Freelance is a career
Freelance guide: 5 steps to becoming a successful freelancer
The plan is in place: You no longer want to work as a permanent employee, but as a freelancer. A very large group of freelancers make up the creative activities, such as graphic designers, copywriters, journalists, marketing experts, web designers or architects. But the so-called liberal professions according to § 18 EStG (Income Tax Act) can also include dentists, notaries, tax advisors, naturopaths or yoga teachers, for example. You can find a rough list on this website. The decisive difference to - and great advantage over - other self-employed persons is that you do not have to register a business for one of these jobs, but can get started straight away with a tax number from the tax office. We'll explain step by step how to do it here.
1. Planning is everything: how do you want to work?
What your first steps as a freelancer look like naturally depends on the situation in which you start. If you are still in a permanent employment relationship, the question arises whether you want to quit directly and work completely freely - or whether you want to start with selected projects and customers from your current job. So at first just incidentally. If you already have a large or several customers who are about to secure your livelihood, you might just want to work freely right away. Here you should only calculate for yourself how secure the job or jobs are and how quickly you would find a replacement. A certain financial cushion at the beginning of the (exclusive) freelance work is always recommended.
If you would like to work as a freelancer as part of your day job, you may want to reduce your working hours first, i.e. switch from full-time to part-time. Many choose this path, which of course has the great advantage that you initially continue to have a steady income - albeit a smaller one. In this way you can build up a solid customer base in peace and quiet and first develop a feeling for what kind of jobs are how lucrative and how long you work on them. Perhaps you don't want to work full-time as a freelancer (that's the official name for the tax office when registering and for the tax return), but only part-time in the long term.
2. The organizational: tax number, tax office, invoices and Co.
So when you have made sure that your job falls under the liberal professions - the tax office can help you here if you are not sure - and you are clear about whether you are (at least for the time being) part-time or full-time as a freelancer you have to inform the tax office. As part of this, you will receive a tax number that you will include on your invoices. A tip in advance: You can also send your first invoices while you are still waiting for your tax number to be allocated. The best thing to do is to write “Tax number has been applied for” on the invoice - you really need the number for your tax return at the latest. You can find the form for registering your freelance activity here and then fill it in and send it to the tax office responsible for you.
Another important point for creating your invoices is the small business regulation. Basically, you also have to pay sales tax as a freelancer. However, if you did not earn more than 17,500 euros in the past year and no more than 50,000 euros this year with your freelance work, you are exempt from this. If your activity falls under this so-called small business regulation, you do not need to show the current 19 percent sales tax separately on your invoices, but instead state the following sentence: "According to § 19 UStG, the amount shown on this invoice does not include sales tax."
In any case, what you have to pay is income tax. The exact amount is determined retrospectively in the tax return by means of an income-surplus-account. However, you should plan in 30 to 40 percent of each invoice and ideally store it in a separate account until the tax return. Speaking of accounts: It is not legally required that you have your own account for your freelance work. Depending on whether you only work freelance occasionally and only write a few invoices or whether you work fully as a freelancer, it can be a good idea for the sake of clarity. Also with regard to possible evidence in the context of the tax return.
3. It starts: build up the customer base and get the first orders
Now you have your tax number, you know what your invoices should look like, and you want to get started. Perhaps you already have initial contacts from your network or even a specific assignment for which you have even considered freelance work. Then let's go! If not, there are different ways to get customers and jobs. One option is portals through which free orders are placed. This is a popular option, especially in the creative or digital environment. These are about dasauge (especially design, photography and advertising) or freelance.de. Gulp mainly offers IT projects. Websites like Fiverr for creatives of all kinds or Textbroker for copywriters and editors collect small jobs that are usually paid very low. But for the beginning or perhaps to make good use of idle time between larger jobs, you may find it here.
Your own website, on which you present yourself, your skills and a portfolio of successful projects, is your business card. If you plan to earn your entire income with your freelance work, you should definitely build a website that is graphically appealing, textually secure and optimized for Google (keyword SEO: after all, you want to be found on the web) - or have it built. If you work in the digital field, this is of course inevitable anyway.
In general, you always get along well using your professional network for assignments. It is best to post on professional portals such as XING or LinkedIn that you work as a freelancer and what kind of job you are looking for. And in my experience, one order often results in the next - either with the same client or through a recommendation. Ideally, of course, you have one larger or more customers with whom you agree fixed jobs per month. So you have at least a certain degree of planning security for your income.
4. What does my work cost? Set prices as a freelancer
The crucial question: How much money can you ask for your work? Of course, that depends primarily on what skills you have, what work you do and what your market value in this regard looks like. Here you should have a good feeling about what freelancers in your area can charge as an hourly or daily rate. It is best to find out from other freelancers what is realistic. Depending on how much experience you have and of course for which potential client you are submitting an offer, you can then see how high you are setting your price.
Depending on the industry, some clients also pay fixed prices so that you cannot or do not have to set your own. If they are below what you actually imagine, you should weigh up: Is it worth working for the portfolio and the name in the Vita for this customer, even if the fee does not meet your wishes? Especially at the beginning, when you don't have many customers but have a lot of time, it can be advisable to take the job first. If you have better paying customers later, you should then re-evaluate which jobs are still lucrative for you.
In general, you should expect to earn little or no money in a few months (of course, this depends on the industry and the size of your jobs). It's best to organize yourself so that you don't live from bill to bill. Plan a buffer from which you could live for a few months if necessary - regardless of your other savings for vacations, major purchases or retirement.
5. Off to the job: How, when and, above all, how long should I work as a freelancer?
Especially if you work full-time as a freelancer and also do it from home, it is important how you organize your daily work. Even if it is tempting to only work on the couch in sweatpants: In the long term, you will benefit more if you set up a permanent workplace. It doesn't necessarily have to be a desk if you don't have enough space in your apartment (although a permanent study can be wonderfully tax deductible!). In many creative professions, all you really need to work is a laptop - which of course leads to a sofa office. But, in my experience, it helps a lot if you at least sit down at the right table - and then actually leave this workplace when you go “after work”.
After work is the next important topic for freelancers. It feels like you can never actually do that. Even if you are not currently working or deep in a job - if an email arrives with a potential further assignment, you will be right back in it. Even at 10 p.m. or on vacation. So it's best to define fixed working hours. That helps a lot to shape your work-life balance within a reasonable framework. Because if you - especially at the beginning of your free activity - have the feeling that you have to be constantly available in order to stay afloat, it quickly degenerates. So make sure you plan in fixed free times, in which, ideally, you don't even check your work emails, or at least don't answer them.
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