Light entrepreneurship is an excellent way to test your business or to bill for side work. It is also profitable from a number of perspectives. There are no start-up costs and fixed costs are low. You can spend your time on the essentials, because you don't have to worry about paperwork, taxes and other bureaucracy.
As a light entrepreneur, you can safely test whether entrepreneurship is for you. In the best case, you'll build up a customer base as a light entrepreneur, which will bring you financial security and stability later on as an entrepreneur. You can change your mind at any time and put your money where your mouth is - or start a full-fledged business.
How does the billing service fee work?
The service fee is the percentage that the billing service takes from your salary as its own fee. There are some differences in the service charges and their contents between different billing services. It is definitely worth comparing service providers.
Try the Truster light entrepreneur billing service for a mere 3.99% service fee. You only pay the service fee when you have done the work and send an invoice. If you find that being a light entrepreneur is a great fit for you, we recommend Truster's nifty monthly service package, which waives the service fee altogether. Our Pro package has all the goodies a light entrepreneur could want. Ask us for advice!
How much tax does a light entrepreneur pay?
As a light entrepreneur, you are officially an employee, so you also pay income tax on the same principle. All you need to do is submit your tax card to Truster. The tax card will show us the percentage of your salary that we withhold tax on. We will then forward your tax to the tax authorities.
Remember that your tax rate is determined by the total amount you earn from your different jobs during the year. You can't think that a few tonnes earned as a sideline will mean that you will hardly have to pay tax. The higher the total amount you earn in a year, the higher your tax rate will be. So take your tax rate into account when you price your work.
Light entrepreneurship pays - but remember these things
As the name suggests, the working life of a light entrepreneur is light and effortless. But there are a few things to be aware of. To get a job and a salary, you need to get your own clients. Do you know how and where to get them?
It may also take some time for your income to stabilise. So don't put all your bets on your income as a light entrepreneur, at least not right away. If your personal finances are in a mess, try to get your finances in order first and then try light entrepreneurship.
If you already have a queue of customers, and you're starting to get more invoices straight away, it makes sense to set up a limited company or a partnership. Without a business ID number, you won't be able to take advantage of tax breaks in the same way as a full-fledged entrepreneur.
It is easy for a light entrepreneur to sell services, but light entrepreneurship is not well suited to selling goods. Some trades are also subject to licensing, so you cannot work in them as a light entrepreneur. Ask us for more information!
Is it worth becoming a light entrepreneur or setting up a company?
We can't offer one right answer, but we can reflect on your situation and preferences.
Would there be customers known with certainty? Are you able to meet the regular expenses and responsibilities of an entrepreneur? Can you live with low risk? Then why not try your hand at entrepreneurship? You can also try a new way of life first as a light entrepreneur and only later start your own business.
If you are already a light entrepreneur, with more and more work and more billing, starting a business can be a good idea. As an entrepreneur, you can make tax deductions, i.e. mark purchases as business expenses. This reduces your company's profit and means you pay less tax.
But if you only do odd jobs or side work from time to time, and your income from side work is quite small, then a light entrepreneur is a smart choice. Also, if you need a summer job, some money to finance your student life, or want to try your hand at getting a job in your field while you're still studying, then it's a good option for that too.
If you have a brilliant business idea and want to see if there's a demand for your services, don't jump ship from your day job just yet. It's not even worth starting a business right away. Test the appeal of the idea as a light entrepreneur first. If the idea is successful, it will be easy to start a business on the fly later.