For some reason, I have procrastinated and avoided this topic for literal years. I don’t know why, but interacting with the state is very difficult for me and I get emotionally quite anxious whenever I have to do it. My default pattern is to postpone and avoid it and just push it further away (making things worse and thus reinforcing this loop). Therefore the fact that I managed finishing this task is as much of a swallowing the frog as it can be 🐸.
I do a lot of digital things, some around web development, some around hosting, some around consulting, some around education. And for a long time, I wanted to make myself independent, so I am able to earn money with these things. For this, in my country, I have to register at the tax agency and say that I want to be a freelancer. This can be a daunting task, as the form is rather long and complicated, if you dont know yourself around tax topics very well (which I do not). Here are my tasks that I set out to do for this:
- Research on the subject of freelancing and understand the options and implications
- Fill the registration form with the tax agency
- Prepare templates for bills
- Create a simple excel sheet to document expenses and income
- Open a seperate bank account for business expenses -> After approval of form
1 Research about the subject
There was actually a lot of research that I needed to do in order to catch up on this topic. There are tax basics (that I always avoided learning about) such as income tax, added value tax. I also learnt about how there is a offsetting of added value tax that I pay when buying something and added value tax that I ask for when writing a bill. Also, in my country, there is a distinction between a freelancer and a business, which has multiple concrete implications such a different taxation. There is also a special rule for business starters, exempting them from added value tax.
For my kind of projects, there are aspects that fall under freelancing and others that would be considered more of a typical business. For now, I decided that I will start as a freelancer for now and later consider creating a business. I also realised that for good bookkeeping, I will open a seperate bank account to keep things tidy.
2 Fill out the registration form
Before this, I first had to setup an account at the taxation agency. This already felt like an emotional drain, but in the end was not too bad actually. I decided to go with the authentication via the national ID card, as I like the simplicity of the concept. For this, I just needed to figure out how to install the authentication software on my Arch system (in the end, it was just as simple as yay authentication-software-name) and connect it with my phone to use as a card reader. This was all much more easy than I thought and went relatively fast :)
Then, I started looking at the registration form. This was a beast with more than 20 sections and hundreds of fields to fill out. It looks rather daunting at first, but with a couple online resources, a very helpful video and some questions to a friendly LLM. Some tips I learnt:
- Most fields can be left empty, as they dont apply for most people
- In case of doubt, leave a field empty and they will get in touch with you
- Look things up online, there are thousands of people who have the same question
Even though I took it quite slow and researched a lot, it only took around 2-3h to fill the form. So I consider it a success!
3 Prepare bill templates and bookkeeping table
As the next step, I want to prepare myself a nice bill template that is easy to use for any bills that I might write this year. But more importantly, it should be looking nice and not be like most of the boring bills out there. To keep it pragmatic, I limited my time effort on just one hour. Fist, I spent some time to get inspired by looking at bills I got over the past years, and some on Pinterest and Canva. I found this picture as inspiration below.
I quickly recreated it (in Google Docs and then exported it as .odt to further use on Arch) and finished this task.
As for the sheet to keep track of my income and expenses, it was a matter of 15 minutes, as I do not really know yet what I need long term. So I just created a little sheet and entered the first expenses and income with some metadata. I expect this sheet to grow and mature as I advance my freelance career.
4 Create a bank account
As the last step, I want to create a seperate bank account to keep private and freelance money tidy and seperate. For this, however, I am dependent on the feedback of the tax agency, so I can only wait at the moment. Therefore I am setting this project as pending ⏳ . until then.