What kind of employee are you

Freelance work: Bring more freedom into your daily work

Many, especially younger, people dream of being able to work as freelancers for companies and thus being their own boss. You can then decide for yourself which jobs to accept and also determine your own wages. As a rule, they don't have to work 40-hour weeks, but have a lot more free time. Very often it is also possible to choose the working hours freely.

However, this form of work not only has advantages for freelancers themselves as well as for companies. In this article we would like to show, among other things, the advantages and disadvantages of this employment, compare it with freelancers and also go into which industries freelancers actually work.

the essentials in brief

  • Freelance workers conclude a fee, service or work contract with their clients. You work either on an hourly or project basis.
  • You work independently of instructions and work for several companies.
  • Freelance workers determine their own wages or negotiate them again and again.

Definition: what is freelance work?

In contrast to normal employees, freelancers are not permanently employed by any company. In contrast to an employee, they are not integrated into the company. Furthermore, they are not bound by instructions and receive work orders from companies.

As a freelancer, you usually work for several companies at the same time and are not permanently employed. Therefore, there are a few important points to note here. (Image source: pexels.com / Startup Stock Photos)

Often they are not only working for one company, but for several clients. You will receive a fee, service or work contract in which, among other things, the task and wages are regulated. If a freelancer is booked by a company on a large scale and over a longer period of time, an employee-like employment relationship is created. Regulations on the number of vacation days etc. can then also be made in the contract for work and services.

What is the difference between freelancers and freelancers?

You can only work as a freelancer if you have a catalog job or a catalog-like job. This has been determined by the legislator. The catalog professions include doctors, pharmacists, physiotherapists, lawyers, notaries, engineers, architects, chemists and environmental experts, to name just a few examples.

Becoming a freelancer: this is how you successfully make yourself independent

The catalog-like professions include midwives, outpatient nurses, IT consultants, automotive experts and many others. Freelancers also need a degree in their field of study or adequate training.

As a freelancer, on the other hand, you can work without a degree, if you have experience or if you want to slip into your job. For example, daily newspapers employ a large number of freelancers. Freelancers are often booked on a project basis, while freelancers, on the other hand, often have their own customer base (lawyers, doctors, etc.).

What is the difference between employees and freelancers?

Employees receive a fixed monthly salary from their employer. At the same time, ancillary wage costs for health insurance, long-term care insurance, unemployment insurance and income tax are paid for them. In the event of illness, they will continue to receive wages.

You are also entitled to at least 24 days of vacation. Freelance workers, on the other hand, only receive the agreed wages and have to take out health and pension insurance themselves. You also have to pay income tax yourself. It will be a little easier for you when you are a member of the artists' welfare fund. This then pays the employer's share of the health, long-term care and pension insurance contributions.

Company employees are bound by their superiors' instructions. This is not the case with freelancers. You will be employed on a project basis or over a longer period of time, but you can definitely save your time. In many cases, they work for several customers at the same time.

Background: What you should know about freelance work

The range of industries in which freelancers can work is enormous. Many companies take advantage of engaging these employees for projects and thus being able to fall back on their specialist knowledge. Because the freelancer has to train himself to be always up to date. Since he can work in different companies, his wealth of experience naturally also grows.

In which industries is freelance work common?

Freelancers are among other things in the areas

  • IT & Development
  • Engineering and technology
  • Finance and insurance
  • Economy, communication and digitization
  • Event management
  • journalism
  • advertising
  • Management and advice
  • distribution
  • Logistics, traffic and transportation
  • Natural sciences
  • health
  • Design, layout and media
  • gastronomy
  • Arts and Culture
  • Legal
  • Education
  • Social affairs
  • human Resource
  • in administration and assistance

active. In administration and assistance, they can, for example, oversee the social media activities of a company, work in engineering on various construction or mechanical engineering projects, support the traffic planning of individual cities or regions and the like.

What are the advantages of freelance work for companies?

Employing freelancers offers companies several advantages. In this way, operational bottlenecks can be bridged with freelancers. The implementation of projects may require more staff, some of which must have special skills. However, this would not be fully utilized in a permanent employment relationship or would not be financially profitable. A freelancer who has the necessary knowledge or know-how can then be called in here.

For companies, freelancers primarily mean more flexibility and less administrative effort. (Image source: pexels.com / rawpixel.com)

Companies also benefit from the fact that freelancers do not have to pay social security contributions, as they are not employed by him. So gross is the same as net wage here. If the freelancer is not a small business owner, sales tax is added.

Another advantage is that freelancers can be deployed flexibly. They are not subject to any notice periods, unless otherwise agreed in the contract for work. If a company currently has no need for the services of freelancers, they simply do not receive any orders from them.

What are the disadvantages of freelance work for companies?

