Are contractors for a company employees

What does “freelancer” mean? - Information on the term, social security and the contract for freelance work

You have to be a freelancer - some employees like to long for the Benefitsto be your own boss and the Determine your daily work routine to be able to. Such a "free activity" promises independence and variety, which in some cases is particularly important for long-term employees Reason to dream should be.

But those who take a closer look at the topic must discover that it is not that easy is to become a freelancer and such a form of activity also comes with many disadvantages. The greatest of them: uncertainty. Uncertainty in the Order situation, at the irregular salary, when it comes to supply in bad times (for example Diseases) and more.

And also employers like to benefit from the Freelance flexibility, but quickly miss the advantages of permanent employees. In order to unravel the topic for you, we have put together a detailed guide in which we answer questions such as the following: What exactly is a freelancer? Which Advantages and disadvantages is there? How must a contract look for freelancers? And what are the legal obligations associated with such an activity? B .: How do I do my freelance work at the tax office Sign in?

What are freelancers? Definition & explanations

The mark of a freelancer is his independence: Even if he works for a client, he is not employed by this and thus not bound by instructions. This means that he is not involved in the day-to-day workflow of the client company. Rather, he can be his own job in terms of time and place classify yourself.

In addition, a freelancer (also Freelancer) authorized to several orders also from other clients at the same time to accept, or to reject them. This also results in the time limit employment with a client - the freelancer only works for the respective company as long as is necessary for the project. Of course he can commissioned again However, such a practice can also be Risks bergen (keyword bogus self-employment, more on that here).

Delimitation: freelancers and permanent freelancers

As for such “free activities”, there are often different ones here similar terms lumped together. Around the term "freelancer" better to define, we therefore find it important to some Delimitations to undertake.

  • permanent freelancer: This is less a delimitation than a specification. Freelancers who repeatedly receive assignments from the same company are often referred to as permanent freelancers.
  • freelancer: The main difference here is that freelancers can also be employed, while freelancers always pursue a self-employed activity and this must also be reported as such to the tax office. Such freelance activities are listed in the Income Tax Act. This includes, for example, the self-employment of doctors, interpreters, lawyers, journalists and more.
  • Employee-like self-employed: This is a further specification of the freelancer who is economically (but not personally) dependent on the employer. This usually earns more than 450 euros per month, does not employ any employees subject to compulsory insurance and for the most part only works for one client. He is therefore also subject to compulsory pension insurance.
  • Freelancer: As mentioned above, freelancers are the same as freelancers. The term comes from the Middle Ages, when it referred to free lancers who hired themselves out as mercenaries during the war.

Advantages and disadvantages of freelance work

As mentioned, a freelancer doesn't just enjoy that Benefits his self-employment but also needs some disadvantage accept. Also the client must be clear about both sides of such an occupation.

Advantages for contractors and providers

As Freelancer you can benefit from these advantages:

  • You decide on the order: You have the freedom to refuse uninteresting orders or not to accept clients with whom the cooperation has not worked well in the past. You can also decide for yourself how much time you want to invest here. You also have the freedom to work as much or as little as you want.
  • You can negotiate your salary every time: You have an influence on how much money you want to charge for your work. Of course, appropriate arguments are also necessary here, but usually the growing experience contributes to an increase in the fee.
  • You can negotiate the working conditions yourself: This not only includes pay, but also working hours and the place of work.

CompaniesEmploying freelancers typically see the following benefits:

  • You can plan as needed: If a project requires more workers than is available in the company, a freelancer can be contracted - only for a limited time, only as long as the project lasts. In this way, a new employee does not have to be found immediately, who would be virtually superfluous after the end of the project.
  • There is no notice period: If a freelancer does not work satisfactorily, the collaboration can usually be terminated at short notice.
  • You may be able to save: Employers pay social security contributions for an employee, which does not apply to freelance work. This may then be cheaper.

