How does freelance administration work?

Want to change your legal status or start your first freelance activity? Have you thought about freelancing?

This form of employment, which combines the advantages of self-employed status with those of an employee, is attracting more and more freelancers. It must be said that freelance administration is practical, full of advantages and adapted to beginners as well as to seasoned entrepreneurs.

Let’s discover together how freelance administration works and the benefits for your business!

What is freelance administration ?

Launched discreetly in the mid-1980s, freelance administration is a rapidly expanding market with a turnover of 1.3 billion euros, according to the Fédération des Entreprises de Portage Salarial (FEPS). Currently, more than 100,000 freelancers work under this hybrid status, which provides the security of salaried employment and the independence of entrepreneurship.

The definition of “portage salarial”, according to L1251-1 of the French Labour Code, determines this status as a tripartite relationship between the freelancer, the client and the portage company:

The portage salarial designates the organized whole constituted by :
“1° On the one hand, the relationship between a company called “enterprise of wage portage” carrying out a service for the benefit of a client company, which gives rise to the conclusion of a commercial contract of wage portage service;
“2° On the other hand, the employment contract concluded between the enterprise of portage salariale and an employee designated as the “porté salarié”, who is remunerated by this enterprise.

So, in concrete terms, how does this contract work?

How does freelance administration work ?

The portage involves 3 actors in the realization of a mission:

• The freelance (or ported employee), expert in one or more fields, finds his own clients and performs services for them.
• The client, who can be an individual, a company, an administration, a local authority or an association. He will order a service from the freelancer.
• The freelance administration company, which acts as an intermediary between the client and the freelancer. It takes care of drawing up the contracts and of all the administrative part linked to the service. This also includes invoicing and collection.

To better understand this tripartite relationship, the ITG wage portage company has created this diagram:

The obligations of the company of portage

In order for the collaboration to be legal and long-lasting, the freelance administration company must respect several obligations towards the freelancer:

• The freelance administration company must establish an employment contract with the freelancer and take care of the administrative, accounting and social formalities necessary for his activity.
• The company must pay the employee a remuneration corresponding to the services rendered (minus the management fees included in the contract and the compulsory social contributions).

• It must invoice the mission, between the client and the freelancer, as it has been negotiated beforehand.
• It assumes the obligations relating to occupational medicine (information and prevention visits, management of sick leave and work accidents, etc.).

• Ideally, the freelance administration company should accompany the freelancer in the development of his services. The company can also provide assistance during the negotiation and drafting of commercial contracts between the freelance employee and his clients.
• The freelance administration company must be transparent about the freelancer’s activity account. The latter must have access to his remuneration, to the details of the fees deducted and to his training account.
• The company must affiliate the freelancer to a professional liability insurance.

The obligations of the freelance employee

Of course, the freelancer also has obligations towards the freelance administration company:

• The freelancer manages and assumes the prospecting missions. It is up to him to develop his clientele and to negotiate the conditions, as well as the rates of his service.
• He undertakes to carry out his mission according to the terms and conditions defined in the contract.
• The ported employee must be transparent and inform the company if he has difficulty in carrying out his assignment. Similarly, if he encounters temporary difficulties that prevent him from working completely.

• He must have proven expertise in the field of his activity. Since July 1, 2017, a minimum level III professional qualification (Bac +2) is required. If applicable, the freelancer must benefit from an experience of 3 years or more in his sector of activity.
• The freelancer must submit an activity report to the freelance administration company on a monthly basis. This document includes the number of hours worked per service. This allows the company to invoice the client and to pay the freelance employee.

What are the possible activities in freelance administration ?

Freelance administration is open to services, except for personal services. This status is aimed at freelancers specialized in marketing, IT, graphic design, management, training, consulting (whatever the field), secretarial work, etc.

However, the freelancer must never become a “hidden employee” of his client. Moreover, he must work for several clients, never take the place of an employee (suspended or stopped) and carry out a service of less than 36 months.

The advantages of freelance administration for freelancers

Now that you have a better understanding of how freelance administration works, it’s time to know the advantages of this status. And they are numerous…

Financial security guaranteed by a regular salary

Choosing to work as a freelancer means receiving a salary from the first month of your activity. Indeed, as the freelance administration company takes care of the collection from the clients, it can make an advance if the latter have not yet paid the invoices.

In addition, according to the collective agreement for ported employees, the minimum remuneration is set at between 70 and 85% of the social security ceiling.

In a company like ITG, the salary conditions offered to freelancers are :

• A minimum income equivalent to 75% of the monthly Social Security ceiling (€2568 gross in 2021).
• A business contribution allowance of 5% to remunerate the time spent prospecting and preparing the mission.
• A precariousness bonus of 10% (on the gross salary).
• A 10% reserve, calculated on the remuneration of the last mission, to compensate for any loss of income between two missions.

If you want to know the salary you will receive, you can do a simulation on the ITG salary simulator.

Freedom from administrative constraints

When you subscribe to a freelance administration contract, the company charges you a management fee. Depending on the company, this rate is between 3 and 15%. At ITG, it is 10%, for example.

These management fees are aptly named since they free you from all the administrative constraints inherent to your independent activity. No more VAT declarations, account management, invoicing, collection, reminders for unpaid bills, payment of social security contributions… The umbrella company takes care of all that!

All you have to do is concentrate on prospecting and carrying out your assignments.

A reinforced social protection

You are an employee, so you are entitled to a complete social coverage, more advantageous than the one of the self-employed. You benefit from daily allowances in case of sickness, more interesting pension rights and even the right to unemployment (under certain conditions).

You limit the risks in the event of a drop or loss of activity, but also in the event of illness. You’ll be better protected, with a guaranteed income that lasts longer.

Total autonomy, without isolation

Even if you are an employee, you remain freelance and therefore totally autonomous in the management of your activity. You can select the missions, specialize on a sector of activity, manage your schedule and work from where you want.

You are alone at the controls of your business, but not isolated! Indeed, the freelance administration company dedicates an advisor to accompany you in the development of your company.

In addition, the company sometimes organizes workshops, trainings and networking events that allow you to meet and exchange with other entrepreneurs. These are enriching moments that take you out of solitude, while opening up new perspectives.

A reduction in fixed costs and expenses

The management costs of freelance administration can sometimes impress and make you think that it is financially more advantageous to opt for another status. In reality, opting for this form of enterprise allows to eliminate certain fixed costs and expenses such as :

• The Business Property Tax (Cotisation Foncière des Entreprises)
• Civil Liability Insurance
• Expenses related to a possible tax or URSSAF audit

Moreover, all professional expenses can be subject to an exemption from charges, which is not the case with the micro-business, for example.

Unlimited growth

There is no limit to your turnover when you sign a freelance administration contract! You are free to develop your activity as you wish, without worrying about any ceiling.

On the other hand, you must achieve a minimum turnover to receive a salary. The average daily rate, in order to benefit from this status, is between 250 and 300€.

Our tip

You now have all the information you need about freelance administration! If you choose this status, remember to compare the offers of the different companies on the market.

Among the important elements to check, you will find its specialization (does the freelance administration company know your business?), the management fees (be careful, low fees sometimes hide a lack of services), the additional services (dedicated advisor, workshops and training, CE…) or even the seniority (and thus the experience) on the market.