Employees in a company report to their boss. They are bound by instructions , work on site and mostly for a monthly wage without reference to performance. The employer pays social security contributions for every employee who in turn receives a pension after his or her working life . Many things are automatically regulated for employees, for example the contribution to health insurance.
Freelancers are not regularly paid by just one employer. Self-employed work for various clients on a fee basis . They look for their customers themselves, keep renegotiating their salaries, take care of their bookkeeping and duties, and meet deadlines. People who become freelancers are their own boss – with all the advantages and disadvantages.
In many areas there are self-employed people who have built up expertise . The professions for which the freelancer is not continuously present in the company are best suited for this. After all, one advantage of independent work is that you can work anywhere . The following fields of activity are therefore particularly suitable for becoming a freelancer:
Jobs for freelancers:
Anyone who has already gained experience in one of these areas or is confident of having expertise has a good chance of becoming a successful freelancer. Companies are increasingly registering the benefits that freelance workers bring to them. However, the choice of career is far from being enough. Anyone who wants to become a freelancer in the long term also needs a lot of perseverance .
Everyone can become a freelancer. Self-employment is either the main occupation or takes place on the side. Those who receive unemployment benefit have a limit of 15 hours per week with ALG I, with ALG II there is none. In both cases, the income from self-employment has an impact on the amount of unemployment benefit. (Source: Employment Agency )
In the case of employees, it is usually stated in the employment contract whether the employee informs the boss when taking up a secondary job . A non- compete clause is also regulated here, if there is one. This means that the employee is prohibited from working for the competition of his main employer.
Freelancers are all people who work independently and without a (permanent) employer. Freelancers are a special group of self-employed workers that is defined by law. The Income Tax Act (EStG) lists in § 18 for freelancers :
“Independent scientific, artistic, literary, teaching or educational activity, the independent professional activity of doctors, dentists, veterinarians, lawyers, notaries, patent attorneys, surveyors, engineers, architects, commercial chemists, auditors, tax consultants, advisory economists and business economists, sworn accountants , Tax agents, alternative practitioners, dentists, physiotherapists, journalists, photo reporters, interpreters, translators, pilots and similar professions. “
All freelancers are therefore freelancers, but not every freelancer counts as a freelancer. The advantage of working as a freelancer is that they do not pay any trade tax and there is no obligation to be entered in the commercial register. The tax office decides whether an activity is actually freelance according to this law. Otherwise, the self-employed person is a trader.
All definitions, information and further tips can be found in the lexicon article “ Freier Arbeiter ” – get informed now!
The romantic idea of self-determined work makes many dream of being a freelancer. There are some advantages to not being bound by instructions and being able to do the work yourself.
Employees who dare to become freelancers were often dissatisfied with their job . This is due to the work itself, the colleagues, the corporate philosophy or the time that is missing in private life due to a permanent position. Former employees already have the necessary skills and concentrate on business management. In addition to the job in addition to freelance opportunities, your own cash register improves. Those who start their own business directly often already have an idea that they want to implement.
In addition to the many pluses because of which people become freelancers, there are also long-term disadvantages hidden behind work. Being self-employed included all aspects of working life, from management and to accounting to self-motivation.
Freelancing is a complete company in one person. Every department in which many people work in large companies falls into one’s own hands. On the one hand, it’s about day-to-day business: collecting and processing orders. For this to work smoothly, the office work behind it is necessary: bookkeeping and organization.
Registration at the trade or tax office
Freelancers only report to the tax office and ask for a questionnaire on tax registration. All other freelancers will need a trade license. The exception to this is the small business regulation. This means that in the past year they did not earn more than 22,000 euros (from 2020) and still register with the tax office. The registration brings the tax number, which belongs on the invoice to the customer.
If you want to become a freelancer, it is best to quickly get used to careful handling of your own money. On the income that every self-employed person makes, he pays income tax. There is a basic allowance for income tax, but it changes every year.
The situation is different with sales tax. Freelancers only pay these if they have earned more than 22,000 euros in the previous year (from 2020) and their turnover in the current year does not exceed 50,000 euros. Otherwise they fall under the small business regulation, in which they do not show sales tax on invoices. If the turnover exceeds 50,000 euros, sales tax is due.
Business tax is only due for natural persons and partnerships (which includes most freelancers) if they earn more than 24,500 euros per year.
