Freelancer or light entrepreneur – Which is better?

The career of a freelancer is nowadays possible across a number of industries. Especially many professionals in creative professions, such as graphic designers, journalists, and photographers, provide their services as freelancers. As more people are looking to become freelancers, there are more questions about a freelancer’s career. Should a freelancer be employed, an entrepreneur or a light entrepreneur? Which one of these options is the best one for you and how do they differ? We listed their pros and cons for freelancers.

What is a freelancer?

Freelancers sell their own work to a number of different clients throughout the year. Most often freelancers invoice their client companies. However, freelancer work is possible in an employment relationship as well.

Freelancer as an entrepreneur

One of the most common ways to work as a freelancer is to become an entrepreneur. As a freelancer usually sells only his or her own work, a trade name is a common choice thanks to its lightness. However, nothing is stopping a freelancer from choosing between other company forms as well.

Working as an entrepreneur gives a freelancer the opportunity to invoice their clients flexibly. One downside of this is that the freelancer has to take care of many additional responsibilities and expenses. Regardless of their company form, every entrepreneur is required to keep accounts. In case their revenue exceeds 15 000 euros, they are also liable to pay VAT.

As an entrepreneur, the freelancer gets a Business ID and with it, the aforementioned obligations, as well as more extensive rights of deduction compared to the other alternatives. An entrepreneur is also able to deduct many of their business’s deductible expenses.

Freelancer as an employee

A freelancer can be employed by their client company. In this case, the freelancer is just like any other employee and their employer has to pay the freelancer’s incidental costs, such as medical insurance and pension.

Working in an employment relationship as a freelancer is not that common as this arrangement causes additional work and expenses for the freelancer’s employer. Invoicing for their work is a more straightforward solution for the freelancer if they work for multiple clients for short periods throughout the year.

Most client companies appreciate the opportunity to be invoiced for a freelancer’s work. This is why there tend to be fewer freelancers who are employed by their clients than ones working as an entrepreneur or a light entrepreneur. Light entrepreneurship is a great option to invoice for your work and simplify all the paperwork.

Freelancer as a light entrepreneur

Light entrepreneurship brings together the best parts of working in an employment relationship and being an entrepreneur. This is why light entrepreneurship is a great option when working as a freelancer. Commissioning by your clients is simpler when you can invoice them directly. However, you are paid your salary just as you would in an employment relationship.

As a light entrepreneur, the ins and outs of accounting and taxation are not your own concern as you are not obligated to keep accounts. A light entrepreneurship service does taxes for you by withholding the right amount from the salary you withdraw. All you have to do is deliver your tax card to the service. With Eezy, it’s even easier. You do not have to worry about sending us your tax card, as long as it’s up to date in the MyTax-service.

In case you are a freelancer working as a light entrepreneur, you are not liable to pay VAT even when invoicing larger sums. In taxation, a light entrepreneur is seen as an employee, so they are not liable to pay VAT.

As a light entrepreneur, a freelancer cannot deduct expenses as flexibly as an entrepreneur with a Business ID, in case the expenses are not directly related to their work. Many expenses related to the production of income and vehicle expenses can be deducted from taxation. Most light entrepreneurship services also allow reporting these expenses when invoicing in order to benefit from the deductions immediately as you withdraw your salary.

Should you become a light entrepreneur as a freelancer?

• In most cases, a freelancer benefits from working as a light entrepreneur. You do not have to worry about many responsibilities, such as prepayments or paying VAT.
• Your client company saves time and money when you invoice your work as a light entrepreneur. 
• Getting paid as a light entrepreneur is almost as easy as in an employment relationship with your client company. The light entrepreneurship service takes care of prepayments according to your tax card.
• Light entrepreneurship suits part-time work, for example during holidays or alongside your studies. You are not charged if you do not invoice your clients.