If you’re feeling the urge to start your own business, but aren’t sure about taking the plunge, the status of self-employed in a secondary occupation may be well worth considering. This means you can test your business idea without immediately having to give up the financial stability you may already have. In this article, we explain what being self-employed in a secondary occupation entails.
Opening a business account
At KBC, we can help you with opening a business account. This business account is mandatory if you’re establishing a company, but not if you’re operating as a sole trader.
In any case, a separate business account is highly recommended as it allows you to easily keep track of your professional and private expenses.
What are the conditions for starting a secondary occupation?
- If you’re a manual worker or administrative employee, you must be in salaried employment for at least 50% of the time.
- If you’re a public-sector employee, you must work for at least 50% of the time in a full-time job of approximately 200 days.
- Teachers have to work a full-time schedule for at least 60% (for permanent staff) or 50% (for contract staff) of the time.
- If you’re not working as a salaried employee for at least 50% of the time, but are building up retirement or disability pension rights or receive social security benefits, you’re also deemed to be self-employed in a secondary occupation when you perform a self-employed activity.
- If you do not meet these conditions, you are obliged to work as self-employed in a main occupation.
Starting your own business as self-employed in a secondary occupation
Being self-employed as a secondary occupation means you have the same social security status as someone who’s self-employed in a main occupation. Therefore, the administrative steps are the same. See how to start your own business in six steps.
If you’re itching to get going and want to save up to 1 500 euros in start-up costs, you can enjoy all kinds of benefits with the KBC Boostpack when you’re first starting your self-employed activity!
What costs should you take into account?
- One-off start-up costs, such as registering in the Crossroads Bank for Enterprises database and activating your VAT number, total roughly 150 euros.
- Social contributions: this is usually about 80 euros per quarter, but this may be more or less depending on how much you earn.
- VAT: In most cases, you have to charge your customers VAT, which you have to pay to the VAT administration. If your income comes to less than 25 000 euros, you can ask to be exempted from paying VAT.
- Taxes: The taxes you pay depend on whether you choose to be a sole trader or a company: if you choose to operate as a sole trader, you pay personal income tax on the aggregate income from your main and secondary occupations. This means you could end up in a higher tax bracket of 45% or 50%. However, you can avoid this situation by ensuring you rack up enough business expenses. If you choose to start a company, you pay corporation tax on your profits. The maximum rate for corporation tax is 33.99%.
- Regardless of whether you are a company or a sole trader, you will also have to pay additional taxes such as local taxes, provincial taxes, and eco-taxes. Lastly, if you’re self-employed, you have to make tax pre-payments every three months to avoid a tax surcharge. Fortunately, starter businesses are exempt from this for the first three years.
What are the benefits and drawbacks?
If you’re unsure whether you want this to be your main or secondary occupation, it’s a good idea to carefully weigh up the pros and cons of each status first.
Benefits of starting a secondary occupation
1. You can test your idea
Have a business idea, but aren’t sure about taking the plunge? Starting a secondary occupation is the ideal way to test your idea. Draw up a Business Model Canvas to flesh out your plans.
2. You limit risk
Starting a secondary occupation limits your risk. You can keep your steady income while experimenting and gaining experience in your own business. When you’ve built up the necessary confidence and feel you’ve grown as an entrepreneur, you can continue with your business as your main occupation.
3. You retain the privileges of a salaried employee
Starting a secondary occupation means that you keep your status as a salaried employee. For instance, you will continue to receive such benefits as paid leave, child benefit, sickness benefit, accrued pension benefits and protection if you’re unable to work.
4. You have an additional source of income
Perhaps the most interesting benefit of all is that you have an additional source of income. When you have a well-prepared business plan, you can better estimate what you can earn. The aim is to at least break even. How much tax you pay depends on which company form you decide on, i.e. a sole trader or company.
Drawbacks of starting a secondary occupation
1. Your full-time competitors have a head start
Your direct competitors may be working full time in their own business, which means they can invest more time in their business idea and in expanding their customer base.
2. You don’t build up the social security entitlements of someone who’s self-employed
Being self-employed in a secondary occupation means you are not entitled to the same benefits as someone who’s self-employed as their main occupation. So, you cannot count on receiving family allowance payments or benefits under a bankruptcy insurance scheme. Fortunately, your social security contributions are much lower than those of someone who’s self-employed as their main occupation.
3. You combine two jobs
Because you are a salaried employee and also work as self-employed, you need to be able to efficiently plan your time. Things get particularly busy when you start up your business, so try to find a good balance between both jobs and with your private life, too.
Our experts are there for you
If you’d like to talk to a specialist before taking the plunge, feel free to talk to one of our experts. They will be happy to help you. Prefer to speak to someone right away? Call KBC Live?