Benefits of being a freelancer
Even if the distinction is not that easy, there are some advantages for you to be classified as a freelancer. Because this gives you some privileges that other self-employed people do not have.
First of all, you can ignore many regulations that “normal” traders have to observe. The biggest advantage of this is that you don’t have to register a business and therefore don’t have to pay any business tax. But you also get around other points such as the fee-based membership with the IHK.
In addition, you have not to be despised advantages in terms of your accounting. Of course, you need to have an overview of your finances. However, a simple income surplus invoice (EÜR) is sufficient for you and you do not have to have double bookkeeping or balance sheets. As a result, the effort is considerably lower and also cheaper.
But not only what is left out is an advantage for you, but also what is added. For example, in certain cases you can insure yourself as an artist and publicist in the artists’ social insurance fund. This is compulsory insurance for certain professions. For this, however , the artists’ social insurance fund will take over your share of the health, pension and long-term care insurance and in this case act like your employer. This means that, depending on your income, you have cheaper contributions than if you voluntarily insure yourself privately or with a statutory health insurance company.
You only have to be careful if you have additional jobs as a freelancer, run a business on the side or work as an employee. Because if this income is too high, you will lose your freelance status. The tax office monitors this income because you have to declare it on your tax return. This can result in your status being revoked.
Are you an entrepreneur as a freelancer?
As we have seen, the boundaries are fluid and not always easy to draw. As a freelancer, you are self-employed. And whether you are an entrepreneur at the same time can be deduced from the definition in the German Civil Code. There it is stipulated in § 14 BGB that a self-employed person – regardless of whether a freelancer or a trader – always acts as an entrepreneur when a legal transaction is concluded in connection with his professional activity.
The decisive factor for whether you are a doctor or a lawyer or an artist at the same time as an entrepreneur depends on which legal transaction you conclude. If you buy a house privately, you are an ordinary consumer; if you book a hotel for a business trip, you do it as an entrepreneur.
The similar term “company” must also be examined carefully in this context. Because as a self-employed person you only have a company if you are a trader and if it is entered in the commercial register. Because the words “company” and “company”, which are often used equally in normal parlance, are to be judged differently in legal terms. The “company” is regulated in the Commercial Code (Section 17, Paragraph 1 of the German Commercial Code) and does not mean your entire company, but the name under which you, as a businessman, conduct your business.
Difference between freelancers and businesses
According to healthknowing, as a self-employed person, you can have a business or work as a freelancer. In the first step, the decisive factor is whether you fall under the liberal professions of § 18 EStG. Otherwise you have to register a business.
Overview of the differences:
| freelancer | Business | |
| Activity defined according to: | Section 15 (2) EStG, negative delimitation according to Section 18 EStG | Finally listed in § 18 EStG |
| Registration required? | At the tax office | At the trade office (city) and at the tax office |
| IHK membership required? | No membership and no payment | Membership required, but free of charge up to € 5,200 profit |
| accounting | Income surplus calculation (EÜR) is sufficient, no balancing is necessary | Depends on the legal form and the turnover. Double-entry bookkeeping is required |
| Business tax | No business, therefore no obligation to pay | Trade tax is due from a profit of € 24,500 |
| Sales tax / VAT | There are no differences here | There are no differences here |
Difference between freelancers and permanent employees
If you are an employee, you benefit from regular working hours, your vacation entitlement, possible bonus payments, the 13th salary, your employer’s participation in social security and benefits in the event of illness.
You don’t have to worry about the work coming to you or acquiring clients. You will also be given a job and your income will be the same every month. When looking for a place to live or other occasions where you have to show proof of income, you always have something in hand. Freelancers get problems here from time to time.
