It doesn’t matter in which industry and with which goals the founders start their activities: Aspiring entrepreneurs have to decide which professional path they want to take. In Germany, this means primarily the decision between a freelance or commercial activity. Both forms of self-employment differ in a few points. In particular, the registration processes differ. This article shows what freelancers have to consider when registering.
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Freelancer or trader?
Becoming self-employed is the start of an exciting journey. Not only is it important to acquire some basic knowledge about founding a company . Rather, it is also important to always be informed about the most relevant startup news and to deal with many new topics. In addition, supposedly simple topics such as writing invoices can become a challenge for founders.
Fortunately, however, there is a lot of help: For example, online invoice generators to write the first invoices are a great help here. In addition, websites like these founders offer support. Nevertheless, one important question must be clarified before you start your career: Should the chosen activity be carried out as a freelancer or trader?
A freelancer is basically anyone who works as a writer, artist, teacher or educator. In this case we are talking about a catalog profession. In addition, there are activities that are catalog-like. This includes appraisal or advisory activities, professions in the fields of medicine and healing as well as activities in the field of science and technology. These activities are also carried out on a freelance basis. Founders who are self-employed in these areas are considered freelancers – not tradespeople.
Sometimes it is difficult to distinguish between trade and freelance work
In general, it can therefore be said that in order to be considered freelance, the activity carried out must have the following characteristics:
- A specialized service is offered instead of a mass product.
- The remuneration is fee-based.
- The job offered often requires a university degree.
- There is often a special relationship of trust between providers and their customers.
Register a freelance activity step by step
In order to officially start as a freelancer, the activity must be properly registered. How exactly the registration process looks depends on whether the activity is carried out together with others or alone. The registration process itself looks like this:
The tax office as the first point of contact
When registering freelance work, the tax office is the first point of contact for all founders. The tax office must be informed of the freelance work within a maximum of four weeks of starting work. However, an informal letter is sufficient for this.
Once the tax office has been notified of the start of the activity, it will send the freelancer a tax number and a questionnaire on the activity started. The questionnaire must be filled with information about the person and the activity carried out. In order to determine the applicable tax rates, a forecast of the expected income must also be attached.
Proof of qualification
For freelancers there is – like for example for craftspeople – an obligation to prove their qualifications. This means that they have to prove their specialist knowledge, which is a prerequisite for the exercise of the activity.
In order to find the right contact person for the proof of qualification, it must be checked whether the activity carried out is subject to registration by a chamber. If it is an activity that is subject to a chamber, the professional chambers are the right contact persons.
For example, freelance work as:
- Patent Attorney or Attorney
- Tax consultant
If the freelance activity is subject to registration, proof of qualification must be submitted to the relevant professional association. If, on the other hand, it is an activity that is not subject to a chamber of commerce, proof of qualification can be provided to the tax office, for example.
Alone or together?
Freelancers can work alone or together with other freelancers. If it is about founding a company together , a legal form must be chosen for the freelancer company.
Foundations of partnerships (PartG), a GbR or corporations are possible. In the case of a corporation, a commercial register and business registration is also required.
The different legal forms have their own advantages and disadvantages. In the case of a corporation, however, many advantages of freelance work are lost. The choice of legal form must therefore be carefully considered and professional advice obtained if necessary.
Freelancers are also required to have health insurance
Of course, freelancers are also required to have health insurance. People who pursue a journalistic or artistic activity can register for health insurance through the Artists’ Social Security Fund (KSK). KSK membership is mandatory for them. However, the advantage here is that the artists’ social security fund pays the health, pension and nursing care insurance contributions. It also gives access to social security. Freelancers only have to pay contributions in the amount of the employee share. In addition, KSK members can decide whether they want statutory or private health insurance.
On the other hand, if you are neither an artist nor a journalist, you have to take care of your own health insurance. Please note: Anyone who takes up freelance work is always privately insured. However, it is possible to switch back to statutory health insurance if the job is given up.
Pension insurance for freelancers
Freelancers who carry out an activity that is subject to a chamber must also register with the pension fund of their chamber. The pension scheme then secures the pension provision for the freelancer.
There are also pension schemes for professions that are not subject to registration. In addition, all freelancers have the option of registering voluntarily with a pension scheme. Alternatively, freelancers are free to make private provision for their pension.
Reporting to the trade association
When registering freelance work, you must not forget to register with a trade association. The trade associations act as statutory accident insurance institutions. Reporting to the trade association is therefore not optional. However, it is not always absolutely necessary to insure yourself through the trade association.
Also useful: A business account
In this country, freelancers are not obliged to have a business account . Overall, however, it makes sense to separate business and private cash flows. It is therefore advisable to open a business account when registering for freelance work.