Pay social security
Health insurance is compulsory in Germany. If the employer pays half of the contribution for employees, freelancers pay it in full. They may stay with their statutory health insurance, but often they only take out private insurance. In a statutory health insurance company, long-term care insurance is automatically included, in a private one it is to be booked in addition. The self-employed can optionally take out pension insurance and disability insurance.
Calculate hourly rates
All freelancers will pay their own salary and all other expenses from the turnover. Too low an hourly rate leads to frustration and money problems. Freelancers who try to outdo their competition with low wages often end up below the minimum wage .
Avoid bogus self-employment
Freelancers are classified like normal employees if they mainly work for one client. The following applies here: Anyone who receives 5/6 or more of their sales from a company and is there even subject to instructions in place and time does not (no longer) work independently. The tax office usually checks individual cases.
Build up reserves
Freelancers save money on their own for a lull in orders, vacation or illness, and in particular for retirement. They also calculate the usual amount of vacation and illness in their hourly rate.
Let the employer know
Self-employed people working as a part-time job often have an obligation, as stipulated in the employment contract, to inform the employer about this. A general ban on secondary employment is not permitted. However, the employer has the right to demand an appropriate performance from the employee that does not restrict the part-time activity. A non-competition clause for the employee is possible. The boss forbids a part-time job with a competitor.
How exactly can I work as a freelancer now? A well thought-out business plan and a strong concept help. It is importantly to think through the following points step by step:
The offer of a freelancer is his capital. Its products or services form its livelihood. The self-employed makes it clear to his potential customers what he offers and why they need exactly that from him.
Customers don’t come to the best offer by the themselves. If you want to become a freelancer, you should think about a strategy for how the and on which channel’s you can be reach your potential clients. This process is never complete and accompanies independent life every day. Many freelancer and job portals are also suitable for this, on which the self-employed advertise themselves with their profiles.
From experience, self-employed people estimate the workload for their offers well. The time consumed changes with more experience and remains customizable. However, it is important to assess whether an order can be created and when it is the turn of the next. The hourly rate depends on this. A few jobs per month bring in enough money in the best case, just like many small jobs. The hourly wage includes all costs that a freelancer has to deal with both privately and professionally. Instead of hourly wages, there is also the concept of daily or weekly rates, flat-rate payments for an entire job or amounts per word for copywriters and journalists.
Freelancers and small business owners register directly with the tax office. For the other freelancers, a visit to the trade office is due. Freelancers are both asked to pay, so they save up reserves to pay income, sales and trade tax.
From home, in a co-working space with other freelancers or anywhere in the world – the choice of location is fixed, at least for a certain period of time. Those who are new to the industry try out where and how they can work best. Digital nomads travel from place to place, others are directed to her office in the hometown according to their wishes, which third sitting with pajamas in the home office .
The work that freelancers actually want to do begins. Orders, deadlines and other orders fill everyday life. Negotiating payment is an important part that comes up again and again. Successful freelancers don’t back down here and insist on what they need to live.
Life as a freelancer is associated with little security. For this reason, it is important to create sufficient nest egg and be prepared for unexpected life situations. From a small laptop crash to a major catastrophe such as a need for care in the family, everything needs to be survived as well as possible.
You can only be successful as a freelancer in the long term if you can observe and discipline yourself. The time management based on their own performance plays a crucial role: one works best in the morning, the other in the evening, Mom comes with a self-imposed 9-to-5 job best for you. It is important here to analyze exactly how you work best yourself over a period of time. Experiments are conceivable here: just try out when and how productivity is highest. Sleeping in and only working when you feel like it are rarely a sensible method.
Discipline, courage and perseverance. And talent in the field of activity. There are also many little digital helpers who support freelancers in their everyday work. A digital office has the advantage that it is in the laptop and automatically comes with you to every location.
Becoming a freelancer involves quite a bit of self-organization. A certain amount of peace and quiet in case something goes wrong or there is a lull in orders doesn’t hurt either. Those who keep track of things, take all the necessary precautions, save on taxes and do their work continuously, have a good chance. Many digital programs also help you not to forget anything and to take the paperless office with you wherever you go. With a well thought-out business plan and the right measures, working as a freelancer is an interesting alternative to full-time or permanent employment.