Starting a part-time business: All you need to know

Step 1: Before you start

Do the entrepreneur check

Are you wondering whether you should register in the KVK Business Register? Then do the entrepreneur check to find out whether you meet the entrepreneur criteria. This check determines whether you have a hobby or a business. Do you meet the criteria? Then you must register with the Chamber of Commerce, KVK. 

Consult your employer and check your competition clause

If you plan to start working as a freelancer alongside your salaried job, consult your employer. Often, your contract will contain rules about secondary activities. The work you do as a self-employed person is a secondary activity. So discuss your plans to start working as a freelancer with your employer to make sure you comply with the terms of employment. This will help you avoid a conflict.

Will you be working in the same sector? Then also check whether there is a non-competition clause in your contract. This will help prevent problems. 

Watch the video for an explanation of everything you need to know when starting as a part-time entrepreneur.
 

Step 2: Register with the KVK

Legal form

When registering, you must choose a legal form. Good to know: self-employment or freelancing is not a legal form, but a way of working. Most freelancers register with the legal form of sole proprietorship (zzp).

You are an entrepreneur

For your registration, it does not matter how many hours per week you want to do business. Nor whether you sell a product or a service. Whether you do this full-time or part-time, you are an entrepreneur if you meet the entrepreneurial criteria.

Step 3: Find out about tax issues

Once you register with KVK, you will have to deal with general tax issues for entrepreneurs. For the following tax issues, it does not matter whether you are a part-time or full-time entrepreneur:

Income tax

Whether you spend many or a few hours on your own business, you have to file an annual income tax return. In this income tax return, you report how much you earned as an employee. And the turnover, VAT, and expenses from your business. It is a misunderstanding that you pay more tax if you have income from your business in addition to your salaried job. You only start paying more tax if your income exceeds €75,518. It does not matter whether your income comes from salaried employment or a business. Or a combination of the two.

Turnover tax (VAT) and VAT declaration

As an entrepreneur, you have to deal with sales tax (VAT). You charge VAT to your customers. From the moment you are registered with KVK, you have to file a sales tax return (usually each quarter). Even if you have not yet made any money with your business. If you don't do this, you will receive an additional VAT assessment and a fine. 

The following tax issues are important for part-time entrepreneurs: 

1,225 hours

If you work at least 1,225 hours a year in your business, you are entitled to the start-up deduction and the self-employed deduction. This gives you tax benefits. In the first 5 years of your business, you are entitled to the starter's deduction a maximum of 3 times. 1,225 hours per year amounts to an average of 3 working days per week. If you are self-employed alongside your salaried job, it is more difficult to devote 1,225 hours a year to your business. 

Small entrepreneurs scheme (KOR)

If your turnover remains below €20,000 per year, you can make use of the kleineondernemersregeling, (KOR, Small Businesses Scheme). This means that you do not pass on VAT to your customer and that you cannot deduct the VAT on costs you incur. If you start working as a self-employed person alongside a job and you incur few expenses for your business, the KOR may be a logical choice for you.

Payroll tax and tax credits

Entrepreneurs who also have a salaried job are often unsure about payroll tax and payroll tax credits. Payroll tax and payroll tax credits only apply to income from your salaried job. However, the amount of the tax credit is calculated on your entire income. For this, therefore, income from your business also counts. Here the following applies: the higher your total income, the less discount you get. As a result, you may be entitled to less or no tax credit, because your income is higher due to the income from your company. Overpaid tax credits must be repaid afterwards.

Step 4: Arrange your insurance and pension

Insurance

If you combine employment and self-employment, the unemployment rights you accrue in employment will remain. For your own business, it is important to take out the right insurances policies even if you are a part-time entrepreneur. Your private insurance, such as your liability insurance or legal expenses insurance, does not apply to your business. 

Pension

You probably build up a pension with your employer. Yet it is important to save for your pension from your own company as well. A common mistake entrepreneurs make is not to do this from the start. Do you wait before building up a pension? Then you may find that your rates are too low. The amount you want to save for retirement has to be factored into your hourly rate. Otherwise, you won't have enough money left over to build up a pension.
Even if you want to grow your part-time business into a full-time one, it is advisable to arrange your pension accrual right from the start.

General information for starters

If you start your own business alongside salaried employment, in addition to the steps above, you will also have to deal with general things every entrepreneur needs to arrange:

• Coming up with a company name
• Determining your hourly rate
• Drawing up general terms and conditions
• Keeping records

KVK Advice Team

Do you have questions about your situation? Contact the KVK Advice Team. Our experts will personally answer your questions, free of charge.