Auto-Entrepreneurship: Why Do I Care as a Business Owner

I asked ChatGPT to suggest an image for this post and he said, someone with a light bulb.

Today, I wanted to discuss big news in the Algerian economic ecosystem, which is the launching of the auto-entrepreneur status that allows individuals to do business in a simplified way. 

Even if I’m not directly concerned by this status, it’s important to be aware of what is happening in the ecosystem, as well as to understand how the market dynamic can be impacted, and of course, to find out how can I benefit from it as a business owner. 

This post will address some aspects of the auto-entrepreneur status based on my understanding, perspective, and own experience, it will not be about how to register on the platform, how to get clients, or any other practical or operational aspects (I’m sure you can find plenty of content about this elsewhere). 

Introducing Auto-Entrepreneurship

Before going any further, let’s start by explaining what is the auto-entrepreneur status. In other words, it is a legal framework for freelancing in Algeria. People are now able to do business without having many constraints. 

  • No need for a trade register
  • No need for a business address/ location 
  • Almost no due taxes 
  • No need for an accountant 
  • Access to Social Security 
  • Personal assets are protected in the event of debt recovery. 

This list is not exhaustive, but it gives you an idea of how easy it is now to legally do business in Algeria. 

What is interesting is that the scope of this status is defined by more than 1300 activities. Those related to IT and different types of consulting but also many types of technicians, healthcare staff, content creators, delivery services, photographers, and a large part of what you can think of are included. 

Maybe it’s important to note that regulated activities are excluded, you can’t be an auto-entrepreneur doctor or lawyer for example. 

There are some limitations: you can’t hire people and your revenue should be lower than 5 MDZD for three consecutive years well otherwise, you’d want to grow more, right? 

Beyond The Buzzword

Now that we know what we’re talking about, I can share that I believe that the name and the concept itself are misleading. 

Algeria didn’t invent either the name or the concept, it has been largely used worldwide for about 15 years. What I’m saying is that I believe that the concept itself is meant and designed to be misleading. Something attractive and trendy that might be serving businesses more than people. 

In the U.S. we talk about freelancing (Which sounds cool ). Yet, legally, a freelancer is called an independent contractor. 

This means that an entity can give you work to do as an individual without being responsible for you. 

Of course, it comes with polished and promoted benefits, but what we should keep in mind is that an independent contractor abandons many employees’ rights that he will have to handle well, independently. 

We also talk about self-employment which is, in my sense, way more accurate to describe what this is about but less attractive. 

I am not saying that it’s wrong to pick an attractive name, rather than the boring names we used to blame administrations of. While the objective is to promote the new status, it’s good to make it attractive. But when I tried to dig deeper, I found the name misleading and it helps to think about it as self-employment when trying to understand the stakes. 

Another thing is that when you talk about entrepreneurship, whether it is auto or not, it is about creating a business, an enterprise. 

It is about having a vision for this entity that is distinct from you and I truly believe that this notion is super important. Therefore, if you are a new business owner or you created your company in the past two years and now that there is this new status that is attractive sounding like you could make more money through it, just try to Re-think about it as self-employment and see if it fits your vision. 

A Disruptive Move

This new framework is disrupting the ecosystem in many ways: 

  • It disrupts the social anchoring in our country. 

Algeria is a deeply social country. The government takes care of you as an individual. How effective is this is arguable, but the fact is that the government pays for your education, your health, your home, your food, and so on, which represents a considerable amount of the state’s budget. The same goes for labor and unemployment benefits. 

The International Labor Organization estimated the public sector to represent nearly 40% of overall jobs in 2019. In the private sector, I used to hear that if an employee confronts an employer, the employee wins: meaning that the law will easily favor employees to protect them from evil business abuse. 

Saying: here you go, be independent, is in a way, disrupting our social anchors, and I’m excited to see how it will evolve in the few upcoming years. 

  • It disrupts the ongoing practices. 

As it is a new framework, we can easily think of it as creating new opportunities for individuals to start doing business, which facilitates new opportunities creation, but I think it’s more about legalizing what already exists. 

To give some context, the World Bank estimated that the informal market represents 30% of Algerian GDP. This was a 2021 number. Since then, e-commerce with cash on delivery has been exponentially growing, so I let you imagine today’s number. 

