How does a freelancer become a professional

Become a freelancer10 tips for starting as a freelancer

Taxes, insurance, set the hourly rate, find customers. What freelancers need to consider when starting out.

Especially in the IT sector, companies are desperately looking for skilled workers. Industry professionals from Germany, Austria and Switzerland have first-class training. When switching to a freelancer, the employed experts often simply lack the courage to go their own way. But doing business with flexible experts is more lucrative than ever for both sides. With the following tips, freelancers master the start in the project business.

Tip 1: Freelancers are all-rounders

Freelancers are not just professionals in their field. Freelancers are management, sales, marketing, HR and accounting professionals all at the same time. A self-confident, detailed self-presentation is also required in order to convince the first client of yourself. This includes a well-maintained online presence as well as various freelancer platforms that are used as sales channels. A freelancer therefore not only takes care of his core business, but also has to prove his all-rounder qualities in order to be successful.

Tip 2: entrepreneur or freelancer?

Freelancers are also popularly referred to as freelancers, but there are significant differences. The freelance status includes a certain group, so-called catalog professions such as doctors, engineers, midwives, lawyers, architects and others. Freelancers act on their own responsibility. Their activities are mostly in the educational, literary, teaching or scientific field. Because the distinction between the terms is not always clear, the final decision on the status is made by the tax office on the basis of certain criteria. The allocation decides, for example, whether an entrepreneur has to pay trade tax or not. A business registration is not necessary for freelancers, but it is for freelancers and the self-employed.

Tip 3: Freelancers also need a focus

With a freelancer, the correct positioning can determine the level of payment and the order situation. You should therefore sharpen and highlight strengths and quality in order to stand out from the competition. The myth persists that the broadest possible list ensures that you receive a large number of orders. In fact, a clear specialization ensures that the freelancer is perceived as an expert in his field and can protect himself from interchangeability. Indirectly, specialization can mean that existing customers are better retained and new customers approach the specialist on their own. This means that less time has to be spent on cold calling. A clear focus is also a big plus for wage negotiations.

Tip 4: The first order has top priority

The most important thing is the first order. Even before bureaucratic hurdles such as business registration are overcome, the focus should be on acquiring the first order and potential further orders. If the first order was landed, it is now important to clarify the important basics: scope, time window, payment and the right to change. It is important that the job suits the freelancer. If possible, it should be avoided to accept a job only out of financial need.

Tip 5: Calculate the hourly rate realistically

When they get their first job, many freelancers ask themselves whether they should set their hourly rate low in order to get a job at all. Especially with a few references, it initially seems obvious to get the first showcase orders thanks to an accommodating asking price. Because some recruiters or companies suspect a connection between the price called and the expertise, freelancers should find out about hourly rates customary in the industry.

Especially at the beginning of your work as a freelancer, it is important to make appropriate demands. That means offering a realistic hourly rate or specific flat-rate packages. With growing know-how and increasing references, the financial demands can be increased. But be careful: once a flat rate or a calculated hourly budget has been negotiated, it can seldom be revised upwards.

Tip 6: Starting out as a small business owner can be worthwhile

Small businesses have the advantage of not having to show sales tax (= value added tax) on their invoices. In return, they are not reimbursed for input tax, i.e. the sales tax that companies pay for purchases for their own use. Freelancers should note: Especially in the first year of founding, input tax refunds are high thanks to new equipment and purchases. But: If the small business regulation is waived at the beginning, this decision applies for five calendar years. For this reason, freelancers should find out exactly which tax status is most favorable for them at the start of their work.

Tip 7: At the tax office - be careful when estimating profits

When starting work, freelancers must register with the tax office within one month. If a tax number is not yet available, it is identified in a clearing procedure using the tax registration questionnaire. While the self-employed receive the questionnaire, freelance workers have to approach the tax authorities. Caution should be exercised when estimating earnings. If a lower value is given, there is still the option of correcting it afterwards. If the value is higher, it is possible that the tax office will request an advance tax payment.

Tip 8: freedom of choice when it comes to health insurance

Freelancers have freedom of choice when it comes to health insurance and can choose between private or statutory health insurance. Artists, publicists and some other professions also have the option of registering with the artists' social fund and thus only have to pay half of the insurance premiums. In the statutory health insurance, the benefits of different providers differ only in nuances, so the contribution rate is a frequent decision criterion. There is a selection of different tariff models in a private health insurance company. In general, the following principle applies: the lower the amount to be paid, the less the insured person will be reimbursed. Private health insurance can be used as an alternative or as a supplement to statutory insurance.

Tip 9: Tax payments: three bank accounts for a better perspective

Taxes are payable at different times. The sales tax is paid monthly, quarterly or annually to the tax office. Income tax and trade tax are not due until next year. For this reason, a well thought-out system is recommended that helps not to lose track of things. The three-account model has proven itself. An account is used for incoming payments and is indicated on the invoices. The freelancer transfers the amount for the sales tax of each paid invoice to another account. As soon as the advance VAT return has been submitted, the tax office will deduct the amount due from this account. A third account is used for reserves as well as the income and trade taxes that arise later and is fed with an amount of your choice.

Tip 10: Think about your retirement provision early on

For freelancers, an independent work situation also means greater responsibility for their own retirement provision. You are solely responsible for filling your own pension fund and thus protecting yourself against poverty in old age. Freelancers have the option of continuing to pay into the statutory pension insurance voluntarily. This can be useful if you have already paid into the fund for a long time due to previous employment relationships. The employee contributions, which must now be paid for personally, must also be taken into account. As a voluntarily insured person, the amount of the contribution can be freely selected within a minimum and maximum amount. If you have paid into the pension insurance for at least five years at a time, you are entitled to a disability pension and a survivor's pension. There are also other pillars such as private old-age provision using built-up assets or the state-sponsored basic pension, also known as the Rürup pension. Certified insurances or funds can be selected for these. The paid-in contribution is tax-free up to an upper limit during the savings phase; taxes are only due in the payment period.

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