1. Self-employed as a student – the sweet life?
If you need to finance your studies yourself or want to earn something, you may have thought about becoming self-employed. The benefits are – apparently – obvious: more income, more flexible working hours and holidays when you want. Although it is usually not that bright , there are good reasons to work independently as a student , for example:
You can start parallel to the study first “small”
You test yourself and your business idea
You take on exciting projects
You gain valuable experience
You make handicraft or entrepreneurial mistakes and learn from them
You build up important contacts and your own professional network
But there are also things that can be seen as disadvantages (but on the other hand can also learn a lot) . Students who work independently as a translator, graphic artist, management consultant, office service provider or ebay retailer differ from their job-seeking classmates in that they
certain founding formalities
Negotiate the terms and conditions for your work yourself
bill for their services and receive their fee directly
not entitled to protection against dismissal, paid leave or sick pay
may have to pay trade tax in addition to the income tax
have to keep a proper bookkeeping
You may have to take care of your own health insurance and retirement plans (depending on whether you are self-employed full-time or part-time)
Insurance against operational risks (eg claims for damages) need
(under certain circumstances) have to pay to chambers and professional associations
What as an entrepreneur can still come to you …
Very few young entrepreneurs have a good idea and the fast money falls from the sky. In most cases, the opposite is the case: you have to persistently and consistently work on your project, and it does not necessarily attract the big money.
You can also fail – that’s part of being independent. But that does not have to be that bad, as long as you keep an eye on not accumulating a personal debt mountain. If you want to work successfully on your own, you are your own boss and you have to control yourself (and possibly others!), Find clients, conduct successful negotiations and fulfill accounting obligations. Ambition, a sense of responsibility, resilience and discipline do not hurt experience.
When the store starts running,Sometimes the study falls by the wayside : Many new self-employed people put a lot of time and motivation in their own company and could definitely do more for the university. It is all the more important that you plan properly and get organized well. Maybe you have to learn to delegate tasks and get more people on board. In the end, there is still the opportunity to study more slowly to finish anyway.
2. Before the start: planning and preparation
It does not take years of experience to successfully become self-employed. Sometimes this happens automatically, for example via private contacts. Often, however, the road to self-employment requires good preparation and endurance.
Therefore, you should first of all realize : Why do I want to start my own business or start my own business? What are my (professional and private) goals?As a self-employed person, you’ll need specialist know-how and industry knowledge as well as some legal, tax and business knowledge to master your tasks – depending on the nature and scope of your project, including administration, communications, sales, performance review and strategic planning.
Do not worry: As a good shoe designer you do not necessarily have to be a good manager! Of course, you should have a business sense, but you do not have to run the operational business yourself. You can look for people who support you. And you can acquire missing knowledge through training, counseling and coaching, Some aspects of self-employment are much easier today than they used to be: it does not cost much money to set up a website or shop on the internet. And effective advertising can also be done without a large budget via social networks or affiliate marketing …
The conditions for self-employed and entrepreneurs in Germany could be cheaper : Especially complicated tax rules and accounting requirements make it difficult to start. At this point, of course, it is natural to gain business software right from the start, which will make it easier for you to handle both bookkeeping and order processing. The best known manufacturers are Lexware or WISO.
If you want to structure your independence and be prepared well, then you should seek a start-up advice – there are even at many universities. The counselors not only offer advice and support, but also ask critical questions that people in their own environment almost always resist.
3. Business idea – or just a nice idea?
As a founder you need a business idea, with which you want to earn your money. What sets a business idea apart from a nice idea: A business idea has to persuade (many) people to spend their money on it . There is hardly an industry in which one could not become self-employed. The business idea is usually found in a field that inspires one: a personal passion, a hobby or even a special area in the study or profession, in which one could already get a taste of an internship.
If you collect what you know, things are likely to come together. You can keep working, listening, looking for numbers, and developing a business idea. Practical example:Is there a target audience for the product I’m designing? And is the target group willing to spend money on it? It does not hurt to deal with such questions … Anyone who believes in his idea, must sometimes close their eyes and ears to ignore criticism. But you should be open to the response of customers or lenders such as sponsoring institutions and banks, because they often provide valuable information that will help you to advance.
4. Do you have to register as a self-employed student actually a trade?
A trade is any self-employed activity that is practiced on a permanent basis in order to earn money – provided it is not one of the so-called liberal professions . If you want to work independently on a permanent basis, you have to register your commercial activity with your community (“business license”). The costs vary from city to city; usually the registration costs between 20 and 50 euros and takes about half an hour. The trade office informs all other authorities and institutions such as tax office, commercial register, public order office, professional association, chamber of industry and commerce or chamber of trade. Traders are required to double-book if their turnover exceeds € 350,000 or their profits exceed € 30,000 annually.
Tip:The fact that self-employment is considered as commercial only if it is permanently invested is particularly interesting for students: If you as a student, for example, during the semester break in a period of about 2 months to issue your clients bills, then you need not to register a trade – because the permanence is missing. In this case, you do not have to declare sales tax on your invoices – and you are not allowed to do that! (Otherwise see also here .)
a) Small business or commercial business
Whether you are looking for a full-time job or, for lower expected sales, a small business, is not only important in terms of tax and health insurance. A small business means less bookkeeping: Up to an annual turnover of 17,500 euros, it is sufficient if you give a so-called income-surplus bill (there are free templates on the Internet); Commercial facilities such as double-entry bookkeeping, inventory or balance sheet are then not necessary.
b) Freelancers have the advantage
Freelance professions include academic work, artistic and journalistic jobs, and certain personal services that require “higher education,” such as teaching and consulting professions. If you teach English at the adult education center on an hourly basis, you work freelance and only have to complete a few formalities. Whether an activity is part of the liberal professions is subject to an official classification.
The distinction to commercial occupations is not always clear, especially in the new media. Often decides here the assessment of a clerk. Freelancers do not have to register a trade or pay business tax. In addition, their accounting obligations are manageable: a simple oneEarnings surplus bill is enough . Freelancers only have to apply for a tax number at the tax office before starting their independent work .
5. Basic knowledge taxes for self-employed students
If you work independently, you have to pay income tax. However, it only accrues when your income is higher than the basic tax allowance of 9,168 euros per year (as of 2019). By “income” is meant by self-employed: the annual profit, so your sales less all your costs. To identify it, you need to aggregate all your operating income and deduct all operating expenses (for example, office rental, telephone, web hosting, advertising, etc.).
You may even be able to claim tax deduction for your studies. Especially if you are already in the master or a second degree study, this is probably worthwhile.
value added tax
Anyone who is self-employed commercially or as a freelancer will be subject to VAT (with very few exceptions) . Depending on the industry, there are two different sales tax rates: 7 percent and 19 percent. An example: If you work as an editor and write an invoice for 100 euros, you must separately declare 19 percent (ie 19 euros) on the invoice and later pay them to the tax office.
If your current year sales are projected to be less than € 17,500 and you expect sales of less than € 50,000 for the following year, you can take advantage of the small business rules. It applies to freelancers and commercial self-employed.
As a small business owner, you do not have to pay sales taxin your invoices and pay them to the tax office. You are also not allowed to deduct input tax . If you do not trade goods or make big purchases, it will not hurt you. The advantage of the small business regulation: Less paperwork with the tax office , because the sales tax must be paid each month, and a form less in the income tax return.