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Starting out as self-employed in a secondary occupation?
If you’re feeling the urge to start your own business, but aren’t sure about taking the plunge, you’re not alone! Fortunately, the status of self-employed in a secondary occupation exists. This gives you the opportunity to test your business idea without immediately having to give up the financial stability you may already have.
In any case, it’s highly recommended to open a separate business account to manage the finances of your secondary job and ensure you distinguish between what is work-related and what is related to your personal life!
What is self-employed in a secondary occupation?
Most self-employed people in a secondary occupation combine their salaried job with their own business, but people who’ve retired and people on benefits are also allowed to start a secondary job under specific conditions.
What are the conditions for starting a secondary occupation?
They depend on your personal situation:
- If you’re a manual worker or administrative employee, you must remain in salaried employment for at least 50% of the time to obtain the status of self-employed in a secondary occupation
- If you’re a public-sector employee, you too must remain in salaried employment for at least 50% of the time, spread over a minimum period of 200 days or 8 months and subject to the consent of your employer
- If you’re a teacher, you must continue to work for at least 60% of your full-time schedule or 50% if you don’t hold a permanent position
- If you’re a temp agency worker, you must work at least 235 hours per quarter and ensure that you are under contract on the first and last days of each quarter
In that case, you may start a secondary job provided:
- You were working for at least 50% of the time before you became incapacitated for work
- You get clearance from your medical insurance adviser
- Your sickness or disability benefit is at least equal to the minimum pension for a single, self-employed person
In that case, you can start a secondary job and continue receiving your unemployment benefit for one year. To do this, you have to apply for what is called ‘springboard to self-employment’ benefit.
These are the conditions:
- You haven’t practised the activity as your main occupation in the past six years
- You didn’t quit or reduce your paid employment to get this benefit
- You are the one who practises the secondary occupation (you may not use subcontractors)
With the help of DG People with Disabilities, you can join the ranks of the self-employed in a secondary occupation provided the income from your work remains limited, otherwise you risk losing your current allowance.
You too can earn an additional income! Exactly how much depends on a number of factors such as your age, your working career and the type of pension you get. Only people who have taken early retirement are, in principle, not allowed to be self-employed in a secondary occupation.
If you do not meet these conditions, you might want to consider starting out as full-time self-employed.
What are the benefits and drawbacks of having a secondary occupation?
If you’re unsure whether you want to start a secondary occupation, it’s a good idea to carefully weigh up the pros and cons of each status first.
Benefits
- You limit risk. Starting a secondary occupation is the ideal way to test your idea. You keep your steady income while experimenting and gaining experience in your own business. When you’ve built up the necessary confidence, you can continue with your business as your main occupation.
- You retain the privileges of 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.
- You can deduct your business expenses. And that will make a big difference when it come to paying your tax bill. So, keeping VAT receipts is the message!
- You have an additional source of income. Make sure you have a well-prepared business plan to estimate in advance what you can earn.
Drawbacks
- Your full-time competitors have a head start. They 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.
- You don’t build up the social security entitlements of someone who’s self-employed. 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.
- You have more than one job. When you’re a salaried employee and also work as self-employed, you need 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.
Which administrative steps do I have to take?
- Choose your company form
Decide whether it’s best to operate as a sole-trader or a company. Both come with benefits and drawbacks that you need to weigh up carefully. - Open a business account
If you’re setting up a company, you must have a business account. If you’re starting up as a sole trader, a separate account is highly recommended. Having one ensures you can distinguish between your business expenses and your personal expenses. - Join a social insurance fund
Before you start up your business, you need to join a social insurance fund. They will make sure you pay your social security contributions properly and on time. - Choose a business one-stop shop
This is required for registering your business with the ‘Crossroads Bank for Enterprises’ database. They will check that your business satisfies the legal requirements, provide your company number and help activate your VAT number. - Take out insurance
When running your own business, you’ll occasionally have to deal with difficult situations. So, think carefully about the appropriate type of insurance cover for your secondary occupation, as it’s essential should you ever make a professional mistake or omission. Another good thing is that the cost of your insurance cover can be deducted from your taxes! - Find a good accountant
Having one will not only save you money, it will also save you a lot of paperwork. However, if you prefer to take care of things yourself, there are also plenty of packages out there for doing your own bookkeeping
Need a helping hand?
Our business experts will be more than happy to help you get started. If you open a business account with us, we can offer you all kinds of business starter benefits:
- Receive a personalised risk analysis
- Use the Billit invoicing tool
- Get a professional website
- Have your VAT number activated for free
- And much more besides
What costs should I take into account?
- You need to consider one-off start-up costs, such as when you register with the Crossroads Bank for Enterprises database and activate your VAT number.
- Being self-employed in a secondary occupation, you pay a small sum in social security contributions every quarter. However, the exact amount you pay will depend on how much you earn.
- Each quarter, you also have to pay the government the VAT paid by your customers. Obviously, this is not a cost in the true sense of the word, but don’t forget to set money aside to cover it anyway.
- Having a good accountant is worth it in the end, but will cost you a bit more at the beginning. If you’d rather not have one, there are packages out there for doing your own bookkeeping.
- In a sole trader business, you pay personal income tax on the aggregate income from your main and secondary occupations, which may end up putting you into a higher tax bracket. However, you can avoid this situation by ensuring you rack up enough business expenses.
- If your business is a company, you pay corporation tax on your profits.
- You should bear in mind that other taxes (including local taxes, provincial taxes and eco-taxes) have to be paid as well.
- At a certain stage, you will 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.
