2. DBA law and determination of employment
Tax determines whether you are self-employed based on a number of criteria. In addition, they also check if you are an entrepreneur for tax purposes. It is important to find out, because it has consequences for the way you fill out the tax return and whether you can make use of deductible items. You can find out more about this by filling in the Tax Authorities ‘Entrepreneurs’ Check. If you are going to do an assignment for a client as a freelancer, you would like to know about the employment relationship between you and your client. Are you self-employed or are you employed? This would be arranged through the DBA Act, but the enforcement of this Act has been suspended for the time being. Have you intentionally and maliciously distorted your employment relationship? Then you can get an additional employment from the tax authorities.
Are you unsure if you are employed? Prevent false self-employment and use a model agreement from the Tax Authorities. That way, you can be sure that there is no paid employment. Many clients find the rules that currently apply to hiring freelancers unclear. To remove this ambiguity, you can consult the web module Assessment of Employment Relationship (WBA) at Onderternsplein.kvk.nl. By filling out this online questionnaire, your client will get an answer in advance to his question whether the work he wants to outsource is considered to be paid employment or not. NB! The result of this web module is an indication and not a legal decision.
3. Determine your hourly rate
It is difficult to determine the right hourly wage. Too high an hourly rate deters customers. A too low hourly rate is not just an underestimation of your qualities. It can also generate too little revenue.
First of all, calculate how much you need to spend per month to be able to live off and to be able to pay your obligations. In addition, your holiday reservation, income tax, the income-related health insurance contribution and unforeseen costs. Then calculate your business expenses, such as office rent, equipment, business insurance, etc. These are your required income and taxes plus business expenses. Divide this amount by the number of billable hours. And you have your minimum hourly rate, the rate you need to avoid losses. Your experience and craftsmanship are also worth something and therefore also play a role in your hourly rate. You can also compare your hourly rate with that of your competitors.
Tool for calculating hourly rate
Use the Chamber of Commerce’s hourly rate calculation tool and calculate your hourly rate based on a desired net income.
Tool for calculating hourly rate
4. Reducing your risks
As a freelancer, you are responsible for your own risks. With general terms and conditions, you determine yourself and your customer’s rights and obligations. By taking out insurance you can further cover business risks. We have listed the most important insurances and risks for you:
- Incapacity for work
- Corporate responsibility
- Professional responsibility
Or see here for an overview of all insurances.
As soon as you start for yourself, you can be found by everyone. In addition to the usual entrepreneurial risk, you need to deal with security risks, such as fraud and crime. What security risks do you encounter as a start-up entrepreneur, and how can you limit them?
5. Choose your legal form
As a self-employed person, you must register with the Chamber of Commerce. There you need to specify in what legal form you want to start. Most freelancers start with a one-man business. And in some cases with a private limited company (for example). The choice of legal form has consequences for your liability in addition to tax consequences. Find out which legal form is right for you with the legal form decision assistance.
6. Register your company with the Chamber of Commerce
So you want to become a freelancer? Are you ready to start your own business? And have you come up with a good company name? Then you can make an agreement with the Chamber of Commerce and register your company. You do this by digitally filling out the registration form. Then you make an appointment online at a Chamber of Commerce office. During your employment, an employee of the Chamber of Commerce checks your identity card and checks whether you meet the registration conditions. As soon as your registration is completed, you will receive your Chamber of Commerce number. The Chamber of Commerce then passes on your information to the Tax Authorities. Registering a one-man business costs € 51.95 once.
Also, think carefully about your business description. The company description indicates which activities you actually perform as a self-employed person. Based on your company description, the Chamber of Commerce will determine an appropriate SBI code with you. This code is used by public authorities, industry associations, pension funds, banks and insurance companies. If you need to do other activities, please report this to the Chamber of Commerce. We will then change the SBI code or add an activity and a new code. As a freelancer, it is possible to perform several activities in your company (sole proprietorship).
Are you in doubt about whether to register your business? Then watch this video: