Self-Employed as a Part-Time Job - 8 Tips That You Have to Keep in Mind

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Self-Employed as a Part-Time Job - 8 Tips That You Have to Keep in Mind - Part-time self-employment is booming. Still. A part-time self-employed person is someone who builds up their independence in addition to their main job as an employee.

For years, more than half of all start-ups in Germany have been setting up their own business on the side. This is what the KfW Start-up Monitor 2015 says. Expressed in figures, that is 522,000 part-time entrepreneurs in 2014 compared to 393,000 full-time entrepreneurs.

We also recently started a blog parade on the subject. Are you self-employed part-time, was it in the past or will it be in the future? Whatever your story, share it with all of us by October 18, 2015, by linking your post in our blog parade article.

In today's post, I'll show you why founders start their own business part-time and what needs to be considered when setting up such a company.

Self-employed in a part-time job - new series of articles with tips, information, and examples.

Self-Employed as a Part-Time Job - 8 Tips That You Have to Keep in Mind

Why Do Founders Start Their Businesses Part-Time?

In 2013, the Institute for Medium-Sized Business at the University of Trier, on behalf of the Federal Ministry of Economics and Technology, questioned the motives and success factors for part-time start-ups and published the results in a study.

Part-time self-employment is defined as follows:

Part-time self-employment exists if

In addition to the first job (independent employment / civil servant or self-employed), a second, self-employed job is carried out, which is performed part-time,
the income from part-time self-employment contributes less than half of the total income of the respective person,
there is an intention to earn income from the second, self-employed activity.

The usable responses to the online and telephone surveys totaled 1,199 participants. The study also included people who were self-employed as an additional source of income. So people who have no other income such as B. housewives, pensioners, students, or unemployment benefit II recipients.

And that's why founders start a sideline:

To create a basis for full-time self-employment. (53.9%)
To be able to try out business ideas. (55%)
To be protected by social security. (58.1%)
To reduce the financial risk. (64.8%)
To have an alternative to earning a living. (68.1%)
To be financially secure. (68.6%)
To use skills. (70.5%)

The stated goals and motivations reveal some of the advantages of setting up a sideline. On the other hand, there are double or multiple workloads, therefore less free time and high demands on one's discipline. If you want to become self-employed as a part-time job, you have to be flexible, have organizational talent, and be able to manage your time correctly.

Why did you start your own business?

Why did you start your own business?

I wanted to do what I enjoy. (29%, 61 votes)
Because of self-determination. (23%, 49 votes)
Because of the temporal or spatial independence. (16%, 34 votes)
Because of the money. (14%, 30 votes)
I am not self-employed. (10%, 21 votes)
I didn't have a choice as I lost my job. (5%, 11 votes)
Another reason. (3%, 6 votes)

Number of participants: 212 (1 vote)

8 Things to Consider as a Part-Time Entrepreneur

Finally, try out your business idea without jumping headlong into unknown waters. Part-time employment is now a valued alternative for many.

If you want to become self-employed as a part-time job, you have to pay attention to a few things. I have summarized the most important things for you below.

1. Registration of Part-Time Self-Employment

Anyone who is regularly self-employed must register this with the trade office per Section 14 GewO. Regardless of whether full-time or part-time. The registration takes place at the trade office or the trade registration office of your responsible municipality or city administration. You have to specify the secondary activity that you will be doing and pay a registration fee of 10 to 40 euros. For this purpose, the trade office forwards your registration to the tax office and professional association.

Be sure to check the small business regulation (§19 VAT Act) before you register your secondary business. Those who are expected to generate gross sales of no more than EUR 17,500 in the year they are founded are entitled to the special regulation for small businesses. This limit always relates to a whole year. Means: If you start your business during the year, you have to extrapolate the expected turnover to 12 months.

Freelancers (lawyer, writer, translator, etc.) do not have to register with the trade office. Registration with the tax office is sufficient.

2. Inform the Employer

According to the Basic Law, every German has the right to freely choose a career. In principle, you are therefore free to take on other activities in addition to your main job. Actually, as a part-time self-employed person, you do not need permission from your employer. However, the emphasis here is on 'actually'. Clauses in the contract that prohibit secondary employment are not permitted.

The only important thing is that

the secondary activity does not adversely affect your performance in your main job,
you are not competing with your employer with your secondary employment,
you do not damage the reputation of your employer in any way,
your regular weekly working hours do not exceed the "normal working hours" (main job) by more than 20%,
Illness or vacation are not used to get started with a part-time job and
you separate main and part-time jobs.

If you meet one or more criteria, your employer may prohibit you from doing secondary work. Civil servants, judges, soldiers, and similar professional groups must generally obtain approval for part-time self-employment.

If you do not meet the above criteria, you do not have to inform your employer about your secondary employment. However, it can be useful to voluntarily inform the boss. In this case, transparency creates acceptance and trust.

The situation is somewhat different if you are still in training yourself. On betriebsratspraxis24.de there is detailed advice about.

3. Taxes and Insurance

Even with part-time self-employment, you have to deal with the topics of taxes and insurance.

Sales tax: This is always due (or can only be shown on invoices or deducted as input tax) if you generated more than 17,500 euros in sales in the previous year or more than 50,000 euros in the current year. In this case, you would no longer be entitled to the small business regulation.

