Handling your freelancer admin
By Carrie M. King →Freelancing comes with stacks of paperwork, so to avoid any confusion—or fines—you’ll need to set up smart, efficient processes that enable you to keep on top of all the admin. Goose can help.
You may raise an eyebrow at this, and you’d be well within your rights, but setting up good processes to handle your freelancer admin can actually be rewarding. Yes, I know that’s a tough sell but hear me out. Staying on top of freelancer admin—and there is plenty!—enables you to focus on building your business and keeps everything running smoothly. From getting paid on time to increasing your feelings of security, good systems help everything else to run.
However, all the paperwork that comes with freelance life can be daunting and more than a little confusing. We’ll go into all these various tasks in detail in later articles, but to get you started, let’s skim through the most pressing admin tasks you’ll need to take care of.
1. Freelancer registration
Registering as a freelancer will be different depending on where you live. In Germany, you’ll have to fill in the Fragebogen zur Steuerliche Erfassung (tax registration form) and send it to your local Finanzamt (finance bureau). You can usually do this online via Elster. It’s pretty simple and within a few weeks they’ll send you a tax number that you’ll need to quote on all your invoices and communications with the Finanzamt. In the US, you're not required to register as a freelancer to get started. However, there are different rules about freelancing depending on the state you live in. If you would like to register as a freelancer—though again in most states this isn’t necessary—you’ll have to register as a business and to submit taxes to the IRS on that basis. We’ll cover this in more detail in later articles.
2. Client contracts
As a freelancer, you don’t necessarily require a contract from your client to start working for them. Many freelance gigs are based on informal arrangements, but it’s usually safer for both parties to have the agreement in writing. This is especially important with new clients if you’ve never worked for them before or if they haven’t come recommended from a reliable source. Again, it’s not a requirement but strongly recommended.
Contracts protect both parties, lay out in clear terms what’s expected on both sides, and can back you up in court in the event there’s a dispute over some aspect of the project or payment. Your contract should contain the following:
- Contact details for freelancer and client
- Project scope and deliverables
- Agreed rates and payment schedule
- Deadlines and timeline agreement
- Ownership and copyright clauses
- Definition of legal terms
- Cancellation terms
- Equipment and expenses
- Signatures
Companies may also ask you to sign non-disclosure agreements (NDAs), intellectual property (IP) waivers, non-compete agreements, or data protection agreements. These may also be folded into the main contract as clauses. If you are unsure in any way about a contract, do not sign it and ask for clarification. Seek legal advice if you need to.
3. Insurance
Insurance is another one that varies depending on where you’re based. Germany, as everyone knows, loves insurance. The more insured you are, the better! Health insurance is mandatory and can take a hefty chunk out of your earnings. If you work in a creative field and/or have a low income, you should apply to the Künstlersozialkasse or KSK. If you get into the KSK—and be aware, it’s a long process—it should vastly reduce your health insurance contributions and will help you pay your pension and social security deductions. It’s probably also worth signing up for Haftpflichtversicherung (personal liability insurance) and income protection insurance which covers you in the event you can’t work due to sickness or disability. Insurance in the US operates on a state to state basis, but in general it’s a lot more lax than European requirements.
4. Invoicing and receipts
Freelancers are responsible for their own invoicing, receipts, and general financial management. There are lots of great tools out there for time tracking and invoice management and it’s really worth taking time at the start to set up systems that help you keep track of your invoices—and get paid on time. Same goes for any expenses you have. To be on the safe side, keep all your receipts, but particularly the ones that can be classed as a business expense. These can include equipment like a new laptop or camera, travel costs, co-working or office costs, phone bills, or client expenses like coffees or lunches.
5. Income tax and VAT returns
Open any social media platform in tax return season and you’ll find freelancers tearing their hair out. Tax returns are basically enormous detailed forms where you declare your income and expenses and figure out how much you owe the government. Many people hire accountants or tax advisors for this purpose as taxation lingo isn’t always that accessible. Filing your tax return can also be a tedious, anxiety-inducing task so no wonder people like to farm it out.
However, it is reasonably straightforward if you have the patience (and good records of your income and expenses). Value Added Tax (VAT) is 19% in Germany and you will usually be required to pay your VAT on a quarterly or monthly basis, depending on how much you earn.
Read more about common challenges freelancers face (and how to solve them).
