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What is a freelancer – definition & characteristics

Freelance work is becoming increasingly popular in today’s working world. The term “freelancer” comes from the English language. It describes professionals who work on a self-employed basis and sell their services to various clients.

Freelancers can be found in many areas such as IT, design, consulting and advertising. They work on their own account and bear the risk. They are often paid through contracts for work or hourly fees.

An important aspect of freelance work is the search for assignments. Freelancers often use digital platforms and social media to do this. Their income varies greatly depending on how many assignments they receive.

Unlike employees, freelancers have no automatic social security. They have to take care of their own health insurance, pensions and accident insurance. Nevertheless, many appreciate the freedom and flexibility they enjoy.

Key findings

  • Freelancers are self-employed professionals in various industries
  • They work on a project basis for several clients
  • Remuneration is based on contracts for work and services or freelance service contracts
  • Acquiring orders independently is a core feature
  • Flexibility and independence are advantages of freelance work
  • Social security must be organized by yourself

What is a freelancer

A freelancer is someone who works independently without a permanent job. This type of work is becoming increasingly popular in Germany. Especially in IT, media and advertising.

Definition and origin of the term

“Freelancer” comes from the English and means “free employee”. In Germany, the term is mainly known in IT, media and advertising. Freelancers often work on the basis of contracts. They are flexible in their working hours and location.

Main fields of activity of modern freelancers

Freelancers work in many areas. They are particularly in demand in:

  • IT and engineering
  • Design and creative work
  • Consulting and coaching
  • Media and communication

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More Information

Legal classification of the activity

The rights of freelancers are complex. They are different from those of traditional employees. They must meet certain criteria.

Characteristic Description
Independence from instructions Freelancers work without direct instructions from the client
Remuneration model Often hourly or flat rate, leads to fluctuating income
Tax classification Usually subject to VAT, sometimes with exemptions
Social insurance Personal insurance required

It can be difficult to distinguish between freelancers and independent contractors. Both have different legal requirements. The characteristics, fields of activity and legal basis depend on the industry and personal situation.

Distinguishing between freelancers and traditional freelancers

Freelancers and freelancers are often equated, but there are differences. Freelancers are self-employed professionals with a trade license. Freelancers belong to certain professional groups.

Special features under tax law

Freelancers and self-employed professionals have tax law differences. Freelancers pay trade tax from 24,500 euros. Both must declare income tax, with a basic tax-free allowance of 11,604 euros (2024).

Occupational groups and fields of activity

Freelancers work in many areas:

  • Graphic design
  • IT
  • marketing
  • consulting

Freelancers work in specific professions that are defined in the Income Tax Act.

Freelancer vs. freelancer

Legal framework

Freelancers and independent contractors are subject to different laws. Freelancers are subject to the German Civil Code and special laws. They are independent and not bound by instructions.

Freelancers have no protection against dismissal and no health benefits. Despite the differences, the legal distinction between freelancers and independent contractors in Germany is not clear. Both bear their own insurance costs and can offer flexible prices.

Key characteristics of freelance work

Freelancers have a lot of freedom in their work. They decide for themselves when and where they work. But there are also challenges.

Independent work organization

Freelancers decide where and when they work. This helps them to find a good balance between work and private life. Over 60% of German freelancers work for several clients.

Remuneration models

Freelancers are usually paid per project or per hour. In Germany, they earn between 100 and 135 euros per hour. Prices depend on the industry.

Industry Average hourly rate
SAP 99 €
Consulting & Management 92 €
IT infrastructure 91 €
IT development 86 €
Engineering 88 €
Graphics, content, media 78 €

Customer relations and project work

Freelancers usually work for a project. They always have to look for new assignments. Around 20% find this difficult. Relationships with clients are often short.

Legal and economic basis

Freelancer Legal

As a freelancer, you have to deal with important legal and economic aspects. Self-employment brings many freedoms, but also obligations. You decide your own working hours and place of work. The legal basis for your assignments can be a fee, service or work contract.

