possible? What are the rules about this? Let's find out...
Payments and reimbursement of expenses: what is it?
As part of your business, you may be required to make an advance payment to purchase equipment or raw materials on behalf of your client.
For example, different cases can be cited:
- A client has just entrusted his car to a self-employed mechanic. To carry out repairs, he will have to buy spare parts himself.
- A plumber or tiler performs repairs on his clients' premises. For each service he must obtain the necessary materials.
As you can see here, these professionals incur costs to refine their services or sell them. Here we are talking about frais de débours.
The good news is that deducting them is entirely possible, even if you are a microentrepreneur!
Frais de débours should not be confused with purchase costs, which are related to the expenses you incur to develop your micro-enterprise.
Such is the case with an antiques dealer who buys and restores items and then resells them at a higher price. Expenses incurred here are not deductible expenses.
Deductible expenses: a solution adapted for auto entrepreneurs
Deductible expenses are a significant advantage for microentrepreneurs.
Perhaps you were initially tempted to take the expenses in your name and then re-bille them to the client? Overbilling may seem easier, but it may not be the best choice! Remember that as a self-employed business you pay social security contributions at a flat rate applied to your turnover. By integrating these costs into your overall selling price, you risk artificially inflating your turnover. Then your contributions will be higher and the cap will potentially be reached faster.
By issuing an invoice for deductible expenses, you avoid unpleasant surprises:
- your payments will not be counted towards your turnover and therefore will not be included in the calculation of your contributions,
- As a result, you act only as an intermediary between the store and the buyer and therefore are not responsible for the purchased equipment. In this way, the customer can benefit from the supplier's after-sales service.
Mileage expenses are not deductible expenses, even if they are incurred as part of your individual business. This is because you cannot issue fuel invoices on behalf of your customer. You will have no choice but to include these costs in the final price.
Do you prefer to travel by plane or train? Does this trip require a hotel night? If the invoices are issued on behalf of your client, then you can apply the principle of deductible expenses.
Issuing an invoice for expenses: procedure
If you want to return the money given to you, you will have to comply with certain formalities:
First, you and your client will need to sign a written agreement outlining the nature of the purchase and the expected maximum budget. This will serve as evidence if your client then refuses to reimburse you.
You must issue an invoice for the purchase in your client's name, providing their full contact details (SIRET, intra-community VAT, head office address, etc.). Do not purchase in your own name, otherwise the refund cannot be issued as a deductible expense.
Deductible expenses are calculated to the nearest penny. You cannot request a refund for more than the advance payment amount.
Keep all proof of purchase (invoices, receipts, etc.). You will give a copy to your client so that they can reimburse you. These documents will also need to be presented in case of inspection.
Let's take a self-employed mechanic as an example and call him Victor.
This morning Victor got a new client. He would like to flush his car's engine, but he doesn't have any oil. No problem, Victor will take care of it! They both then sign a contract specifying the nature of the purchase (a can of oil) and the budget allocated.
Victor orders what he needs and asks that it be billed on behalf of the customer. He pays the money (40 euros) by withdrawing the required amount from his bank account intended for his own business.
After work, he issues an invoice to the client for 140 euros. It specifically mentions the costs of washing (100 €) and the costs to be deducted (40 €). He also encloses proof of payment for the oil container.
Thus, the client will have to pay Victor 140 euros, but he will only indicate 100 euros when he declares his turnover.
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