Becoming Self-Employed as a Part-Time Job - Advantages, Disadvantages, Taxes ... Becoming Self-Employed Step 5
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Becoming Self-Employed as a Part-Time Job - Advantages, Disadvantages, Taxes ... Becoming Self-Employed Step 5 - More people become self-employed part-time than full-time. One of the reasons for this is that it has some advantages to be self-employed as a part-time job.
Today's part of my series of articles on self-employment is about the advantages and disadvantages of part-time self-employment and what you have to pay attention to, such as taxes, employer, and more.
I describe my experiences and give practical tips.
Doing Part-Time Self-Employed ?!
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| Becoming Self-Employed as a Part-Time Job - Advantages, Disadvantages, Taxes ... Becoming Self-Employed Step 5 |
According to KfW, around 439,000 people became self-employed in 2020. That is more than half of all founders.
The Corona crisis has probably also “motivated” many people to create another financial pillar.
Today, however, it is not about earning money on the side to improve the household budget, but about the path to self-employment via the “detour” of setting up a part-time job.
In general, a part-time job is defined as a maximum of 15 hours per week (sometimes 18 hours are also spoken of). Above all, the social insurances see it that way and therefore one should pay attention to it. This is of course completely sufficient for building up self-employment on the Internet, and you don't take the hours there too closely. Who would want to check that if you are not currently billing your customers according to hourly rates?
Advantages - Doing Part-Time Self-Employment
Let's just start with the reasons why you should set up a part-time business at all, instead of jumping into the deep end and starting a full-time business.
- Risk
An important advantage of part-time self-employment is of course the lower risk. While a full-time entrepreneur has to live from his activity, a part-time entrepreneur does not have this obligation. That doesn't mean that you shouldn't and don't want to make money. But it takes the pressure off a bit and you can devote yourself to building up your independence in a more relaxed manner.
If self-employment does not work, then you have a secure main job and are not unemployed. - Know-How
If you set up a part-time business, you can learn a lot in practice. You notice which commercial knowledge is necessary and where you still have to acquire know-how. - Test
No self-employment is a guarantee of lifelong happiness and success. Around 1/4 of all business start-ups still go down the drain in the first 3 years. Therefore, part-time self-employment is an ideal opportunity to test your business idea and find out whether you could live off it full-time. - Customers
Since you also earn money as a part-time job, but that is not yet that important, you can concentrate a little more on finding customers and making contacts. A very important prerequisite for long-term success. - Credentials
And through this, you can create a lot of references, which of course make it much easier to find new customers. - Flexible
Part-time self-employment also has the advantage that you are relatively flexible. In the start-up phase, in particular, it is often difficult to work regularly and you have the opportunity to develop this discipline in a part-time job and to make friends with the more flexible working hours of a self-employed. - Financial Cushion
Anyone setting up should not necessarily do this with an empty account. If you earn money with your main and part-time job for a certain amount of time, you shouldn't spend it all right away, but create a financial cushion and set aside for self-employment.
Disadvantages - doing part-time self-employment
But being self-employed as a part-time job can also have a few disadvantages.
- Discipline
When I was still an employee, I tried to set up one or the other private website. But I have to say that at the time I had problems sitting down regularly and exhibiting the necessary discipline. As a full-time self-employed person, the pressure and the “motivation” were significantly higher. - Leisure
Anyone who works 8 hours in their main job and another 2 hours as a part-time job naturally loses a lot of the free time that is needed to relax and “recharge the batteries”. An alternative would be to work only 6 instead of 8 hours in the main job, for example. - Main Job
Especially if you enjoy being self-employed, you may find yourself reluctant to do your main job. But that can cause a lot of trouble. - Safety Net
Some people think that jumping into the deep end of full-time self-employment is the real deal. The safety net of the main job prevents many from really 100% “committing”. - Health
One should always take care of one's health. Anyone who works 10 or more hours a day should be careful to deal with stress well and take care of their health.
Overall, the disadvantages should be considered, but I believe that the advantages outweigh the disadvantages.
Do I Have to Ask My Boss?
An important question is whether you have to ask your boss. The answer is no since every employee has the right to work part-time.
However, there are a few criteria that must be met:
- A part-time job must not negatively affect one's performance in the main job.
- You can't compete with your employer.
- Illness or vacation should not be used to get started on a part-time basis.
- Main and part-time jobs must be separated.
If one or more of these criteria are not met, the employer may prohibit secondary employment.
Civil servants must generally obtain approval for part-time self-employment.
In principle, if the above criteria are met, you do not have to inform your employer about a secondary job. But I'm there for transparency and if you have a good relationship with the boss, you should be open about being self-employed as a part-time job.