Freelance work also has a few disadvantages for companies. That is why it should be regularly weighed up whether a permanent position might not be a better alternative. Since freelancers usually work for several clients, they are not always automatically available when there is a need. If the company has had good experience with a freelancer, it cannot assume that they will have free time for their next assignment.

A new freelancer may then have to be found and instructed. And that brings us to the next disadvantage. Because although every freelancer has qualifications and experience in his or her specialist field, every company is set up a little differently in its way of working. Thus, every freelancer has to be instructed again in the way of working, so that a good cooperation is guaranteed.

Another disadvantage for companies is that freelancers usually receive a higher hourly wage than permanent employees. This, in turn, not only leads to higher expenses on the part of the company, but can also damage the peace at work. After all, who likes to work for less money than their new colleague who works as a freelancer and has to be instructed in the company's work processes when he or she is working here for the first time.

If new freelancers are always employed, they never develop a sense of togetherness. Furthermore, the company invests in the capacities of freelancers instead of using the money to promote the loyalty of its own employees. Therefore, it makes sense to look at which activities could be taken over by your own employees, perhaps also through a financial incentive such as the prospect of a salary increase.

Freelance work: practical application and benefits

Freelance work has both advantages and disadvantages for the self-employed. However, if you think about this activity, you usually only associate it with the advantages. But in order to be able to weigh up precisely, you have to know the other side of the coin, of course.

What do I have to consider with a contract for freelance work?

A basic distinction is made between a fee or service contract and a work contract. An hourly wage is agreed for fee and service contracts, and a project fee is paid for work contracts. As the name suggests, service contracts include the provision of fixed services for a fixed salary.

It is also important to sign a contract for freelance work. In doing so, particular attention should be paid to the pay and the scope of work. (Image source: unsplash.com / Cytonn Photography)

It is roughly equivalent to an employee's employment contract. In contrast to the contract for work and services, the contractor, in our case the freelancer, owes a performance, but unlike the contract for work, it owes no success.

Basically, with a contract for freelance work, you should make sure that the type of service is precisely defined and that you are not obliged to do any further work. This then has to be done by a permanent employee. In addition, you are not bound by instructions. Make sure that you still have enough time to work on other projects and have the hour quota or the project duration set accordingly.

Otherwise, there is a risk that the tax office will classify your activity as a pseudo self-employment and the company may be obliged to pay social benefits including wage tax retrospectively. It should therefore also be in the company's interest that you can devote yourself to other projects and, for example, not being fully scheduled for half a year or a full year during your entire working hours.

How do I get paid as a freelancer?

As a freelancer, you set your own wages. Here you can enter an hourly wage, a daily rate or a project fee. However, you have to use your wages to cover all your expenses yourself, including social benefits and taxes, expenses for your office, etc.

Therefore, your wage should be set higher than the hourly wage of a permanent employee. The best thing to do is to find out more about the wages that are common in the industry on the Internet or at the Chamber of Commerce, Chamber of Commerce and other associations. But also take a look at the websites of your competitors and find out about their services and - if given - prices.

What is bogus self-employment about and how can it be avoided?

One speaks of bogus self-employment when a freelancer or freelancer only works for one company over a longer period of time and is therefore financially dependent on it. The same applies if the freelancer has to carry out the employer's instructions.

This could be a “de facto employee relationship”. Whether a pseudo self-employment exists does not depend on the information in the service or work contract, but on the activity actually carried out. If it happens that the tax office or the social security (also retrospectively) determine that it is not a matter of freelance work, but a permanent employment relationship, he has to pay the employer the costs for health, pension and unemployment insurance. An additional further fine can also be set.

What are the advantages of freelance work for me as a freelancer?

As already mentioned, as a freelancer you are not bound by instructions. So no employee or boss of a company can give you specifications regarding your working hours and - if the work at the employer has not been agreed in writing on site - the place of work.

You can very well be a trader, freelancer and also an employee of another company. With the latter, however, you have to make sure that your employer there approves the sideline activity in another company, which should not be part of the competition.

As a freelancer, you decide for yourself which jobs are of interest to you and which you accept. Every now and then you will have bad experiences with customers. You then have the right to decline further collaboration - for example on other projects.

Freelancer: This is how you earn your money independently

In contrast to a permanent employee, you don't have to perform a specific job and you are faced with fewer expectations. As a freelancer, you can react very flexibly and decide for yourself how many projects you want to tackle. You also have the opportunity to negotiate the individual contract conditions. A permanent employee does not have this option, or only to a very limited extent.

You are also much more flexible when it comes to choosing your place of work and working hours. Many freelancers do not orientate themselves to office hours, work on the go or in their own home office.

One of the biggest advantages is that you can influence payment. While a permanent employee can advocate higher wages for his work in the salary negotiations and this is then fixed for a longer period of time, you can adjust and negotiate your wages for each new project. Growing experience and new skills are particularly good arguments here.