Disadvantages for contractors and contractors

The The downside of freelance work often let the dream of employees caught in their daily grind burst. It is certainly attractive to be your own boss, but one freelancer must also prepare for the following circumstances:

  • They do not receive a regular salary: Your earnings result from the current order situation. If there is no need for your services or if nobody wants to hire you, you will not receive any money.
  • You have to take care of your insurance: A freelance worker has to pay for his health insurance, pension insurance, etc. himself, which is done by the employer for an employee. These can quickly become expensive for the self-employed.
  • You are not entitled to paid vacation or continued payment of wages in the event of illness: If you do not want to work because you need a break or if you are unable to do so because you are sick, then you have no coverage. In this case you have to live with the fact that you do not receive a wage, as is the case with an employment relationship.

As Companieswho wants to rely on freelancers, you have to factor in the following disadvantages:

  • You may have to forego loyalty and team play: A freelancer is usually not part of the permanent team. This can have an impact on the working atmosphere.
  • You have to train every new freelancer: Every company works differently, so you must first familiarize a stranger with your procedures. This can cost you valuable time.
  • You cannot rely on availability: If you want to hire someone for a limited period, you cannot rely on finding a suitable freelancer. They might not want to accept your order or they might already be scheduled.

Freelance workers: what should be considered?

Let's get to the legal matters: If you want to become a freelancer yourself or if you want to contract someone as a company, there are a few important things to consider. As we mentioned earlier, the freelancer must identify as such register with the tax office. Hence, working as a freelancer affects the person Taxes out. From the point of view of the Employer is this positive: You need for this worker no wage taxes pay and also no social security contributions.

In addition, an important point is that it should be done quickly to bogus self-employment can come. A freelancer must avoid this, because in the worst case scenario this counts as Moonlighting and is punished.

A bogus self-employment arises when a freelancer as such reported to the tax office is, however, dependent on only one employer, whose instructions follow, the same tasks like the employees takes over and generally also treated the same way becomes. It doesn't matter what is in the contract, what matters is that practice.

Should this be in retrospect to the tax office or social security stand out, companies often need the contributions for this employee count. There might even be one Penalty payment towards the company.

Details of the employment contract: A freelancer needs special regulations

In principle, a oral contract apply, but in this case it is not advised. A freelancer is usually subject to one Work, fee or a service contract. The type of contract that comes about depends on the activity that is to be performed by the freelance work. It can also Mixed forms give.

A freelancer, but also a client, should find out about the main components be aware that with such a document should be in place to support the Framework to be clarified for the upcoming cooperation. These include the following:

  1. Mention of both Contracting parties
  2. Type and scope of Work performancethat is to be provided
  3. Agreements on compensation, especially their amount, but optionally also for advances, success commissions and the like.
  4. Duration of cooperation, possibly also one notice period

In addition, specifications for privacy, to Confidentiality (e.g. trade secrets) or to a Non-solicitation.

How a freelancer regulates insurance

Since he is self-employed, a freelancer must be his social insurance lock it yourself and pay. The most important thing here is that Health insurance, the one in Germany Compulsory insurance is. All other social insurances are recommended, however not mandatory.

The self-employed can either opt for a private or statutory health insurance decide. It is only important that such an insurance is taken out at all.

The care insurance is usually taken out where the health insurance was taken out. But this is not mandatory.

With regard to the Pension insurance a freelancer can decide to do a voluntary statutory insurance complete. Here he can usually choose between one minimal and one maximum contribution choose.

To a Accident insurance a freelancer can take care of himself by himself voluntarily at the employers' liability insurance association insured. The contributions are measured here according to the Annual earnings.

Also one voluntary unemployment insurance is possible for the self-employed.

Note: If you work as a freelancer, leave on the side but also one employment subject to social security contributions after, you are covered by unemployment insurance compulsory insurance.

Freelance FAQ

What is a freelancer?

A freelancer is primarily characterized by his independence from the client. Although he works for him, he is not employed by a company and has the freedom to refuse orders and to decide on his own everyday work.

What are permanent freelancers?

Those workers who repeatedly receive orders from the same company are referred to as permanent freelancers.

What does a freelance contract include?

Agreements on remuneration, the duration of the contract and details of the work that is to be performed are particularly important. You can read more information on the subject here.

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What does “freelancer” mean? - Information about the term, social security and the contract for freelance work
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