Becoming a Freelancer: Checklist for the First Steps

You want to become a freelancer and achieve more flexibility, have more fun at work and also get a higher income? You're not alone in that. Due to the pandemic and the increase in remote work, freelancer numbers have risen worldwide in recent years. 1.57 billion people are self-employed, according to World Bank figures, representing 47 percent of the total working population.

We'll show you how to become a freelancer in Germany in 10 steps. With our checklist, you'll have everything in place and be ready for a successful career with your freelance business.

Step 1: Find out if freelancing is right for you

First and foremost, ask yourself if being a freelancer is the right career for you. Just because others choose it and are happy with it doesn't mean it's a great fit for you. If the following points apply to you, freelancing would suit you:

• You are disciplined and good at motivating yourself
• Your time management is great
• You quickly get bored or feel restricted in a permanent job
• You value flexibility
• You can negotiate well and stand up for yourself
• You are well-balanced and can cope with working more and less at times

Step 2: Define your offer

What services do you want to provide? This decision is important for many later steps, including customer acquisition and whether or not you qualify as a Freiberufler in Germany.

You may think that it makes sense to offer as broad a range of services as possible in order to attract a lot of customers. But often the opposite is better: if you specialize, you're more likely to be perceived as an expert, you'll be in higher demand, and you'll be able to charge higher fees.

For example, as a designer you can commit to a certain style, as a copywriter you can deal with a specialized subject area, or as a consultant you can decide to work only with start-ups. The main thing is to pay attention to your skills and previous experience so that you can be successful with your choice.

Step 3: Freiberufler or business owner?

If you want to become a freelancer in Germany, you should look into the topic of the Freiberufler status before you register your business. Freelancers and Freiberufler are not the same thing, even though the terms are often confused. 

Freiberufler belong to a certain group of self-employed people for whom special rules apply. For example, they don’t have to pay business tax and have an easier time with accounting. If you work in a scientific, artistic or educational way, you are often a Freiberufler. If your work is administrative, on the other hand, you'll probably have to register a business (in German: Gewerbe).

Whether you get the Freiberufler status is decided by the tax office. You can ask them before you register, or consult a tax advisor to find out whether being a Freiberufler is realistic for you.

In our article "Freelancing in Germany: Freiberufler or Gewerbe?” you can find out more about this topic.

Step 4: Register as a freelancer

Once you know what you want to offer and whether you are likely to be classified as a Freiberufler or not, you can register as a freelancer. This is done at the tax office at your place of residence. There you fill out the questionnaire for tax registration (in German: Fragebogen zur steuerlichen Erfassung). In it, you provide information about yourself, your planned activity and the revenues you expect.

If you’re a Freiberufler, you have already completed the registration with this. You will receive your tax number shortly afterwards. If you are a tradesperson (Gewerbetreibender), you also have to register with the trade office. However, this is less extensive than the questionnaire for the tax office.

You can find detailed information on freelancer registration in our article "Freelancer Registration in Germany: What You Need to Know".

Step 5: Set your hourly and daily rate

Congratulations, you are now officially a freelancer! This brings us to a very important topic: your fee. If you've only worked as an employee before, you may be uncertain about what you can and should charge. Be sure to take enough time to answer this question, so you don't sell yourself short.

Avoid taking your previous salary as an employee as a starting point and extrapolating it down to hours. As a freelancer, things are different, for example:

• You have to pay for your own health insurance.
• You have expenses for your business.
• You don't get paid when you're on vacation or sick.
• You have to set aside money for taxes.

If you ask for too little, you will get into trouble quickly. So try to be realistic about your expenses and set your hourly or daily rate based on that. You can also compare yourself with other freelancers in your field and find out what is realistic.

You can find detailed instructions in our article “How to Calculate Your Hourly Rate as a Freelancer".

Step 6: Learn about insurance

As an employee, you are usually covered by statutory health insurance through your employer - unless you have a high income and have opted for private health insurance. As soon as you become self-employed, you have a choice: you can remain insured by the state or take out private insurance. What is better for you depends on many factors. In our article "Health Insurance as a Freelancer in Germany: The Basics" we give you an overview.

There are other types of insurance that should become an issue for you as a freelancer. Not all of them are absolutely necessary, but you should look into them and decide what you need and what you don't. These insurances include:

• Pension insurance
• Occupational disability insurance
• Professional liability/pecuniary damage liability
• Commercial liability
• Legal protection insurance

Find out more in our article "What Insurance do You Need as a Freelancer in Germany?".

Step 7: Understand taxes

For many people, the topic of taxes comes with a big question mark, and as a freelancer, it doesn't get any easier compared to being an employee. It can be a good idea to hire a tax consultant. This will save you time, nerves and, in many cases, money.

Still, you should get to grips with the basics and understand the different types of taxes:

• Income tax
• Sales tax
• Trade tax (if you don’t have Freiberufler status)

For income tax, you usually make payments in advance based on your most recent income or (in the first year) an estimate of your income. If you earn more, there will be additional payments. Therefore, you should set aside money for the tax, so that you do not get an unpleasant surprise.

For more information, read the article "Taxes for Freelancers in Germany: What You Need to Know". 

Step 8: Client acquisition

The set-up is in place: You know your offer and your hourly rate, you're officially registered as a freelancer, and you know about insurance and taxes. Now we come to a very important area: client acquisition. As an employee, your work comes to you automatically, but as a freelancer you have to make sure you have enough projects and therefore enough income.

In the beginning, you might start with clients from your private environment or former colleagues who have projects for you. But in the long run you should not only rely on your existing network, but continuously invest time in client acquisition, for example through:

• Your own website
• Social media
• Freelancer platforms
• Networking
• Cooperations with other freelancers
• Advertisements

In the article "Finding customers: Client Acquisition for Freelancers" we give you a detailed overview of the topic.

Step 9: Avoid false self-employment

False self-employment means that your client treats you like an employee, even though you are self-employed. He saves on social security contributions and does not have to pay you in case of illness or vacation, but at the same time they get the same service from you as from their employees. This constellation is prosecuted and punished in Germany.

It is best to make sure from the beginning that you don’t get into false self-employment. For example by following this advice:

• Don’t take instructions from clients (briefings are of course okay)
• Avoid being integrated into the company, for example into the client's systems
• Work in your own space and with your own equipment
• Don’t accept that you have to coordinate vacations with the client or call in sick to the client
• Work for several clients at the same time

For more tips, read our article "Avoiding False Self-Employment as a Freelancer: How it’s Done".

Step 10: Achieve a good work-life balance

For many freelancers, it is challenging to relax and recover in a sufficient way. On the one hand, they have a lot of flexibility and can decide on their own time off, and on the other hand, they want to satisfy their clients and ensure a high income by working hard.

But in the long run, it is highly recommended that you take care of yourself and give yourself breaks. This way, you will be happier and perform better. In our article "How to Find Your Work-Life Balance as a Freelancer" we give you many tips. 

We hope that this checklist will help you with your plan to become a freelancer. Good luck with it! 

By the way: With 9am you can manage all aspects of your freelance life - for free. You'll find new exciting projects, organize all your clients and contacts in one place, and get to know other freelancers in the community. Learn more about 9am.

We have prepared this article to the best of our knowledge, but it does not replace legal or tax advice.