Taxes & business banking for the self-employed


Freelancers Pro Guide - Investments and Spendings 101

Last updated on Feb 21, 2020

Kate Bailey

Freelance Editor

Mar 25, 2019

Everyone wants the best equipment to work with. Everyone wants the right kind of computer licences or the Pro plan, and everyone wants to make their work as a freelancer or self-employed person a little bit easier. Investing or spending often facilitates these things which ease our lives. This is another part of working for yourself that is rife with tough decisions and a mixture or urgency AND long-term consideration. Sometimes a healthy amount of deductions seems like a nice time to make the investments your business needs, but, as with all finance decisions - a good understanding and knowledge of the basic principles of control will go a very long way. So, we’re going to take a delve into investments and spending for freelancers and self-employed people.


There are some golden rules when it comes to talking about investments and spendings. One relates to deductions . The seductive optioning of goods and services used for business that we are all accruing over the course of the year. This can also be one of the pitfalls of being a business owner or freelancer, especially when the overheads are low. No matter how certain you are that you definitely needed that particular book about artisanal ravioli for your freelance aerosol business, convincing the Finanzamt of this might be another thing altogether. This is where it gets tricky - of course, we all have the right to bring down our taxable income based on the expenditures we made within our business - but as with all things finance and freelance in Germany: play by the rules. Simply spending your way to lessor tax bills is not good business.

Good Investments Help Other Parts of Your Business

Potentially the best thing a self-employed or freelance person could consider doing as an investment, would be to hire assistance in areas you are not so good at. This could be bookkeeping, social media marketing, an administration assistant who can take care of calls or emails. Something that gives you back your time within the business is essentially an investment in the allotted time you can devote to new work or clients. If there is room in your cashflow whereby you could afford to pay someone to handle your social media, you could consider that you could take on another client, meaning you would make that money up. This is especially smart to do if there are clients you want to take on, but do not have the time.


Equipment That Helps

Maintaining equipment, or getting the right equipment, can weigh on a business heavily. Sometimes, it takes months of going without to procure necessary funds for key equipment. Technology and equipment are two components of the business that, if selected correctly, will make a huge difference to the productivity of your work and the quality of the work itself. Sometimes, in the circumstances where you do not have what you need to do your business quickly and to a high standard, your chances to grow slim, because already you can not keep up with the output. If you find you are stabilising in the cash flow and could make such an investment - always ask: does this make things easier or better for me, and do the customers get a better result.

Eliminate what is unnecessary

It sounds obvious, but repeated costs like magazine subscriptions or organization membership fees can add up quick… maybe even to the dollar amount you need to reinvest in the business, a projector for workshop sessions. Review what you’re paying for and make a decision about which are necessary, and assess what expense really help you achieve your goals and purpose and allow you and your business to have the things you need to thrive. Basically, its costs like these that seem inconsequential that can block you from necessary investments and spendings to improve you or your business's financial affairs.

Investment should always lead to growth

You’re really getting into this whole work for yourself thing and it seems like things are going good? But if you’re trying to do everything on your own, you might be limiting yourself for potential growth. A business powered by systems is one that can handle the multi-layered demands of expansion. There are many types of growth you can have even as just one person. From getting a Steuerberater to having a translator create advertising in another language for you, there are always opportunities to grow. Being the savvy business soul you are means you will likely be able to address these

No band-aids, don’t invest in band-aids

When money, time, and expertise are in short supply, it can be tempting to go with the quick (or cheap) fix, and investing in basic solutions that don’t require a huge financial investment or learning curve can seem wise. But things are not always what they seem. Yes, that dream solution may be a stretch and have an intimidating learning curve. But ending up in a patchwork maze of multiple inexpensive and inefficient systems that only appear economical will end up costing money in the long run. So, if you’re thinking what to do when it comes to investment or spendings, ask the question: are there any band-aids in the financial framework I need to address right now?


Spend More To Educate More, and improve yourself

Whether it’s selecting a mentor or enrolling in a German course, you should pay for your certain kinds of education that dramatically boosts your earning potential. There are expansive amounts of free resources out there. You can learn a lot even from blogs like ours! But perhaps there is a bigger qualification that could help you land bigger clients, or just improve the amount of services you offer. Actually, you can achieve a lot by seeking out specialised courses and investing in your knowledge. Of course, you need to go through all the checks and research the quality of the course, the amount of time you have to devote to it, and if it really will improve your overall revenue opportunities. As mentioned, it is possible to consider taking free courses an investment - because it is all about what improves your business, and your finances, for you.

The Clients Experience

When looking at your business and what you offer, ask yourself, is there anyway I can improve what I offer to my clients with either investments or spendings? Perhaps it’s switching to environmentally friendly paper to print proofs on, and letting them know. Perhaps it’s investing in automations or ordering simplification. Perhaps better laying out your website so they know all of your services. Basically, anything that improves the customer's experience should inevitably result in more word-of-mouth, and ultimately, better results for your customers. You should be in a stable position and looking to refine your business with stable investments and spendings and feel secure in these decisions by seeking external opinions.

Ultimately, if you do your research and have a solid strategic rationale for your investment decisions, there is no “wrong” type of investment to make for you or your business. Investing for growth as a small business owner is never easy, but if you have a clear vision and purpose for each investment, and you know what outcomes you want to achieve, you’ll be more likely to see results. There are a bevy of banks, investment specialists and all sorts of people telling your debt is good, and to spend-spend-spend but at the end of the day that advice doesn’t always work for the everyday you or me. Focusing on deepening internal growth strategies, yes, even if you work on your own should be apart of assessing your business in general. For every budget with a bottom line, and a clear status, has some potential to be performing better. So, why not pursue an understanding of all the things we spoke about today? If investments and spendings are so good and feel right, let’s ensure it always plays a crucial purpose in our business, our finances and our overall productivity and function.

Nearly every person who works for themselves will struggle with this. It is something, however, that belongs to an overall ‘healthy diet’ for your finances. A little too much spending, there will be trouble. Too little spending and there is not enough to grow and take on new business. Too little looking at the cashflow can often mean thinking too much of your liquidity. Samewise, not paying attention can invariably undermine your capacity to grow because you think you can’t afford it. Either way, the solution is all about a mediated, balanced financial diet that analyses pragmatically, and alleviates your emotional burdens of worrying about cash, equipment and what to do, when you just wanna do, what you are good at doing.