Anyone who is only busy with the same tasks over the years longs for variety. This is given when you work as a freelancer, as you will always work with new companies, get to know other employees and also learn from the various projects. Your future customers will also benefit from this experience.

What disadvantages does freelance work have for me as a freelancer?

Many only see the advantages of working as a freelancer. There are also some important aspects that can definitely be seen as a disadvantage.

In contrast to permanent employees, freelancers have greater financial insecurities. The latter do not receive a fixed monthly salary, but their wages depend on the current order situation. In addition, freelancers also have to pay other expenses such as office rent, installments for technical equipment, etc. even when there is currently a lull in orders.

As a freelancer, you are more flexible and for the most part your own boss. However, the financial situation is often a little more uncertain. (Image source: pexels.com / Marek Levak)

Freelancers are also not entitled to paid vacation, so they have to create reserves themselves for this time. For some freelancers, it is also difficult to get back into (new) projects after their vacation, as the customer may have found other means. Therefore, even if you are currently well booked, you should always advertise your services. Because it can quickly happen that a customer drops out at short notice and you have to reschedule your time capacities.

Another negative is that you will not receive any sick pay in the event of illness. So that you get money at least after the first six weeks, you should consider taking out daily sickness allowance insurance. And that brings us to the next point, because as a freelancer you have to insure yourself. It is essential to have health insurance, the costs of which you should take into account when determining your hourly wage or project fee.

Other important private insurances that you need to take care of include pension and long-term care insurance. If you belong to the group of people who can be admitted to the Artists' Social Insurance Fund (KSK), you should submit a corresponding application for admission. If the KSK accepts your application, it will take over the employer's share of the health, long-term care and pension insurance.

Especially at the beginning there is a risk of becoming self-employed. Therefore, make sure from the outset that you work for several customers at the same time or at short intervals.We have already listed above what the bogus self-employment is all about and how you can avoid it.

Resources: The best entry opportunities for freelance work

It makes a lot of sense if you have completed vocational training or if you have successfully completed a degree that is related to your future occupation. For example, if you want to work as an editor or journalist, you should have completed a degree in journalism and be able to provide evidence of internship experience as part of a traineeship. IT consultants and graphic designers who want to work as freelancers should also have successfully completed relevant courses.

However, in order to assert yourself in the market as a freelancer, it is advisable to acquire the knowledge that is necessary for successful self-employment right from the start. You can find numerous guides on the Internet - you have already read ours up to here. With us you will also discover articles about what defines a freelancer, what a freelancer is and what is meant by a solo preneur.

Solopreneur: This is how you generate your passive income

Because you not only have the opportunity to work as a freelancer for companies with a fee, service or work contract, but you can also submit contracts to your customers yourself or work without them at all. In the latter case, however, you should get the written okay with regard to payment - an email is usually sufficient here.

What well-known books are there about freelance work?

The third edition of the book “The Freelance Contract: A Guide to Contract Creation” provides a comprehensive impression of the legal requirements for working as a freelancer; Series of operational practice ”by Christian Ostermaier.

The book “Entrepreneurship - Step by Step”, written by Benjamin Michels, received very good reviews. It shows what needs to be considered when setting up a business and is also valid for freelance workers.

What matters when drafting a contract and how to correctly calculate the workload is discussed in the Haufe practical guide "Employees without permanent employment - including online work aids: Using the right form of employment to minimize entrepreneurial risks" by Stephan Wilcken and Moritz Rothe. All types of contracts are presented in this book. Current contract templates, explanations, etc. are available for download online.

By the way, you can deduct the costs for these books on your next tax return - for example as part of the income-surplus account.

Conclusion

In contrast to other freelancers, there are some special features for freelance workers. You also work for various companies, but here you have signed a fee, service or work contract. This contains important information about the type and scope of the project, the number of hours to be performed, but also the place of work and of course the payment.

In contrast to a permanent employee, as a freelancer you can set your own wages for each new project, i.e. increase it. A permanent employee will initially stay at this salary level for some time after a salary increase. Since freelancers insure themselves and also have to pay income tax themselves, their hourly wages, daily rates or project wages are of course higher than for permanent employees who do the same job.

Basically, you should make sure that you work as a freelancer for several companies at the same time. Otherwise, there is a risk that the tax office or one of the social insurance companies will classify your activity as bogus self-employment, which means that the company employing you will have to pay the social insurance contributions and possibly penalties.

So that you enjoy doing your job and are not dependent on every job, you should advertise your services even if you are currently fully booked. Furthermore, create a financial cushion for yourself so that you can enjoy your vacation in peace and not end up without money even in the event of illness.

Further reading: sources and interesting links

[1] https://de.wikipedia.org/wiki/Dienstvertrag_(Deutschland) [2] https://www.absolventa.de/karriereguide/vertragsarten/frei-mitarbeit

Image source: pexels.com / rawpixel.com

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