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You can lose everything with the auto-entrepreneur status

The auto-entrepreneur status is one of the easiest ways of getting started and making your work legal in Morocco. It’s also one of the cheapest options (tax wise).

But isn’t this too good to be true? Hmm, indeed!

The auto-entrepreneur status can make you lose all your belongings too!

How? Let’s see.

Auto-entrepreneur status hidden rule

There is a hidden rule in the auto-entrepreneur status that says: There is no separation between you and your work.

Hmmm… What does this mean?

Well, let’s explain this with an example.

Let’s imagine you signed a contract with a company to provide a service, like the maintenance of some machines for example.

A few months after finishing the job, you got a letter from the company saying that you did a bad job and the machines are now damaged due to your work. The company is suing you and asking for 1,000,000 MAD in damages.

I hope this will never happen to you, but for the sake of this example, let’s say it actually happened. And the court found out it’s actually your fault.

If you are an auto-entrepreneur, you’ll need to pay the whole amount. If you don’t have enough money, they can take over your personal belongings: house, car, phone, etc.

If you signed the contract as a company, there is a protection in place by default. If the company can not pay the whole amount, then the company will go bankrupt. They will not take over your personal belongings given it’s separated by law.

Separation of assets

That’s what we call separation of assets. In fact, when you create a company in Morocco, you’ll create an SARL. Société A Responsabilité Limitée. The Responsabilité Limitée part literally means there is a separation between you and your company.

The auto-entrepreneur status is good and has fewer taxes, but it’s worth keeping in mind that it comes with risks too.

If you are after big contracts and big projects, it’s worth creating a company instead of using the auto-entrepreneur status. This way, you’re protected by law.

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