The time has come, you have decided to start your own business in order to continue as a self-employed person in the labour market. The IT sector is “big-business” and there are many interesting assignments available for you as a freelancer. But what do you have to take into account as a starting freelancer? We break it down for you.
How do you become a freelancer?
To become a freelancer or self-employed, you do not have to do a lot of work. One must register as an entrepreneur in the Trade Register of the Chamber of Commerce (KvK). Think carefully about your company’s name and do not forget to check whether this company name is in use by another organization. You can check this in the register of the Chamber of Commerce.
Because of the tax benefits (later more on this subject), it is wise to set up a sole proprietorship from the start. This is also the most common form of enterprise among freelancers. It is advisable to also take a good look at the other possibilities, such as a Private Company (B.V.) or a cooperative. These forms of enterprise can, in fact, come in handy in the future. You can contact an accountant or tax consultant for more technical information on this matter.
As soon as your registration at the Chamber of Commerce is completed, you will immediately receive your Chamber of Commerce number. You will also be given the option to request a (digital) extract statement. You must be able to hand it over as, soon as you have received an assignment. Also, a VAT-number is applied for when registering (if you are liable for VAT) with the tax authorities. This VAT-number consists of:
- The country code NL
- An RSIN / fiscal number or citizen service number (BSN)
- An addition of 3 positions: B01 to B99
If you have opted for a sole proprietorship, you will receive a VAT-number that consists of the country code (NL), your BSN number and as a closing number B01.
IMPORTANT: From January 1, 2020 there is a new VAT identification number (VAT-ID) for sole traders. You should state the new VAT-ID on your website or webshop, invoices and formal letter paper from January 1, 2020. The VAT-ID consists of 14 characters: country code NL, 9 digits, letter “B” and a 2 digit check number/code.
Then it is important that you acquire/set available good work equipment. Not every client can make a laptop and any other necessities available for an assignment. Do not be put off by this requirement, as there is an advantage to it. You can easily keep all business and private activities separate by utilizing your own work equipment.
Lastly, it is important to properly organize the administrative affairs. For you, as a fresh business owner and entrepreneur, this is one of the most important arrangments. After all, a thorough administration ensures a financial overview. This is also important if you are going to file the turnover tax return (every quarter). It is advisable to open a business account. This way you keep your business and private administration separated and more organized. If you are not big on numbers and tax rules, you could consider outsourcing these to an accountant.
TIP: Take a full day off to arrange everything as a starting entrepreneur. An appointment at the Chamber of Commerce and the bank can (considerably) take overtime.
The contractual matters
In recent years, the law and regulations for freelancers have been often revised. Previously, a VAR declaration was sufficient to get started with a client. However, this declaration was replaced on May 1, 2016, by the Deregulation Assessment of Labour Relations Act (DBA Act). This law was created to better counter fake self-employment.
The biggest difference with the VAR is that instead of just the professional, the client now also runs the risk of additional tax. A good model agreement is crucial to limit the risks as much as possible. That is why WIBA IT works with the Model Contracts drawn up by the Bovib and approved by the Tax Authorities. In this way, we have covered the whole chain with certainty.
Getting the right job
If you are just starting out as a freelancer, it is important to acquire an assignment as quickly as possible. If you do not have an assignment, you do not have any income. You must actively seek out clients yourself. Your network can play a big part in this. An important way to expand your network is to create a good LinkedIn profile and, as a self-employed person, start profiling yourself on the internet in a professional manner. You can expand on this by creating a professional business website with more information about the services that you offer as a freelance professional.
There are, of course, more options for arriving at a challenging assignment. For example, there are intermediary agencies (such as WIBA IT) that often have the right contacts and assignments that suit you. Besides, a mediation agency can take care of administrative matters. For example, we at WIBA IT take over the entire contract processing (using an approved model agreement) and we support the financial settlement of an assignment. This way you can focus as a professional on what you are good at – making the client happy.
It is important that you do not immediately register with dozens of agencies in your search for a quality assignment. It is possible that you automatically give permission to be offered to clients at registration. This can be very disadvantageous with regard to the rate, duration of the assignment and other conditions. It is, therefore, advisable to call a maximum of three good mediation agencies and to maintain good contact with those. This way you gain an advantage by establishing a closer relationship and you expand an ever-growing network even faster.
Of course there are many more possibilities to get jobs as a (starting) freelancer. Curious about these possibilities? Please, feel free to contact us.
As a self-employed person, you are not automatically entitled to a tax benefit. It is important that tax authorities recognise you as a self-employed. And that is just a bit different than being an entrepreneur for VAT.
If you want to make use of the advantageous tax regulations, such as the self-employed and start-up allowance, you must meet certain conditions. One of the conditions is the hour criteria. You are expected to work 1,225 hours for your own company in a year. This amounts to an average of 24 hours a week. This may seem like a lot, but if you have received an assignment, you will almost effortlessly reach it. Finally, you may also include working hours that are not billable. Think of hours that you put in your administration or your own website maintenance.
It is important to read on this subject. If a declaration is incorrect, you have to correct it. Correcting a declaration will cost time and, therefore, money. An accountant or bookkeeper can, thus, be of real help here. These professionals initially cost money, but will eventually yield time and potential tax benefits and are, therefore, worth a consideration.
Insurance and your pension
In addition to the many benefits that entrepreneurship entails, there are also some disadvantages. For example, a pension is not automatically accrued and, if you are unable to work due to illness or another suffering, there is no income.
To start with the insurance policies. There are several insurance policies that can guarantee you receiving income from illness. These insurances, however, are rather expensive (€600, – to €1200, – per month). In addition, there are many rules that can reduce the benefit. It is, therefore, the consideration that you have to make in order to set aside this money each month. In this way, there is still a source of income in case of illness. However, these insurance policies are not mandatory, even though they offer considerable security.
It is also important to have a business liability insurance. Since the introduction of the DBA Act, this is a hard requirement to be able to start with a client. Fortunately, these insurances are fairly cheap (about €120 per year).
Finally, there is the pension… If you choose not to arrange something for your old age, you will only be entitled to AOW (basic pension) in the future. This is often not enough for most households by far, which is why many freelancers do try to build up a supplementary pension. This can be done in several ways. For example, you can take out an annuity insurance policy, put money aside via the Fiscale Oudedagreserve (FOR) or, as before, deposit a fixed amount every month on a separate savings account.
Become a freelancer via WIBA IT?
At WIBA IT, we are always ready to support you as a (starting) freelancer. We could, if desired, pay out the first invoice earlier and consult and train you to present yourself as a real entrepreneur. Would you like to receive more information on the offered support? Please, contact our recruiters directly by calling 010 840 9999 or leaving us a message below.