Part-Time Self-Employed - What Pupils and Trainees Have to Consider!
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So can anyone easily build a company for themselves? Even schoolchildren and trainees can become self-employed. Schoolchildren or trainees are usually under 18 years of age and therefore not fully competent. There are also important points to consider in training, such as the vocational training contract or vocational training assistance. The “normal way” of becoming self-employed as a part-time job, as it applies to salaried employees, for example, remains closed to these two groups of people.
This article provides clear instructions on how you can still successfully set up your own business as a student or trainee.
Self-employed in a part-time job - new series of articles with tips, information, and examples.
Do You Even Have to Register a Trade?
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| Part-Time Self-Employed - What Pupils and Trainees Have to Consider! |
Business is understood to mean any self-employed activity that is carried out permanently to earn money. You have to register your trade with the trade office responsible for your place of residence. The costs for this are between 10 and 80 euros, depending on the city.
The trade office then informs all other authorities and institutions such as the tax office, commercial register, regulatory office, professional association, chamber of industry and commerce, or the chamber of crafts. So-called freelancers, who are listed in Section 18 of the Income Tax Act, are excluded from this. This includes scientific, artistic, literary, teaching, or educational activities.
Incidentally, self-employed work is only considered commercial if it is designed for the long term. For example, if you only work once a year during the semester break for around 2 months, you can issue your clients invoices without registering a business. The reason for this is that there is no durability. You do not have to show any sales tax on these invoices, but you do have to state the profit and pay tax.
The Advantage of Freelancers
If you are a freelancer, you neither have to register a business nor pay business tax. All you have to do is apply for a tax number at the tax office before starting your self-employed activity and create a simple income surplus account at the end of the year. In the new media, in particular, the demarcation to commercial professions is not always clear.
Limited Competence
You are often under 18 if you are an apprentice or student. This poses a problem as you have only limited legal capacity. These situations and constellations are regulated in the German Civil Code in Sections 104 - 113 BGB.
If a minor conclude a contract, the effectiveness of the contract depends on the consent of the parent according to § 108 BGB. There is an exception if the business can be financed with one's resources (pocket money paragraph), is legally advantageous, and does not entail any obligations.
It is questionable whether you, as a student or trainee under the age of 18, will be able to build up your own business if you have to involve your parents in every decision. That is why there are exceptions.
How Schoolchildren and Trainees Under the Age of 18 Can Register a Business
If a minor wants to set up and run an independent business, he needs the approval of his parents and confirmation from the Guardianship Court (112 BGB).
The approval must be given to the minor without any formal requirements. The court only approves this authorization if the minor has the skills and knowledge to manage this business.
With permission from the Guardianship Court, the minor is no longer legally competent to exercise his independent activity but has unlimited legal capacity. This means that you can conclude all legal transactions, rental agreements, and employment contracts except borrowing, granting of power of attorney (full powers of attorney), and bills of exchange.
When registering a business, the trade office checks whether the permit is available. Without this permit, no person with limited legal capacity can operate a trade.
You must also bring your child's passport or identity card with you when you register your business. From my point of view, the greatest difficulty is convincing the guardianship court of the skills and knowledge.
Part-Time Self-Employed in Training
Apprentices have a special status, as it is not just about imparting knowledge through the school and the training company. The training company also has an educational mandate. Whenever the training objective is in jeopardy, the training company can prohibit the secondary activity.
The employer is responsible for ensuring that the company's training goals are achieved. For example, if tiredness occurs frequently, poor results are achieved at school, or the report book is not maintained, the outside activity can be prohibited.
Vocational Training Assistance and Part-Time Self-Employment
If you receive support from the employment agency in the form of the BAB during your training, there are various points to consider. The exemption limit for additional earnings is € 255 per month without crediting the BAB. The € 255 is profit, not sales.
You can reduce sales by your business expenses. Anything you earn beyond that will count towards the BAB. Incidentally, the child benefit is not counted towards the BAB.
Why You Should Know the Social Security Regulations
You are freelance part-time whenever you invest less than 18 hours in self-employment and this is not the focus of work and business. On the business registration, “will be carried out as a sideline for the time being” must then be ticked. If you exceed these values, you have the status of a full-time self-employed person and have to take out health insurance yourself. For this reason, the question of whether you are self-employed full-time or part-time is very relevant for health insurance.