You need a tax number from the tax office to work as a freelancer. You are obliged to pay tax on your income yourself. The tax return must be submitted by May 31 of the following year. This involves income tax, trade tax and VAT.

An important economic aspect is your social security. Unlike employees, you are not automatically subject to social security contributions. You have to take care of your own health insurance and pension provision. Under certain circumstances, permanent freelancers can be exempt from compulsory pension insurance.

Aspect Freelancer Employee
Working hours Self-determined Fixed by contract
Work location Flexible choice Assigned by the employer
Work equipment Own Provided by the employer
Subject to instructions Low High
Social security Self-responsible By employer

Be careful not to fall into the trap of bogus self-employment. If you use the client’s work equipment or are integrated into their operational organization, this can be problematic. If this is discovered, the client could face high additional payments and fines.

Successful order acquisition in freelancing

As a freelancer, it is important to find work. Digital platforms and networks help with this. They increase visibility and help to acquire new customers.

Digital platforms and networks

Freelancers use online platforms to find jobs. LinkedIn is very important here. A well-maintained profile can increase the chances of finding jobs.

Studies show that an optimized LinkedIn profile can increase visibility by up to 40%.

Marketing and self-presentation

Effective marketing is important. A clear value proposition makes freelancers unique. Personalized communication during cold calling increases the response.

Taking part in specialist discussions and publishing expert contributions on LinkedIn demonstrates expertise.

References and portfolio building

A strong portfolio is crucial. Satisfied customers are valuable referrals. A satisfied customer can generate an average of three further recommendations.

Continuous learning and updating knowledge are important. This keeps you competitive and expands your portfolio.

Conclusion

The world of work is changing rapidly. This offers freelancers many opportunities and challenges. Many people are opting for self-employment, which is often a big decision.

Freelancers have flexible hours and locations. This helps to find a better balance between work and private life.

The future looks bright for freelancers, especially in IT, advertising and copywriting. Hourly rates are often between 30 and 40 euros. But all costs must be taken into account.

Income can fluctuate and social security is often lacking. Online platforms and good marketing are important to find clients.

Freelancing offers the chance to improve skills and build a large network. However, there are also risks such as social isolation and administrative tasks.

It is important to deal with the legal and financial aspects. With the right preparation, freelancing can be a rewarding career.

FAQ

What exactly is a freelancer?

A freelancer works independently and takes on projects. They work for various clients. In contrast to permanent employees, they offer their skills flexibly.

In which areas do freelancers typically work?

Freelancers work in many areas. Especially in IT, marketing, design, journalism and consulting. Popular areas are web development, graphic design and content creation.

How do freelancers differ from traditional freelancers?

The difference lies in the law and taxes. Freelancers are defined according to the Income Tax Act. Freelancers are often classified as tradespeople. They have a wider range of fields of activity.

What legal steps do I need to take if I want to start as a freelancer?

You must register with the tax office. Decide whether you want to work as a freelancer or a tradesperson. Business registration is often necessary. Also pay attention to health and pension insurance and taxes.

How do I find work as a freelancer?

There are many ways to find jobs. Use freelancer platforms such as Upwork or Fiverr. Network on LinkedIn and XING. Create a professional website and use social media.

What remuneration models are common for freelancers?

There are hourly rates, daily rates or flat rates. The choice depends on your project and preferences. Your rates should cover your costs and a profit.

How important is a portfolio for freelancers?

A portfolio is very important. It shows your skills and experience. A good portfolio impresses clients and sets you apart from the competition.

What are the advantages and disadvantages of freelancing?

The advantages are flexible hours and higher earning potential. The disadvantages are irregular income and self-marketing. There is also a lack of social security compared to employees.

Simon Lüthje

I am co-founder of this blog and am very interested in everything that has to do with technology, but I also like to play games. I was born in Hamburg, but now I live in Bad Segeberg.

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