Many founders set up a business part-time on the side before they make the leap into full-time self-employment. Important topics such as taxes, registration or whether the employer needs to be informed must not be forgotten. As a founder of a business you can use part-time self-employment to test whether and how well your business idea is received. However, it is also important that you prepare well for part-time self-employment.
Create your business plan and weigh up the pros and cons. For an optimal start, you can also seek some start-up coaching before you set up a business part-time on the side.
Part-time business is booming
If you are still employed, part-time self-employment is also a way to start a business. Worldwide, government data confirms that part-time self-employment has become more important in recent years. More than half of all start-ups now take the form of part-time self-employment. Women, in particular, are more likely to choose part-time self-employment as a way of starting a business than starting a full-time job. In addition, the start-up monitor shows that the capital requirements for part-time self-employed people are generally lower.
7 points if you set up a business part-time on the side
If you want to set up a business part-time on the side, there are several points to consider. We have listed 7 relevant topics that you should consider before you become self-employed:
1. Self-employed part-time versus full-time
Their independence is only part-time as long as certain criteria are met. These relate, inter alia, to working time and income earned. The basic logic is to determine which employment is your work center. For example, working time can be based on a target time of up to 18 hours per week for part-time self-employment.
Of course, income from part-time self-employment should not exceed earnings. When an employee is employed, you are also assumed to be self-employed full-time and you are no longer self-employed on a part-time basis.
2. Registration of part-time self-employment
The same requirements apply to the registration of your part-time business as for a start-up for full-time business.
3. Inform employers
Basically, you are free to become self-employed. However, you must not neglect your duties as an employee or compete with your employer. Also, observe existing regulations in your employment contract. Not only it is advisable to notify your boss and obtain permission, but is often a requirement of your contract with the,.
4. Observe any social security obligation
If you are self-employed, you do not have to pay (additional) social security. However, consultation with your health insurance company is urgently needed, as the remuneration from part-time self-employment is also taken into account for the contribution. This may otherwise result in additional claims. Even if you want to become self-employed as a student, contact with the health insurance company is important.
As soon as your part-time self-employment prevails (in terms of income and/or working time), you can apply for self-employment status. This will make you insurance-free and you will not have to pay contributions for pension and unemployment insurance. In addition, you can then switch between the legal and choose private health insurance.
5. Permits to set up a business part-time on the side
Also for part-time self-employment, there may be a requirement that you must prove you have any necessary qualifications and permits, just as in the case of full-time self-employment.
6. Taxes for part-time self-employed persons
For taxation, it does not matter whether you have self-employed part-time or carried out your foundation in full-time employment. Find out, what taxes you have to pay if you are self-employed.
7. Examining the small business scheme
Part-time self-employment and small business status are not identical. Even if you are self-employed, you can take advantage of the special arrangements for small business owners. The main issue is the exemption from VAT in some countries. You should check on what small business schemes are available in your state and country.
As soon as your part-time job prevails, you become insurance-free and can save contributions to pension and unemployment insurance!
What legal forms are needed to set up a business part-time on the side?
Even if you start a part-time business, you should think about the legal forms that may be required. For many founders, there are often some questions when it may be in the choice of legal form. Often you will need the advice of a lawyer or tax advisor, or at the very least from the government department relevant to your business area.
Unemployment and part-time self-employment
Even if you are unemployed, you may also work independently. However, part-time self-employment may not exceed 15 hours per week. If you are self-employed in unemployment, you will not be able to earn €165 per month’s income. However, you must immediately report the part-time self-employment to the employment office.
Part-time self-employment and its benefits
- If you first become self-employed on a part-time basis, you can test whether your business idea actually has enough economic potential for full-time self-employment.
- You reduce the risk of failure through part-time self-employment, as you have a secure income from work and can use this to finance part-time self-employment.
- If you are self-employed on a part-time basis, you can take more time or invest less time with the development compared to the full-time start-up.
- In the event of impending unemployment, you can transfer part-time self-employment to full-time self-employment.
- Of course, you can also increase your previous income from work through part-time self-employment.
Part-time self-employment and its disadvantages
- Keep in mind that you are also burdened with a double burden of part-time self-employment and do without time for family and private life.
- Check that the time available to you is sufficient to successfully run a company in a part-time job before you become self-employed.
- In the case of potential customers, the circumstance of part-time self-employment can be interpreted adversely. The same applies to partners and suppliers.
- Due to your main occupation, you are less flexible in time to respond to urgent customer requests when you are self-employed.
- The start-up in part-time employment can also fail – you then have to pay off your debts via your salary.
