Berlin should come with many warnings, and one of them would definitely be that the city’s creative vibes may make you want to try freelancing. Which can be a good thing! To help you get over the paralyzing fear of becoming independent amongst the German bureaucracy, we prepared a succinct guide.
First thing’s first: if you’ve grown confident that you want to quit the 9-5 way of working, you can’t be shy about it; Finanzamt has to know. You need to go there and register as a freelancer to get a Steuernummer that you’ll use to issue your future invoices. Please don’t let this first step discourage you from the whole endeavor. The legal side is really easy (at the beginning) – so you can relax and see if the freelancing gigs work out before you have to pay any of the Einkommensteuer (income taxes), Gewerbesteuer (trade taxes), or Umsatzsteuer (VAT). You don’t pay the income taxes if you’re earning less than 8.004 EUR.
One legal aspect that you cannot neglect is the issuing of your invoices. You wouldn’t really like to neglect it though – that’s how you get your money after all. It’s important that each invoice has the correct addresses of both you and your client, the date, continuous number, precise description of what the job was and the period in which it was done. You also need to feature a sentence that states that, according to the paragraph 19 of the UstG, no VAT taxes are included in the invoice. They will be only after you earn more than 17 500 Euro a year and once the Finanzamt tells you to include them.
Another thing you’ll have to consider for your own good is the health insurance. As a freelancer, you need to pay it on your own. Long story short, you basically have two options – either a private or a public health insurance. A lot of young freelancers go for the former because the fees are lower, but only when you actually are young and when you’ve got no medical record. In case you’re at odds with any of the two, you may want to think of a public health insurance. Beginning at something as low as 137 Euro a month when you hardly earn anything and going up to around 690 EUR per month the fee actually depends on your income (it’s around 14% of the amount after deduction, but its locked to a minimum and maximum), it can definitely get much more expensive than a private one, but at least it’s always relating to your actual income, while the private health insurance can go up to ridiculously high costs when you get older.
Now, for the fun stuff – letting go of your office means that you need to find a new nest to hone your skills and carry out your ideas. There’s a few ways you could go about it – ranging from working from the comfort of your home, which probably means your time management game has to be ace, to actually renting an office, a room, or, if we take a more minimalistic (realistic?) approach, a desk in a co-working space. We’ve listed some of our favorite Berlin coworking spaces.
If you’ve decided to turn one of your rooms into a workplace – which assumes you’ve got at least two rooms so you definitely don’t sound like a beginning freelancer, but I’m glad you’re reading this all the same – you could deduct it from your tax declaration. If you actually are a beginner, that’s not the only deductible thing – find out about others when you read on through the following paragraphs.
Blogfabrik, photo: Christoph Neumann
The tricky part: how to get all the people you’ll be issuing your invoices for? Well, anything goes in this diversified field. There are a lot of options to connect with potential customers – and you should definitely get some of them figured out before you start. We’re all rooting for you here, but quitting your daytime job with no previous research is an idea we cannot endorse. However, if you’ve lost your job anyway because you stayed up late at Berghain, you don’t really have much choice, do you?
LinkedIn is obviously the number one website to pinpoint your achievements for the important guys to see, but be aware that there are others depending on the field you’re active in – for example, if you’re into film, then check out Crew United.
There are also online marketplaces which you can use to get your creative gigs. If you’re doing graphic design, then check out 99designs. If you’re a writer, you may find upwork interesting. Do you know any other interesting platforms for freelancers worth checking out? Let us know below.
In the beginning, try to brand yourself as much as you can. That means you may be taking part in projects that you don’t get paid for – it’s really important that you’re creating content that you can later refer to when talking with potential collaborators. Whatever you do, have it presented on your blog or a portfolio – even if it’s just the plainest WordPress blog. Your online presence on social media is just as important as the digital footprint that is your website. Don’t try to make up excuses saying you’re not tech-savvy enough – if you want to make it as a freelancer, you’ll be going to have to deal with some technical stuff sooner or later.
Obviously, focusing just on the Internet would be a huge mistake, especially in a city as vibrant as Berlin. Take the full advantage of the events offered here – just google or facebook for all the networking opportunities in your genre. Although it may sometimes feel tiresome to force yourself out of the working clothes (i.e. pjs) and get out there, all sociable and driven – it’s worth it. You never know who you may end up meeting. It’s not even just about the customers. Get active in your genre community. See what others are doing. Exchange ideas. If you’re working in the same field, you really have some common ground. Plant flowers on it instead of putting up a fence of ignorance and jealousy.
Last but not least, tax declaration! There’s no escaping it even if you’re just a beginner – you literally need to file one from the first year on. But the German system is actually helpful – there’s a website called Elster Online, all connected with the Finanzamt, that allows you to manage this relatively easy. Especially when you’re starting out, don’t rush to a tax consultant.
Another Internet resource idea that’s there to help you is a bookkeeping system. There are many – either available online (such as Lex Office) or ones that you can download. They come in handy especially if you want to deduct some expenses from your income, so that you can pay your taxes from a smaller amount of money. Most of these programs even create some of the various tax declarations automatically and even transmit them directly to the Finanzamt. It doesn’t get any more practical than that!
Especially if you’re a blogger, there’s a bunch of costs that may apply – how much did you pay to get to a place, or to have a dinner with a potential partner. For those of you who travel a lot for business there is a whole set of standard costs such as accommodation, transport and food that you can deduct. Our tip: collect all the receipt so you have a good overview. You may even consider getting a separate bank account just for your business expenses, keeping it clean from any private activities. This way, the statements are a great help in your bookkeeping.
In spite of our careful research, we cannot take any legal responsibility for the accuracy of the information in the article. If you’re aware of anything we missed, let us know in the comments!