Part-time freelancing can be a wonderful way to test the freelance life without risk and generate additional income. But what should you pay attention to legally, what about insurance and do you need permission from your employer?
Part-time self-employment: The advantages
Maybe you're not quite sure if you should really become a freelancer. Or you're actually quite happy with your main job, but want to work freelance on the side to have more variety and supplement your salary. There can be many reasons to become a part-time freelancer, for example:
- Try out freelancing
- Gain experience
- Build a client base for full-time freelancing
- Generate additional income
- Gain more self-determination without risk
In case you've been toying with the idea of (part-time) self-employment for a while, you might find our article "7 Signs to Tell if You're Ready to Become a Freelancer" interesting.
If you've decided to make the move, many questions probably pop into your head: Do I need to tell my employer? Will my health insurance change? What about taxes? And is there a limit to how much I can earn? We'll give you an overview of the situation in Germany.
Employer approval: Sometimes mandatory, always recommended
The first step is to take a look at your employment contract. There it could say that a side job is not allowed, requires the consent of the employer, or at least to inform the company about it. Good to know: A general ban on a side job is not possible. The employer may only object if you would compete with the company or if they have to fear that your main job would suffer. This could be the case, for example, if it is a strenuous side job, and you would always be overtired as a result. However, if there is no justified interest against it, they must give you permission.
Even if there is nothing about this in your employment contract, it makes sense to inform your employer. This will strengthen your relationship of trust and ensure that they will not be irritated if it comes to light that you are a part-time freelancer.
Register your freelancer side hustle
No matter whether you become a full-time or part-time freelancer: You must register your new activity with the tax office (Finanzamt) within four weeks. To do this, you can first send an informal letter, but you can also fill out the questionnaire for tax registration (Fragebogen zur steuerlichen Erfassung) via ELSTER directly online. If you’re not classified as a Freiberufler, you must also register a business with the Gewerbeamt. For more information on this whole process, see our article "Freelancer Registration in Germany: What You Need to Know".
What applies to taxes for part-time self-employed persons
As an employee, you pay wage tax, which is paid directly to the tax office. So you don't see much of it. As a freelancer, you additionally pay income tax on the profit from your work (you can deduct business expenses). You have to file a tax return. Furthermore, you have to charge sales tax on your services and transfer it to the tax office.
You can be exempted from this with the small business regulation (Kleinunternehmerregelung) if you earn a maximum of 22,000 € in the first year and 50,000 € in the second year. This is quite realistic for a freelance side business, since you are only self-employed on a part-time basis. Nevertheless, you should seek advice on the advantages and disadvantages of the small business regulation.
If you don’t have the status of a Freiberufler, you also have to pay trade tax (Gewerbesteuer).
What changes regarding social insurance
Health insurance for part-time freelancers who are employed continues to be provided by the employer. However, you should make sure that you work significantly more in your main job than in your side hustle. Statutory pension insurance also continues as before. However, some freelancers are subject to compulsory insurance, depending on the type of work. It is best to find out whether this is the case for you.
The statutory accident insurance through the employer does not apply to accidents during your freelance work. It could make sense to compensate for this with private insurance. Read our article to learn more about the insurance you need as a freelancer.
Freelance side hustle: How much am I allowed to earn?
The good news: There is no earnings limit for your part-time freelance work. You just can't earn more than you do in your main job, so the ratios are clear. If this becomes an issue, though, the question is whether you'd prefer to switch to freelancing altogether anyway.
It is a bit more complicated if you receive unemployment benefits or BAföG (federal education assistance) or are a civil servant. Then there are earnings limits that you should know and observe.
What else you should consider
Especially if you are self-employed on a part-time basis, false self-employment can become an issue for you. This is when you are formally self-employed, but in practice your client treats you like an employee. In the case of a part-time freelance business, it may well be that you only have one client with whom you work on a long-term basis. There you could be integrated into the company’s processes and perhaps work dependent on instructions. And because you're used to being an employee, you may not even notice. Read our article to find out more about false self-employment and how to avoid it.
If you want to become a freelancer next to your permanent job, and you don't already work part-time there, you can either reduce your hours or do the new work in your free time. However, make sure that you don't overdo it. As a freelancer, you will also have to deal with activities such as customer acquisition and accounting, for which you will need time too. Therefore, it can be useful to have a fixed day per week for your part-time work.
By the way: 9am relieves you of many tasks. For example, you can quickly and easily find customers and get paid through the platform. Learn more about 9am here.
Please note: This text does not replace legal advice and does not claim to be comprehensive on the topic.