Many people coming to Germany from far away lands (or, a time zone or two over) are not just migrating for the first time, but starting a business for the first time. Armed with knowledge and experience after years of slogging away (likely making coffees for the Man), there is finally a pathway to “be your own boss” success. As with anything and everything - the first time we are doing that variation of any or every - we are likely going to be pretty bad at it! And, that’s OK, we all need to learn and grow in our own ways. One of the most interesting parts about working for yourself it truly understanding how you work. It can confront much more than just the things you thought you would be bad at (paying taxes on time!) and things you thought you would be good at (making sure you have some holiday time booked!). Beyond the eye opening experience that the money sent your way is not all yours, is not actually all profit, is the realisation that even as just one employee you are essentially your own little empire, your own employee, your own HR manager - your very own corporation. Thankfully, some of the “first time self employed” mistakes can be pretty common - and here is our pro-tip guide to navigating your way around them!
1. Failing to register in a business or self-employed capacity
There’s a lot Germany can offer freelancers in terms of lifestyle and the quality and quantity available business wise. However, if you speak to Freelancers and Self-Employed expats that have ‘made-it’, most will tell you they wish they had been more informed before they started the process. Commonly, this is because when you have to produce so much verifying information in a short period of time, it can create a stressful experience and limit the quality of what you turn in. It can result in late taxes, late paperwork and communication problems with all the important agencies in Germany. The best way to avoid this: is to start with a full, self-initiated education - know what you are getting into before you fill out your first form and the whole process becomes a lot easier and a lot more manageable - so you can focus on building your German business! The first step of this process is of course to begin with registering as a self-employed person or freelancer with the tax department. Without the numbers and registration that comes in this part of getting registered you will find yourself in that aforementioned group that is behind the 8-ball - this is a long enough process without it being apart of a broader stress of not being officially a business when you should be!
2. Underestimating workload
Remember, even as just one employee you are essentially your own little empire, your own employee, your own HR manager - your very own corporation. For every client, there is an accounting implication and also an expense, potentially receipts you need to process. A workload is now not as simple as just doing the job, because you are also your own receptionist… Basically, It’s easy to keep doing what you know. So, you were an accountant in a big corporate firm and you become a self-employed accountant working with smaller businesses. You fill your days with work for your new clients and then you realise that you have your own accounts, marketing and admin to do. So, it eats into your evenings and weekends. You’re now working 60 hours a week for yourself to avoid working 40 hours for someone else! Make sure you build time into your working week to get the admin, the planning, the networking, sales & marketing done.
3. Mis-budgeting business needs and personal needs
Tax money is not your money… yep, we said it! The health insurance money is not your money… The legal insurance… The income tax… The capital tax… OK-OK-OK - you should start getting the idea. If you have never been in business before, how could you know exactly what expense you will be up against? What we are referring to here is that often the first two years of business is severely underfunded - as in, the pulling of money goes not only into a new side of the businesses, but maintaining a lifestyle an employer likely once maintained for you. It’s as much about the new business as it is about those personal needs, that will have to be the first to be sacrificed when the business needs money