Most starting self-employed entrepreneurs have difficulty making ends meet on the income from the business. Remaining employed initially is necessary for most starters. Setting up a business requires investing a lot of time. The time invested is not immediately converted into income. By continuing to work as an employee, security is provided. This is not only useful for extra income, it is also a smart way to stay in the workforce. If the company is not successful, there is always an income available.
Does the employer agree to self-employment?
Before you make plans to become a self-employed person, it is wise to first submit your plans to the employer. If you wish to set up a company that will make you a competitor of your current employer, you will not easily obtain permission. You must tell your employer to avoid later disputes about this.
Setting up a business with a job at hand
Partly employed and partly entrepreneurship can be a good combination. In order to benefit from the tax benefits of entrepreneurs (start-up deduction, self-employed deduction), you must work at least 1225 hours per year in your company. Starting entrepreneurs will have difficulty meeting this so-called hour criterion. However, it is possible to start setting up the company, with the ultimate intention of meeting the hours criterion. The so-called SME profit exemption is an entrepreneurial facility that you can also benefit from if you do not meet the set hours.
Run your business at least 1225 in combination with a job
Do you meet the hour criterion? Then as a starter you can benefit from the starter’s deduction and the self-employed person’s deduction. For most full-time entrepreneurs it will not be feasible to combine entrepreneurship with full-time employment. Remaining employed part-time is an option with benefits. As soon as you are no longer classified as a starter, an additional requirement will apply to benefit from the self-employed deduction. You must spend 1225 hours per year on your business. In addition, you must devote at least 50% of your working time to your business. If you work 32 hours a week in your company, you may work a maximum of 32 hours as an employee.
Demonstrate that you have worked 1225 hours in your company
You must make it plausible that you actually worked the hours. It does not have to be 1225 billable hours. For example, you can also include the time you spend on administration and acquisition. In addition, turnover must support the hours invested. Opening a store for a week with a turnover of 100 will be difficult to defend with the tax authorities.
Administration must provide proof
You must assume that you must prove to the Tax Authorities that you have actually worked 1225 hours in your company. You can do this by recording daily how much time you had to spend on the business. You would be wise to record this specifically. If necessary, keep an outline of what you have done and, if necessary, for which customer.