The French government has established various innovative solutions to help (ex)employees make a smooth transition toward entrepreneurship. One of the most well-known solutions is ‘portage salarial’ (umbrella company).
What is Portage Salarial?
It is a creative alternative to self-employment. Working for an umbrella company technically makes the ‘employee-entrepreneur ‘ its employee, though he still works as an independent contractor looking for clients requiring his own specific skill set, whilst being on a payroll.
Umbrella companies act as a channel between contractors and clients. The clients pay the umbrella company for the employee-entrepreneur’s work and the umbrella company then gives him his salary after having made deductions for taxes and management fees (5% to 10% of the monthly income).
This allows the employee-entrepreneur to work with complete autonomy, but provides protection, as he is under a recognized umbrella.
What Are The Duties of Umbrella Companies?
- They manage the administrative aspects of the job such as timesheets, taxes and other fees
- They secure payment for the employee-entrepreneur
- They handle taxes
By Faten Amamou, Chartered Accountant
Member of the French Chartered Institut and founder ESCEC International. Faten has 15 years’ experience establishing and registering businesses in accounting, taxation and social matters, Faten provides entrepreneurs with professional advice and support for setting up a company.