Trade tax: A trade tax must be paid from a profit of 24,500 euros. However, you have to achieve that in a part-time job. Since freelancers do not have to register with the trade office, there is no trade tax to be paid.

Income tax: If you earn more than 410 euros a year with your secondary activity, you have to pay tax on this. To do this, simply carry out an income-surplus-calculation (EÜR) with the attachment GSE (income from business operations) and submit it to the tax office.

Health insurance: One of the greatest advantages of starting a part-time business is that you can keep your statutory health insurance. This means that as a part-time self-employed person you do not need your additional health insurance, provided that the second activity does not outweigh the main activity economically and you spend a maximum of 18 hours per week on your secondary activity. Otherwise, private or voluntary insurance is required. A consultation with your health insurance company is recommended to inquire about these limits individually.

Students are allowed to work full time during their semester break, but during the lecture period, there is a limit of 20 hours per week to keep their student health insurance.

Pension insurance: The same generally applies to pension insurance. But be careful: Some self-employed activities are subject to pension insurance, such as teachers, midwives, educators, craftsmen, or the like.

Accident insurance: There is no obligation to take out accident insurance. However, if you have a part-time job that makes this necessary in principle, you should consider taking out separate accident insurance. Because the accident insurance taken out through the employers' liability insurance association will not take effect in the event of an accident in the part-time job.

The tax and social security advantages of part-time self-employment cannot be overlooked. In particular, the protection provided by social insurance (health, pension, long-term care, unemployment insurance) in your main occupation is an immense advantage over your full-time self-employment. For taxation purposes, it is also irrelevant whether you are self-employed as a part-time or full-time job. The same rules apply here.

4. Choose the Right Legal Form

As a part-time founder, you can choose any legal form for your company that you would also choose as a full-time founder. As a rule, you start as a sole trader or in the form of a civil law company or GbR (at least 2 people). In both cases, you can start immediately. This means that no share capital, entry in the commercial register, or notary visits are necessary. However, you are fully liable for your private assets. You can find a comprehensive overview of the various legal forms, including their advantages and disadvantages, in Part 5 of Peer's series of articles 'Step by step into self-employment on the Internet'.

5. That's How Many Hours You Can Work

The trade and tax office doesn't care how much time you spend on your sideline. It looks different with health insurance. As already mentioned, there is a limit of 18 hours per week that you can spend on your part-time job. Beyond these 18 hours, additional health insurance must be taken out for the secondary business.

For the Federal Employment Agency, you are self-employed up to a limit of 15 hours per week. Job seekers can also set up independent secondary employment up to this limit without losing their entitlement to ALG 1 or ALG 2.

6. That's How Much You Can Earn

The good news: if you set up a business alongside your main job, you don't have to pay attention to any additional earnings limits. The same is true for 450 Euro jobbers. However, it is completely different for recipients of ALG 1 or ALG 2 or students. While ALG 1 - recipients have to observe an additional income limit of 165 euros per month, for ALG 2 recipients it is 100 euros per month and for students who receive BAföG, 400 euros per month.

7. Bogus Self-Employment

Especially at the beginning of self-employed part-time work, there is a risk of not being a “real” self-employed person from a legal point of view. Especially if you initially only work for one client. Take a look at the following criteria. If three or more apply to you, you will be considered a bogus self-employed:

You do not employ employees who are subject to social insurance and earn more than 400 euros a month.
Most of the time you only work for one customer (reference value: 84% of sales).
You cannot decide freely about your working hours yourself.
You cannot freely choose your place of work.
You're not soliciting new customers.
You don't set your prices and hourly rates yourself.
You are doing a job for your client that you previously did as an employee.

If you meet at least three of these criteria, you will be classified as a bogus self-employed person and treated as an employee. As a result, social security contributions have to be paid and, above all, have to be paid later. It also has tax implications.

8. A Grant from the State

There are also funding programs and grants for part-time founders. Since it's easy to lose track in the German funding jungle, I have created an overview of important funding programs and financing options for founders. You must apply for this in good time to meet any deadlines and not to become stressed and hectic. In addition to the sources presented in the article, you should take advantage of professional advice, because only there you can explicitly address your requirements.

Conclusion: Part-Time vs Full-Time Self-Employed

Less risk, better financial security, more time. If you can endure the double burden of full and part-time jobs and get the green light from your employer, you have a good chance of starting a successful business as a part-time founder.

To be considered part-time self-employed, the ratio between main and secondary employment is crucial. The limits to be observed can often be expressed in hours or euros. Elsewhere you can make credible to authorities or health insurers that you are only self-employed part-time.

The decision for or against part-time self-employment depends entirely on your goals and your situation. You have to know what you want to achieve and what you are ready to do for it. As a part-time entrepreneur, you always work when family and friends are relaxing after work or devoting themselves to their hobbies. Full-time job, independent part-time job, partner, children: getting all this under one roof is not always easy. One of our interview partners also had to experience this. On the other hand, you are financially secure through your main job and can therefore work on your own business, test ideas, and grow step by step without great risk.

Your Questions About Part-Time Self-Employment

Do you have questions about starting a part-time business that I haven't answered in this article or that are simply burning your nails? Leave a comment and we will include your questions in further posts or answer them right here.

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