Social security: do I need a Tax Code or a Rule?

Hello, I discovered Manager a couple of weeks ago and migrated from GnuCash as quickly as I could. Thank you for this great software and economic model. I have a question regarding the settings for social security.

As a freelance entrepreneur in France, I am expected to pay a percentage of my income (22%) every month to social security. The price I charge my clients is deemed to include this percentage. So I need a system that puts aside 22% of every sale I make (in a social security payable a/c) so that by the end of the month I know exactly how much I owe to the social security authorities… I figured out that one way of doing this was using a tax code.

I have read a number of threads on tax inclusive pricing by now. I have to admit some are quite complex for me. Nevertheless, I made my calculations and used 28.205128% (tax rate/1 - tax rate) as my tax code so that I would get the system to calculate exactly 22% for every sale… However, there is still a discrepancy (i.e. sends €21.96 to social security payable for a sale of €100.)

So… what am I doing wrong? How do I get Manager to put exactly 22% of all my sales aside, every time? Should I use a “rule” instead of looking in the direction of “tax codes”?

Is it income tax or sales tax? If it’s income tax then you should construct your Chart of Accounts to better reflect your income tax position and possibly create some new subtotals which you can use to create a Journal Entry every month.

At year ends, you should hire a tac accountant to do your final provisioning, deductions and write-offs for you.

If it’s sales tax, then you create a tax code for 22% and apply it to every sale.

But in no case you should do this using a bank rule.

This is very unlikely. You have not explained your legal form of organization, other than saying you are a freelance entrepreneur. I do not know the French tax code, but if you are a sole proprietor/trader, your income tax may well be a personal obligation, not a business one. In that case, there would be no entry at all concerning income tax in your business accounting records. Instead, your net business income will be an input to your calculation of personal income taxes.

If you have some other form of legal organization, you may need to make provision for income tax. @Ealfardan has addressed that. Regardless, income taxes have no place on sales or purchase forms of any type. (Think about those you receive from others. They never mention income tax.)

Tax codes in Manager apply only to transactional taxes due from/to buyers and sellers: sales taxes, value added taxes, etc. Even tax withheld at the source and remitted by customers, meant as advance payment of income tax, is calculated based on transactions, as an approximation of what you may owe. Manager has no facility for calculating income tax due in any jurisdiction, as such calculations must take into account local regulations covering income and deductibility of expenses.


Thank you @Ealfardan and @Tut. And sorry for the confusion… As you may have noticed, this is all very new to me.

So the 22% is actually not a tax, it is a social security contribution that my business has to pay every month on the amount of sales revenue my business makes during this month (I am a sole proprietor). I have edited my question for clarity and future reference.

So I understand from your answers (and further research with keywords social security) that I would need to manually take out the equivalent of 22% of my sales for the month from my bank account and pay a social security account every month. Or would there be a way to automate this?

You need to create two accounts
An expense account : Cotisations & Contributions Sociales
A liability account, it could be a supplier: URSAFF

At the end of each month, you need to you need to calculate 22% of your month’s sales and create a journal which would debit the Cotisations & Contributions Sociales and credit the URSAFF account

When you pay the URSAFF, you would make a payment from the bank account and post it to the URSAFF account

If you wanted to keep track of the amounts due during the month, you could add a line to each invoice and post 22% to the Cotisations & Contributions Sociales but that is not really the correct way to do it, as your customer has nothing to do with your contributions.


  1. you could post a purchase invoice after each sale for 22% of the sale amount but this seems a bit over the top
  2. you could post a journal entry after each sale - debit Cotisation & Contributions Sociales, credit URSAFF
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I have a few other thoughts, @norbert:

  • As a sole proprietor, your social security contribution may be treated under French law the same way as I described for typical sole proprietor income taxes. In other words, this may not be a tax on the business, but a tax on you as an individual. This is the way it is in some countries, with the contribution replacing both employer and employee portions of the overall levy. Check with an accountant about this. If so, it does not belong in your business accounts.
  • You said you must pay every month. Even if your accountant tells you this is a business rather than personal expense, there may be no reason to make journal entries crediting a liability account (although this is certainly sound accounting). You could also just create a profit and loss statement for the month, calculate 22% of the net profit, and make a payment to the authorities. This will debit the expense account directly.
  • You asked about automating this process. There is no way to do that. The closest you could get would be to set the social security authority up as a supplier. Then create a recurring purchase invoice. But you would have to (1) calculate the contribution manually and edit the purchase invoice, then (2) make the payment to settle the purchase invoice. So why not just make the payment as in the paragraph above? The only advantages to this method would be the monthly reminder and the ability to create a supplier statement.
  • If local law allows, you might consider setting yourself up as an employee. Then, you could create payslips including your draws as earnings and the social security contribution as a contribution. Again, talk with an accountant. In some countries, it is not legal to account for a proprietor as an employee; in others, it is.
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I thought VAT in France was 20% not 22% which is calculated on the value of each taxable supply.
Social tax appear also to be based on earnings and income not business net profit.

Professional tax (which a sole trader must pay), income tax and I think local taxes however is calculated on the net income (ie reduced for expenses) and paid each year with an estimate paid each month.

These two tax types are handled differently in Manager due to the different quantity from which they are calculated.

He is not talking about a Sales tax but an income tax for sole traders

Well, I say Income Tax but is actually a Social Security charge

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That is the most important question, what tax or group of taxes is he actually talking about? In France I thought

  • Social taxes: there are 3 depending on income source with a total of 7.1% to 13.2% calculated on 95% to 100% of income depending on the income source

  • VAT 20%

  • Personal income tax was 0% to 41%

  • Professional tax: local tax payable by self employed people, rate varies with exact location

  • corporate tax 33.3%

The important thing is, what exactly is this tax calculated from:

  • Estimated net taxable income for the year
  • Actual net taxable income for the month
  • Actual sales subject to this particular group of taxes for the month (ie VAT)

@Joe91, @Tut & @Patch, thank you for being such a great community (and good to see other fellow french here)!

I found a good English explainer of my business situation here:

I will settle for a mix of the proposed approaches. I created a custom report for my “Sales per month” (the social security charges are calculated on revenue only). From there I manually calculate 22% and post the amount (from bank a/c) to a “Social security” expense a/c.

Still… I am wondering whether it makes sense somehow (would there be other scenarios where it would) to have a system that puts X% of revenue/earnings each month aside…

There are two important skills in running a business

  1. Price your goods and/or services so that you make a profit
  2. Make sure that your cash flow is positive so that you can meet ongoing expenses

Note that these tied, but not the same - a business can be profitable but run out of cash and have to fold

In all cases planning ahead is necessary

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