Self-Employment as a Secondary Activity – The Safe Beginning of Entrepreneurship
Practicing your dream job as a profession is almost everyone’s dream. However, starting your own business often involves risks, and even without financial security, it is often difficult. This is why many people start their independence part-time. For several years, more than half of the founders of companies in Germany have even started their own part-time business. However, those who are regularly self-employed must pay attention to many things.
The question to clarify first, we would like to be active as an independent or trader. The advantage of being freelance is that, unlike a trader, you do not have to pay business tax. A freelancer, regardless of the amount of his profit, does not have to prepare a balance sheet. Freelancers (mainly professionals in the service sector such as translators, writers, lawyers) do not need to register with the Trade Licensing Office. All you have to do is register with the tax office.
It should be checked in advance whether the regulations on small enterprises (§19 of the Value Added Tax Act) apply. This applies if the planned turnover for the year of foundation does not exceed 17,500 € gross. This means that it refers to the entire year and must be extrapolated for an entire year if self-employment begins in the middle of the year.
The right legal form
In general, self-employed people can choose any legal form for their part-time business, which would also be available full-time. Depending on independence, therefore, advice should be sought to be sure, in order to exclude risks that have not been calculated, such as the inclusion of private assets, etc.. As a general rule, no legal form should be chosen for freelancers. Self-employment is performed and income is taxed accordingly.
The number of working hours invested in secondary employment does not matter for the commercial and tax office. However, this is not the case with health insurance, which has a maximum limit of 18 hours per week. If secondary employment exceeds 18 hours, health insurance must be purchased separately for the secondary occupation.
In principle, it should also be ensured that statutory breaks of at least 10 hours are respected. This means that if the secondary activity is until 11 pm for example, the main activity can only be resumed at 9 am at the earliest.
Inform your employer
According to the Basic Law, every German has the right to freely choose a career and everyone is free to undertake other activities in addition to a main job. In theory, no employee needs the consent of the primary employer. The emphasis is on theory. Because everyone should read again in the contract if a secondary job is excluded or if the secondary job is subject to the so-called competition rules.
However, the recommendation is to tell the primary employer that you are self-employed. Then there won’t be any nasty surprises if she comes out after all. This creates trust and transparency and, in some cases, can even be taken into account.
Self-employment as a secondary activity means less risk and better financial security. Those who can cope with the double burden of primary and secondary occupation will find here a good alternative to starting their own business.