Start Up Successfully Alongside Your Main Job

Starting a Business On the Side: Why It's Worth It

Starting a business doesn't necessarily mean putting all your eggs in one basket. With a well-developed idea and good planning, you can also do it after work. Many people appreciate this approach, as there is still financial security even in the event of failure. This allows you to test and adapt your business idea at your leisure.

Often, complete self-employment is not the goal at all, but starting a business as a sideline is intended to supplement the income from the main job. Sometimes the basic requirements for complete self-employment are simply not met. There can be various reasons for this:

• The business does not generate enough income.
• You have to care for relatives or look after children at the same time.
• There are not enough financial or time resources available.

In such cases, a part-time business is just the right thing. Nevertheless, there are also points that you need to bear in mind when starting a business on the side. You should also exercise caution when choosing your business idea - not all of them can be realized alongside a permanent position.

Digital business models that allow you to do a lot online are very suitable - this also keeps your fixed costs low. If your idea also offers the potential to develop from part-time to full-time self-employment, all the better. In any case, careful and realistic time management is the key to success. Part-time self-employment always harbours the risk of an extreme double burden between your main job, side job and private life.

Self-Employed As a Sideline: A Definition

Depending on the country in which you work, the law defines more or less precisely what part-time self-employment involves. Basically, this means that your established business is not the centre of your professional activity. In addition, the income from your sideline business does not exceed the salary you receive from your main employer.

Incidentally, you can also employ staff if you are self-employed as a sideline. However, you must also register them with the social insurance institution in advance.

Requirements For Part-Time Self-Employment

Even if you set up a business on a part-time basis, in many cases the same rules apply to you as for full-time self-employed persons.

Registration Of Part-Time Employment

Whether you work full-time or part-time, you must notify the authorities if you are self-employed. If you are a freelancer, it is sufficient to register with the relevant tax office. In case of doubt, which activities are considered freelance is a case-by-case decision.

As a rule, freelance work is based on specific training or creative talent. Classification as a freelancer also offers advantages: It eliminates some bureaucratic obligations (single instead of double-entry accounting) and in many cases you do not have to pay trade tax.

If freelance work is not an option, you must register a business. This is done at the relevant trade office. In addition to income tax, you must also pay trade tax and may be obliged to keep double-entry accounts. If there are any doubts about the categorisation of your business, tax advice can help.

Taxes

Regardless of whether your profit comes from full-time or part-time self-employment, you must declare it in your tax return. As a self-employed person, you are liable for income tax, VAT and, if applicable, trade tax. You must also submit an advance VAT return several times a year. This tells the tax office how much VAT you have claimed from your customers and how much you have to pay tax on. Refunds are also possible if you have paid more VAT than you have collected.

If you wish, you can also use the small business regulation if your activity does not exceed the country-specific contribution limits. This exempts you from the obligation to pay VAT and you no longer have to submit an advance return - but you are then no longer entitled to deduct input tax. In concrete terms, this means that if you have made purchases in connection with your activity, you will not receive a VAT refund. The only thing that helps here is to calculate everything carefully so that you can make the right decision for you.

Legal Form

The choice of legal form for your business is largely determined by taxes, accounting obligations and liability - so carefully weigh up the pros and cons of the individual company forms before you make your decision. The classic sole proprietorship is particularly popular for sideline businesses. This legal form is relatively uncomplicated and the associated costs are limited.

Social Security

If you set up your business as a sideline, in most cases you will continue to be covered by social insurance through your main job. This saves you high expenses that you would have to cover privately as a fully self-employed person. But be careful: the profit you make from your business can be offset against the income from your main job up to certain limits. You should therefore contact your health insurance company and inform them of your planned sideline in order to avoid high additional claims.

Part-Time Self-Employed: How To Inform Your Employer

Your employer is not allowed to prohibit you from having a second job. Nevertheless, for reasons of transparency and fairness alone, it is advisable to communicate your plans openly. These points are particularly important:

• You must not compete with your employer with your part-time job.
• Your work in your main job must not suffer as a result of your sideline.
• Holidays are for recovery and sick leave is for restoring your health - do NOT use this time to promote your part-time self-employment.

Many people feel uncomfortable going to the manager with this issue. However, a frank and professional discussion of your plans is important in order to do justice to both your main job and your side hustle. At the end, put the agreements you make in writing. This will give you and your superiors security and ensure a trusting relationship.

Beware Of Bogus Self-Employment

You may not yet have too many clients, especially if you are self-employed as a sideline or at the beginning of your career. For this reason alone, many founders worry about the issue of bogus self-employment. But there is no need to panic. There are a few signs that you can use to determine whether there is a risk of bogus self-employment in your case:

• You can decide for yourself when, where and how you work.
• You have set your own prices and charge a reasonable fee.
• You have your own premises in which to carry out your work.
• You are not involved in the organisational processes of clients.
• You work for more than one client.
• You are self-employed and have your own website, for example.

The more of these points apply, the lower the probability of bogus self-employment. Ultimately, however, such a complex issue is a case-by-case decision.

Risks Associated With Part-Time Self-Employment

Even if you "only" set up your business as a sideline, you need to be aware of the potential risks. If you cause damage to clients or other third parties, they can hold you liable - there is a risk of high claims for compensation that you will have to settle with your private assets without suitable insurance coverage.

The biggest risks for your business are:

Infringements:
For example, if you use third-party content without permission, you are committing an infringement of copyright law that is subject to a written warning. Errors in the imprint or cancellation policy are also violations of applicable law. Areas such as trade mark or personality rights also offer scope for legal infringements.

Professional Mishaps:
If you make a mistake in the course of your work, it can be expensive - because it is usually not only a nuisance for you, but also has financial consequences for your customers. Of course, clients do not want to bear this damage alone, but will hold you liable for it. This is the case in the following scenarios, among others: missed deadlines, budget errors, transposed figures.

Cybercrime:
Cyberattacks can affect any business - regardless of industry and size. If criminals gain access to sensitive data, they can cause great damage and the relationship with your customers suffers. That's why you should take precautions:

• Make regular backups
• Do not blindly click on email attachments
• Carry out regular updates
• Introduce multi-factor authentication
• Use VPN on the move

Property Damage:
If for example you damage your customers' property, you have caused property damage for which you must pay.

Data Protection:
The rules of the GDPR also apply to you as a person who is self-employed on a part-time basis. If you do not comply, you will not only lose the trust of your customers, but you could also face fines.

Part-Time Self-Employment: New Opportunities, Known Risks

Testing a business idea alongside your main job offers security. This approach reduces the pressure of having to make the business a success as quickly as possible. However, starting a business as a sideline also requires meticulous preparation, good organisation and comprehensive coverage. This will greatly increase your chances of running your business productively and enjoying it in the long term.