Freelancing 101: A Comprehensive Guide to Succeeding as a Freelancer

Discover everything you need to know about freelancing 

Freelancing and self-employment refer to an individual working independently without employees. The term “ad interim” denotes temporary work or function performance. Typically, it involves replacing a staff member or working on a fixed-hour project for a few months. 

Before beginning your sole proprietorship, you need to register with the Chamber of Commerce (KvK). Although registration may be simple that should not suggest that running a business is easy. You need to consider all aspects of freelancing and discuss the advantages and disadvantages with your partner (if applicable). Deciding to go freelance will impact several areas, particularly finances. Therefore, it is crucial to weigh the pros and cons carefully before making a decision. 

The benefits of freelancing 

Although freelancing has several benefits, not all advantages are presented realistically. Often, experienced freelancers who have put in years of challenging work are highlighted as examples, which can lead to impractical expectations as a beginner.  

Here are the most significant advantages of freelancing: 

More freedom – Freelancers often start their businesses seeking freedom in work and life. It takes time and effort to earn this freedom. It is important to ask yourself what freedom means to you, are you looking for freedom in the type of work, companies, or work-life balance? Starting your business means taking on additional responsibilities such as administration, website maintenance, and acquiring new clients. You can outsource these tasks, but it affects the costs you incur. 

More money – Although financial freedom is essential, entrepreneurship does not guarantee a higher income. Many new freelancers overestimate their earning potential. Freelancing comes with additional responsibilities such as acquiring disability insurance, business legal expenses insurance, and building a financial cushion. Therefore, it is crucial to consider the financial implications of freelancing before beginning. 

More variety – Freelancing offers variety and diversity in daily work. You can work with different clients, apply professional knowledge to various industries, and find what suits you best. Specializing in a certain industry is not necessary, and many entrepreneurs find it both enjoyable and educational to work with clients from different industries. 

The disadvantages of freelancing 

Freelancing requires several additional responsibilities beyond the work itself, such as marketing, networking, and administrative duties. It is also your responsibility to seek out new clients and projects actively. 

Becoming a freelancer 

Congratulations if you decided to start your freelance career! Before beginning, here are some steps to take: 

1. Register your business with the Chamber of Commerce (KvK).
2. Apply for a VAT number. 
3. Open a business bank account. 
4. Create or have a website made for you. 
5. Find clients and start building your network. 

Register with the Chamber of Commerce (KvK): 

To begin your freelance journey, you must register with the Chamber of Commerce (KvK) and obtain a VAT number. To register with the KvK, you need to schedule an appointment with the nearest branch, provide a trade name, business address, and contact information. A one-time registration fee of € 51.30 (March 2021) is associated with registration. Obtaining an extract from the KvK is necessary to prove that your company is registered in the trade register. A recent extract may be required when opening a business bank account or renting office space. Visit the KvK website to check the current rates and conditions. 

Obtain a VAT number: 

In addition to registering with the Chamber of Commerce, obtaining a VAT number (VAT ID) is crucial for freelancers. This registration system safeguards your privacy by separating your personal BSN number from your VAT number. After registering with the Chamber of Commerce, the tax authorities will issue you a VAT identification number automatically. 

Open a business bank account: 

While it may not be mandatory, opening a business bank account is beneficial for freelancers. It allows you to separate your work and personal finances and offers clarity when filing tax returns. 

Create a professional website: 

A professional website is essential because it is often the first thing potential clients will see. Ensure that it is user-friendly, with well-written text. Start with a basic website, and upgrade if necessary. Be mindful of costs and determine the purpose of your website before making any decisions. 

Search for assignments: 

You can use your network or search online for business marketplaces and service providers to find work. Different types of assignments and industries are available, and revenue models can vary from monthly fees to a percentage of turnover charged by the intermediary. Be sure to evaluate the expenses and potential turnover associated with each assignment, including intermediary costs. 

Networking: 

Building a strong network is crucial for finding new contacts and assignments. There are different networking clubs available, but they can be costly. Consider networking online using social media platforms like LinkedIn. 

Financial Responsibilities for Self-Employed Individuals: VAT Returns, Insurance, and Accounting 

As a self-employed individual, there are various financial responsibilities that you need to manage to ensure the success of your business. These responsibilities include VAT returns, insurance, and accounting. Here is what you need to know about each: 

VAT Return and Sales Tax: 

As a self-employed individual, you are required to charge VAT and pay it to the tax authorities. It is important to note that the VAT rate for services is 21%, and you need to submit a VAT return every quarter. While the process of filing a VAT return is not difficult, it is crucial to ensure that your administration with incoming and outgoing invoices is accurate. The amount of VAT you need to pay can quickly accumulate, so it is advisable to set aside the VAT amount received in a separate business savings account to avoid any financial difficulties during VAT returns. 

Insurance: 

Another important responsibility for self-employed individuals is to opt for insurance policies to safeguard their business. However, determining which insurance policies are necessary can be challenging, and the coverage of each policy can be confusing for starters. Fortunately, there are different insurance options and packages specifically designed for entrepreneurs that are increasingly budget-friendly and cater to the risks of self-employed professionals. 

The most important insurance policies for self-employed individuals include disability insurance (AOV), business liability insurance, and business legal expenses insurance. 

• Disability insurance (AOV) ensures that you have income if you are unable to work due to illness or injury. While this insurance can be expensive and complex, there are various options to choose from. Make sure to carefully review the conditions and use online calculation tools to determine the financial cushion you need in different scenarios.  

• Business liability insurance covers a range of damages and risks, but not all damages and risks are covered. The cost of this insurance varies depending on the industry and sector in which you operate.  
• Business legal expenses insurance is available and is often made up of different modules, similar to private legal expenses insurance. 

Accounting and Administration: 

Managing administrative tasks and accounting can be overwhelming, particularly if you are unfamiliar with these tasks. However, there are online software packages available that cater specifically to small entrepreneurs. These packages offer a user-friendly interface, training, and online tools, such as creating and sending invoices, sending payment reminders, and preparing VAT returns. While hiring an accountant is an option, it can be costly. Doing your own accounting and administration ensures that you maintain control over your company and finances. Additionally, to avoid penalties from tax authorities, it is recommended to set up and schedule a fixed time every week or month to do the administration. You can still hire an accountant to prepare the annual accounts and file tax returns.  

Finally, as a self-employed person, it is crucial to keep all administration, such as incoming and outgoing invoices and bank statements, for at least seven years to fulfil the retention obligation. Managing these financial responsibilities as a self-employed individual can be challenging, but with the right information and tools, you can successfully navigate them to ensure the success of your business. 

Start or continue your Freelancing Journey with Smelt 

Freelancing offers exciting opportunities to work on fulfilling projects, set your schedule, and earn a living doing what you love. However, the freelancing world can be overwhelming, especially for those starting. At Smelt, we understand the challenges of freelance life and believe that freelancers are the backbone of the Life Sciences industry. That is why we are committed to helping independent professionals find their ideal assignments, connect with top clients, and navigate the challenges of freelance life. 

With the right tools, resources, and support, you can build a successful freelance career and achieve your goals. Whether you are just starting or looking to take your freelance career to the next level, Smelt can help. So, what are you waiting for? Sign up with Smelt today and start your journey towards freelancing success!