If the boss takes a stand, then you should think twice about whether you can still enforce your right to a part-time job. After all, you want to build something on the side and not risk your main job.
The situation looks a little different if you are still in training yourself.
Part-Time Self-Employed and the Trade
We can deal with this point in a nutshell. The same rules apply to full-time self-employment. So if you regularly work part-time, you have to register a trade.
Of course, you can register as a small business owner if you expect less than 22,000 euros in income per year.
You can find more about the different legal forms in the next part of this series.
Workplace for Part-Time Self-Employed
Of course, the question of where you do your part-time job is also important.
As a self-employed person in the network, who primarily works on the PC, it is relatively unproblematic to work in the home office. If it is not visible from the outside and does not cause any disruptions, then you don't even have to inform your landlord about it. It doesn't make much difference whether you play or work on the computer for 2 hours in the evening.
However, if you carry out activities in your part-time job that is not normally common in an apartment and, for example, cause noise, you should speak to your landlord.
And even those who have customer or supplier traffic should not try to hide it. Otherwise, you may be terminated.
Taxes and Insurance
There will be detailed articles later in this series on the subject of taxes and insurance for the self-employed.
However, it is as follows:
- Value-Added Tax
Sales tax is only mandatory (or can only be shown on invoices or deducted as input tax) if you have more than 22,000 euros in sales in the previous year or more than 50,000 euros in the current year and you no longer benefit from the small business regulation can take. - Business Tax
Trade tax is due from a profit of EUR 24,500 (tax exemption). That shouldn't be so easy to achieve in a part-time job.
Of course, freelancers do not have to register a business or pay a trade tax. - Income Tax
Here you have to tax the profits of part-time self-employment if these are more than 410 euros per year. To do this, an income surplus calculation is carried out and the attachment G or S is submitted to the tax office. - Health Insurance
As long as self-employment is carried out part-time, you do not need your health insurance. And the part-time job does not increase the health insurance contributions that you pay for the main job. - Pension Insurance
The same applies to pension insurance. However, some self-employed activities require pension insurance, such as teachers, midwives, and the like. - Accident Insurance
There is no obligation here, but depending on the part-time job, you should think about taking out separate accident insurance, as the accident insurance taken out through the employers' liability insurance association does not affect the part-time job.
The tax and social insurance advantages of part-time self-employment cannot be overlooked. In addition, you have to inform the social insurance company about taking up a part-time job.
It gets a bit complicated when you reach certain limit values. For example, the weekly working time of 15 hours in a part-time job or a certain amount of part-time income. That is why you should just contact your health insurance company or insurance company and ask what specific limit values apply there. Not that you experience a surprise and, for example, need additional insurance.
Avoid Bogus Self-Employment
An important point in part-time self-employment is the risk of bogus self-employment. This is not allowed and can be recognized by the following criteria:
- You cannot freely choose your working hours yourself.
- You only work for one customer.
- You only work for the employer of your main job.
- You don't have your business premises.
- You don't recruit new customers.
- You don't set your prices and hourly rates yourself.
- etc.
Those who meet many of these criteria can be classified as bogus self-employed and are then treated as an employee again.
As a result, social security contributions have to be paid (and subsequently paid) and this also has tax implications.
Do You Self-Employed Part-Time or Full-Time?
Anyone who has read through the previous parts of this series of articles will have recognized the advantages and disadvantages of a part-time job.
The question of whether you should become self-employed part-time or full-time also depends heavily on the individual circumstances.
Anyone who has a secure job that is fun and makes good money shouldn't just throw it away. And even if you are not sure whether self-employment is something for you or whether your business idea works at all, you should consider part-time self-employment.
But even then, if you are sure that you will be successful in self-employment, it can be an advantage to work part-time for a while. Because it is, of course, no problem at all to switch from part-time to full-time self-employment later.
If you know that self-employed work suits you and you can earn enough money with your own business, then the change is relatively easy.
However, one should bear in mind that the change entails new costs. In addition to additional costs for your own office, etc., you should always calculate about 30% on top, because health insurance, pension insurance, possibly unemployment insurance, and the like have to be borne entirely by yourself. And as a self-employed person, you should build up reserves for unexpected expenses and bad times.
You should also speak to a tax advisor and ensure proper bookkeeping.
Finally, I have an interesting video for you. It is more about classic part-time jobs and less about self-employment starting part-time, but a lot of interesting information is provided.
There is more information in my self-employed part-time job series of articles with tips, information, and examples.
So It Goes on
The next part of this series of articles deals with the legal form of a company. Which ones are there and for whom is which legal form useful?
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