Starting as a freelancer: 7 important steps

No difference between a self-employed professional without staff and a freelancer

There is no difference. In both cases you work for various clients, without an employment contract. You carry out your work as an independent entrepreneur. In the Netherlands, self-employed professionals and freelancers are not legal structures.

Freedom

Freedom is at the top of the list of benefits that come with being a freelancer. But self-employment has more advantages. And disadvantages, too.

Advantages

• You are your own boss and decide for yourself how and when you carry out assignments.
• Your hourly rate is often higher than when you work as an employee.
• If you meet the hours criterion of 1225 hours, you pay less taxes.
• You choose your clients yourself, which allows your work to be varied.

Disadvantages

• You are not insured against illness or incapacity for work, you have to arrange this yourself.
• You do not build up a pension.
• You are your own boss and therefore liable for any damage and failure to comply with agreements.
• You must maintain your business records yourself or outsource it to a bookkeeper or accountant.
• You do not receive a net amount: you still have to pay tax over your profit.

Are you going to work as a self-employed professional? These 7 steps will help you start your own business.

1. Your preparation

With a business plan you write your plans down on paper. This increases your chance of success. You investigate whether your plans are feasible. Does your own company generate enough money to cover your costs? Do you need investors or do you start from an unemployment benefit? Take these aspects into account when making your business plan.

Start your business in a location that suits you. From a market to a multi-company building or in a pop-up store. There are various possibilities.

Most freelancers start from home. Do you want that too? Always check with your municipality what is allowed and what the options are.

Are you unsure whether you should register with the Netherlands Chamber of Commerce KVK? View the criteria that make up a company here.

2. DBA Act and determination of employment

The Dutch Tax and Customs Administration determines whether you are self-employed based on a number of criteria. In addition, they also check whether you are an entrepreneur for income tax purposes (in Dutch). It is important to find out, because it has consequences for the way in which you complete the income tax return and whether you are allowed to make use of any deductions. You can get clarity about this by completing the OndernemersCheck (entrepreneur check, in Dutch) of the Dutch Tax and Customs Administration.

If you are going to carry out an assignment for a client as a freelancer, you need to know about the employment relationship between you and your client. Are you self-employed or are you in paid employment? This would be arranged through the DBA Act, but the enforcement of this law has been suspended until October 1, 2021. Are you not sure if you are an employee? Avoid false self-employment and use a model agreement from the Dutch Tax and Customs Administration. This way, you know for sure that there is no paid employment. Many clients find the current rules to hiring freelancers unclear. To remove this ambiguity, they can consult the pilot Web module Assessment of the Employment Relationship (WBA). By completing this online questionnaire, your client will receive an answer in advance to their question whether or not the work they want to outsource is considered to be paid employment. Please note: the outcome of this web module is an indication and not a legal decision.

3. Determine your hourly rate

Determining the right hourly rate is difficult. An hourly rate that is too high holds off customers. An hourly rate that is too low is not only an undervaluation of your qualities. It may also generate too little income.

First of all, calculate the minimum monthly amount you need to live on and to pay your financial obligations. Add to this your holiday allowance, income tax, the income-related health insurance contribution, and unforeseen costs. Then calculate your business costs, such as office rent, equipment, business insurance, etc. These are your necessary income and taxes plus business costs. Divide this amount by the number of billable hours. And there you have your minimum hourly rate, the rate you need to avoid making a loss. Your experience and skills are also worth something and therefore also play a role in determining your hourly rate. You can compare your hourly rate with that of your competitors.

Hourly rate calculation tool

Use the KVK hourly rate calculation tool and calculate your hourly rate based on a desired net income. Please note that this tool is only available in Dutch.

Hourly rate tool