Part-time entrepreneurship or light entrepreneurship
Many people dream of running a part-time business and selling their services alongside a full-time job. In this situation, is it better to choose part-time entrepreneurship or to work as a light entrepreneur? We compared these two options and weighed their advantages and disadvantages in selling services part-time.
What is a part-time entrepreneur?
A part-time entrepreneur earns their living mainly outside of their business operations.
An example of a typical situation is a small-scale business conducted alongside a daytime job, where the entrepreneur still earns the majority of their living from paid employment.
In most cases, part-time entrepreneurs choose business name entrepreneurship, i.e. officially operating as a private entrepreneur.
In some rare cases, part-time entrepreneurs also establish a limited company, but this is typically not profitable in a part-time entrepreneurship due to the higher costs of a limited company.
Can a part-time entrepreneur work as a light entrepreneur?
Yes. In most cases, a part-time entrepreneur can act as a light entrepreneur and avoid many of the obligations of an entrepreneur.
Most part-time entrepreneurs sell their work and services through their business, which is also possible as a light entrepreneur.
However, there is an exception concerning the resale of products, which is not possible as a light entrepreneur. This means that you cannot set up, for example, an online store as a light entrepreneur.
Is light entrepreneurship or part-time entrepreneurship profitable?
Is it more profitable for a part-time entrepreneur to act as an entrepreneur with a business ID or as a light entrepreneur through a light entrepreneur service? Next, we will compare the profitability of both options.
Starting a business
The first difference is between starting a business and starting as a light entrepreneur. If you end up establishing a business name, registering a business name online currently costs only EUR 60. Filling out the online form to start a business is quick.
On the other hand, starting as a light entrepreneur is even easier and cheaper. All you have to do is to register on a light entrepreneur service through strong identification. Registration is free, and your current tax card is obtained directly from the Tax Administration’s interface.
You can start invoicing for your services right away. The service fee is automatically deducted from the work you invoice, and you do not have to pay anything until you start invoicing.
Accounting
Light entrepreneurship and operating as an entrepreneur with a business ID also differ in terms of accounting obligations. An entrepreneur is always required to keep single-entry bookkeeping, which is almost always outsourced to financial administration professionals, such as an accounting firm. An accounting firm incurs fixed monthly expenses for the entrepreneur, which must be paid, even if there is no invoicing.
When operating as a light entrepreneur through Eezy, you are considered to be an employee in terms of taxation. As a result, you do not have an accounting obligation. Your only accounting obligations are limited to taking care of your tax return and updating your tax rate. Eezy takes care of the necessary paperwork for you.
Costs
For a part-time entrepreneur, the business operations are usually quite small, which is why minimising costs is particularly important.
When operating as an entrepreneur, you must pay the fixed financial administration costs and possible prepayments every month, even if you do not invoice customers.
As a light entrepreneur, you have no fixed costs (except for possible YEL insurance), but all your costs are scaled according to the invoicing. As a light entrepreneur, you only pay Eezy a percentage service fee, which is charged automatically when invoicing customers.
Value added tax
Please note that as a light entrepreneur, VAT is always automatically added to your invoices, even if you do not exceed the turnover limit of EUR 15,000. This is because all your invoicing takes place under Eezy’s business ID, and Eezy is liable for VAT.
When operating as an entrepreneur with a business ID, you do not need to register for VAT if your turnover is less than EUR 15,000.
Part-time entrepreneurship in brief
- A part-time entrepreneur earns their living mainly outside of their business operations.
- An entrepreneur has many fixed costs that must be paid even if there is no invoicing.
- As a light entrepreneur, you can minimise the amount of fixed costs.
Here are some useful links:
EezyPay – We revolutionized invoicing for light entrepreneurs!