What I’m trying to say is that the legal framework is new but the model is already established. With this new status, it becomes more interesting to be compliant, especially for those who used to do crazy gymnastics to be able to create an invoice, and it will hopefully drive the professionalization of doing business. 

On the other hand, the move is political, Algeria is making efforts to bring people into the formal economy to improve our GPD and numbers overall which might be related to our ambition to join the BRICS. 

This is also why I think it’s more about regulating work than promoting entrepreneurship. 

  • It disrupts the perception of taxes.

After two years in business, I still struggle with tax calculations. 

Taxes are the enemy or should I say, used to be. With the ultra-friendly rate of 0.5% for auto-entrepreneurs, people just can’t say anything. The perception of taxes is disrupted because it’s almost non-existent in this context, people simply tend to talk about other aspects rather than complaining about tax rates. 

  • It disrupts Admin procedures. 

Known to be heavy and unclear, the process of obtaining an auto-entrepreneur card is fully and exclusively digital, which is, as I understand, a premiere. 

We’re on hold to see how it goes but, so far, it is very promising. 

Auto-Entrepreneurship For Business Owners

While it is interesting and attractive for individuals, established businesses also have an opportunity for cost reduction and a lever on mindsets.

This makes me perceive Auto-entrepreneurs as the audience and the businesses as the real target or beneficiaries of this status. 

It simply serves them. To be more compliant, to cut costs, to higher the professional relationships standards, to be results-driven, and to position efficiency as a requirement when it’s not only about getting a task done. It can be a real booster to the economy. 

The first question I asked about this aspect was: Is there a limit to the amount of expenses engaged with auto-entrepreneurs for a business? At some point, it sounds interesting to switch the whole team to auto-entrepreneurs. 

Well, there is no official limit, but it’s naive to think that businesses will be interested in transforming all of their teams by pushing people into auto-entrepreneurship just to save costs. Many jobs require long-term commitment and experience, not only in doing a specific job but in understanding the company processes and its market. Company culture and team integration are the keys to developing a sustainable business. 

I also want to add that in the U.S., Europe, and probably elsewhere as well, freelancing or auto-entrepreneurship is getting more and more regulated. For example, you can find that an auto-entrepreneur should at least have two contractors otherwise it can be considered as an abuse of labor rights. 

In 2016, the Freelance Isn’t Free Act, was a U.S. law passed to protect freelancers. Step by step, things are handled in a way that makes me think: What if, by regulating freelancing, you end up with labor rights and employment models as we know them? I don’t have an answer. But to get back to our context, these regulations don’t exist yet in Algeria but are expected to appear very soon.

A Team of Auto-Entrepreneurs

As a first-time business owner who never long-term employed anyone this launching led me to reflect on my journey of trying to build a team and the topic of hiring. 

Long story short, my vision of doing business in Algeria shifted to keeping the HelloData team minimized for two main reasons: 

  • How administratively heavy and how expensive it is to hire.
  • People’s mindsets. 

I see the auto-entrepreneur status as an opportunity to let go of some tasks that the core team is doing while being less stressed about the stakes of properly hiring. 

Plus, I believe (and hope) that this model will impact job seekers’ mindset, which is a real challenge in the employment market in Algeria. 

If you think it’s hard to find a job well, it’s harder to find someone to do the job. 

A new results-oriented dynamic is needed to re-establish trust and achieve good performance. 

Go on LinkedIn to see business owners’ testimonials about people not coming to interviews, people deciding not to work the day the contract is signed, people suing their employers for invalid reasons, people stuck with non-performant individuals trying to rotate them between different positions because they can’t fire them, people becoming mood managers, absorbed by futilities instead of being focused on building a business. 

I never employed anyone and the ecosystem, rather than encouraging me, did the exact opposite by scaring me when it comes to hiring. My expectation of using this new framework is to build trust in professionals and be able to create a larger team. 

A non conventional team but an effective one. 

References & More:

Employment VS Freelancing

The World Bank estimated that the informal market represents 30% of Algerian GDP.

The International Labor Organization estimated the public sector to represent nearly 40% of overall jobs in 2019.

Freelance vs Fulltimer, pros and cons of hiring

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