As a pupil or student, you are insured free of charge with your parents up to the age of 25. That is the great advantage of family insurance. There are special features with students. If you earn more than € 450 per month as a freelance student as student, you lose this family insurance status. The health insurance company will look at your tax assessment. The consequence is self-insurance in statutory health insurance. You can expect health insurance contributions of around € 300 per month.
Alternatively, you can take out private health insurance. Due to the low credit rating as a student, however, an acceptance is not to be expected. As a student, you should therefore keep a close eye on your earnings or, if necessary, increase your expenses sensibly.
Students have great advantages here. If you should withdraw from family insurance, you can switch to student insurance. For an amount of € 80.42 per month, students can take out health insurance with student insurance. The health insurance will only check whether the “student life” is still the focus of work. If you spend less than 18 hours on your part-time self-employment and earn a maximum profit of 70% of the reference value of the statutory pension insurance amounting to around 2,100 euros (difference east/west), your focus is on your studies.
However, health insurance will always check this individually and base it on the overall picture of your activity. The reference value of the statutory pension insurance reflects the average earnings of all insured persons. So if you are unsure, you can carry out a voluntary health insurance status assessment.
Steer
Choose the Small Business Rule at the Beginning
If it is expected that the annual turnover in the founding year will be more than 22,000 euros, the small business regulation according to § 19 UStG cannot be used.
After the year of establishment, the following rule applies: To continue to use the small business regulation, the previous year's sales must be less than 22,000 euros and in the same year probably less than 50,000 euros. You then do not have to show sales tax in the invoices and pay it monthly.
However, you cannot reclaim any input tax, i.e. the sales tax that you as an entrepreneur pay on purchases. With high initial investments, the regular entrepreneur can also make sense. It is best to discuss this individually with your tax advisor.
Income Surplus Calculation
According to Section 4 (3) of the Income Tax Act (EStG), you can create a simple income surplus calculation. It is an informal listing of all profits minus business expenses and depreciation on assets. There are free templates for this on the Internet.
Alternatively, you can hire a tax advisor to do this. The income surplus calculation does not apply to corporations and sole proprietorships that exceed the order of magnitude of € 60,000 profit and € 600,000 turnover (§ 141 Tax Code).
Business Tax
As a sole proprietor, you have an exemption of € 24,500 profit per business. I will therefore not go into further calculation at this point.
Other Good Reasons for Self-Employment
Often money is tight when you are a schoolboy or a student. Instead of looking for a mostly low-paying part-time job in some area, you might as well invest that time and energy in an activity that you enjoy and that suits you. Ideally, you can even link it to your studies or what you are learning in school!
If you go self-employed parallel to school or studies, you do not only gain valuable experience, you also establish your first professional network and can try out, relatively risk-free, whether self-employment suits you or whether your idea has potential.
What Freelance Means
As a young entrepreneur, you need a lot of energy, self-confidence, a vision, and a lot of perseverance. You will learn how to organize yourself and, if necessary, others efficiently, find clients, fulfill your accounting duties and conduct negotiations.
With all the hustle and bustle and know-how you have to acquire, you mustn't run the risk of neglecting school or university. A real challenge!
Risks
Even part-time self-employment cannot be built up without risk. Many entrepreneurs start with a sole proprietorship, which is not called “house and yard society” for nothing. If the founder's total assets are no longer sufficient to cover liabilities, there is a risk of personal bankruptcy.
When you start your company, you are obliged to draw up annual financial statements, adhere to contracts and serve them.
Conclusion
There are many benefits to becoming self-employed during school or college. You not only benefit from the enormous personal development that comes with your own business, but you also set the course for a successful future.
If your plan works, you can devote yourself completely to your idea after your training and skip the annoying job search. By making money doing something that fulfills you, you will drastically increase your life satisfaction. And even if your plan fails, you have gained valuable experience and increased your job chances many times over.
Part-time self-employment not only requires discipline and ambition to withstand the double workload, but it also gives you the peaceful and satisfying feeling of being your boss.
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