Auto-entrepreneur expenses, why track them when the IFU does not deduct them

The auto-entrepreneur's flat tax (IFU) is calculated on revenue, at 0.5%, with no deduction at all. Many conclude that recording expenses is pointless. The opposite is true: since the tax says nothing about your profitability, only your own tracking will. By the end of this guide, you will know how to tell tax from margin, classify your expenses, calculate your margin rate and keep a ten-minute monthly routine.

Flat tax and real margin: two calculations that never meet

The IFU applies to revenue earned, as explained in the guide on the 0.5% IFU. Equipment, subscriptions, purchases of goods: nothing is deducted. That is the trade-off for a very low rate and a simple return.

Real profitability is measured with another formula, which has nothing to do with tax:

Real margin = revenue collected − business expenses

Two auto-entrepreneurs can pay exactly the same IFU and live in opposite situations:

Same tax, a margin four times smaller. The tax administration will not ask you for this calculation; it is up to you to do it, for yourself.

Typical expenses by activity

The categories below are not a regulatory list: they are the items found in most activities. Choose six to ten categories, then keep them from one month to the next so you can compare.

Service provider

• Equipment: computer, phone, monitor, tools, work furniture.
• Subscriptions: software, hosting, domain name, internet connection, telephony.
• Travel: fuel, transport, accommodation during an assignment at the client's premises.
• Subcontracting: the part of a service entrusted to another freelancer.
• Training and documentation: courses, books, certifications.
• Miscellaneous: supplies, printing, bank charges.

Micro-importer

• Purchases of goods: the price paid to the supplier, converted into dinars at the rate on the day of purchase.
• Travel costs: tickets, accommodation, local transport, excess baggage.
• Entry duties and taxes: according to the regime of decree 25-170; the customs document is authoritative. MyHissab shows an indicative estimate at 5% of the trip's value; the amount actually paid is recorded as an expense.
• Transport and packaging after the goods arrive.
• Selling costs: marketplace commissions, delivery to the customer.

For a micro-importer, the central question is the cost price of an item: converted purchase, plus duties, plus a share of the trip's costs. An item bought for 2,000 DZD that carries 100 DZD of duties and 300 DZD of travel costs comes to 2,400 DZD; sold for 3,000 DZD, it leaves 600 DZD, not 1,000.

Keeping receipts: for you first

The flat-rate regime does not require you to produce your expenses to calculate the IFU. Keeping receipts is still a good habit, for three practical reasons:

1. To prove a purchase: the warranty on equipment, a dispute with a supplier or a marketplace all assume an invoice or a receipt.
2. To reconstruct your accounts: a bank statement alone does not say what a debit corresponds to six months later.
3. To answer calmly in the event of an audit or a simple question from the tax administration: being able to explain where the money came from and where it went is always more comfortable than reconstructing from memory.

The nature of the documents expected and how long to keep them fall under the Directorate General of Taxes: your tax office is the only reliable source on this point. In the meantime, the simplest method is to photograph the receipt the same day, name it with the date and the supplier, and note its reference in the expense line.

Calculating your real margin and margin rate

1. Add up the month's receipts, not the invoices issued: an unpaid invoice is not income. Deduct any credit notes granted.
2. Add up the expenses paid during the month, all categories combined.
3. Subtract: collected − expenses = real margin.
4. Divide the margin by the amount collected and multiply by 100: that is your margin rate.
5. Compare with previous months before drawing a conclusion.

Example: 220,000 DZD collected, 103,000 DZD of expenses. Real margin: 117,000 DZD. Margin rate: 117,000 / 220,000 × 100 = 53.2%.

A single month can mislead. A computer bought in January is used all year, and a micro-importer pays for goods one month to sell them the next. Always look at the cumulative margin since 1 January as well as the current month.

When the margin is low, the status itself may be in question

Take a micro-importer who collects 8,000,000 DZD over the year, below the 10,000,000 DZD cap:

The tax is not the problem: 40,000 DZD on a margin of 1,200,000 DZD. The real question lies elsewhere. With a 15% margin, the 10,000,000 DZD cap limits annual earnings to around 1,500,000 DZD, whatever the effort put in, and each trip ties up large sums for a modest result. A service activity with an 85% margin has no such constraint.

If your costs are very high compared with your revenue, the auto-entrepreneur status may not be the most advantageous, even if the IFU remains low. The guide auto-entrepreneur or trade register details the criteria for choosing; tracking your margin is precisely what lets you decide with figures rather than an impression.

A typical month in a table

The month of March for Amine Kaci, a developer in Algiers:

Three ways to read this table:

• The month's IFU (1,100 DZD) does not move, whether expenses are 103,000 or 3,000 DZD.
• Subcontracting accounts for almost half of the expenses: it is the item to watch if the margin falls.
• The 70,000 DZD cash payment carries a stamp duty, calculated separately on the invoice; it does not appear among the business expenses.

Monthly routine

1. The same day: photograph the receipt and enter the expense with its label, amount, category, payment method and reference.
2. Every week: reconcile the payments received against the invoices issued, noting the date and the payment method.
3. At month end: total the amount collected and the expenses, calculate the margin and the rate, compare with the previous month.
4. At month end: check that every line on the bank statement has a counterpart, either a receipt or an expense.
5. Every quarter: look at the cumulative margin since January and your position relative to the revenue cap.

Ten minutes a week is enough when entries are made as you go; several hours when everything is left until December.

Common mistakes

1. Expecting an IFU reduction. It will not come: the IFU is calculated on revenue, never on profit.
2. Mixing personal and business expenses. An account or a card reserved for the activity makes the sorting automatic.
3. Calculating the margin on invoiced amounts. A pending invoice inflates one month's margin and hollows out the next. The basis: what is collected.
4. Forgetting entry duties and travel costs in the cost of an imported item: the purchase price alone gives an illusory margin.
5. Entering expenses in bulk at year end. Receipts get lost and amounts are forgotten.
6. Entering no expenses at all. The dashboard then shows revenue, not a margin: you will know nothing about your profitability.

What MyHissab does

In the Expenses menu, each line has a label, a date, an amount ("Amount excl. tax" field, VAT at 0), a free-text category, a payment method (cash, cheque, bank transfer, card, online, other) and a reference. These expenses do not reduce the estimated IFU, in line with the regime, but feed the real margin on the dashboard: expenses for the year, margin equal to the amount collected minus expenses. As long as no expense has been entered, the indicator says so explicitly, with a link to the entry form, rather than showing a misleading figure. Expenses can also be imported from a CSV file. The OCR import (analysis in the browser) is used to recreate your own invoices from a scan, not to enter an expense.

Frequently asked questions

Do my expenses reduce my IFU? No. The auto-entrepreneur's IFU equals 0.5% of revenue earned, with no deduction. Your expenses serve only to measure your real profitability and to decide whether the status remains suitable.

Should I keep the receipts and invoices for my purchases? For yourself, yes: warranty, supplier dispute, reconstructing your accounts and answering calmly if the administration has a question. The list of documents expected and how long to keep them are set by the Directorate General of Taxes: ask your tax office.

What margin rate is "good"? There is no standard. A service activity with no purchases often exceeds 70%; reselling goods sits much lower. What matters is your own trend from one month to the next and, if the margin is low, the question of which status best suits your activity.