What are the costs for a person who is self-employed as a supplementary profession?
Any profitable activity will require a minimum of investment. These investment costs will usually depend on the type of activity, and not on whether it is carried out as a main or supplementary activity. As a person who is self-employed as a supplementary profession, you often have the same expenses as your colleagues who practise the same profession as their main occupation. There are also minimum costs that you cannot avoid.
Costs related to the activity
First of all, there are the costs which depend on the activity. Some activities require a lot of investment, others less. A hairdresser will have to invest in more equipment than an accountant or a translator. This core investment is important because it plays a role in profitability. The larger the investment, the longer it will take for the activity to start being profitable.
Expenses as a self-employed person
As we have seen, a person who is self-employed as a supplementary profession must undertake the same administrative procedures and submit to the same obligations as a person who is self-employed as a main profession. Logically, people who are self-employed as a supplementary profession will already have coverage thanks to their main activity. However, they must inform their mutuality of their activity as a self-employed person and provide them with a certificate of commencement of activity. They will also have a number of identical fees, such as registration with the Crossroads Bank for Enterprises via its business portal. However, they will earn less and, for this reason, these costs will weigh more heavily on people who are self-employed as a supplementary profession. It is important to take this into account when you start your business. Other costs, on the other hand, will be smaller for a person who is self-employed as a supplementary profession.
A person who is self-employed as a supplementary profession must be affiliated with a social security service and must pay social contributions on a quarterly basis. As we have seen, these social contributions depend on income and are much lower for a person who is self-employed as a supplementary profession than they are for those who are self-employed as a main profession.
A person who is self-employed as a supplementary profession will also have to – if he or she carries out an activity subject to VAT – submit a quarterly VAT declaration and pay the VAT due. However, it is difficult to speak of "expenses" here, because a self-employed person simply collects VAT and pays it back to the authorities. On the contrary, it is possible to deduct the VAT which he or she pays for his or her activity, which is to his or her advantage.
Possibilities for VAT exemption
Small companies and self-employed persons (as a main or supplementary profession) who have an annual turnover in Belgium of EUR 15,000 or less may, since 1 April 2014, benefit from an exemption from VAT for the supply of goods and services they carry out (according to Article 56bis of the VAT Code). On 1 January 2016, this threshold was raised from EUR 15,000 to EUR 25,000, but the legislative texts incorporating these amendments had not yet been published and this change was subject to authorisation by the European Council. Belgium has obtained a temporary authorisation until 31 December 2018. Previously, the ceiling was EUR 5,580. The self-employed person in this situation no longer has to submit a VAT return. But this of course implies that he or she will no longer be able to recover VAT on his or her professional purchases. It is therefore necessary to analyse the situation carefully in order to decide what is most advantageous.
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In summary |
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A small business or self-employed person with a turnover equal to or lower than the threshold provided for:
He or she must nevertheless:
If, in any year, the turnover exceeds the threshold provided for, the VAT administration must be notified and the normal system will apply. |
Here is an example to help clarify things. Charles is self-employed as a supplementary profession. Because his annual turnover is less than EUR 15,000/25,000, he is able to benefit from VAT exemption. This is good for his customers, who will no longer have to pay VAT, but also for him, because he will no longer have to submit a quarterly VAT return. This way, he does not have to pay accountant fees every quarter. But he had not taken one thing into account: from now on, he can no longer deduct VAT from the many invoices he pays for his activity. As this is much more significant than the benefits and savings mentioned above, after one year he returns to the system without exemption. It is therefore necessary to think carefully and decide what is most advantageous.
A good accountant is worth his or her weight in gold
For his or her VAT and personal income tax return, it is in the best interest of a self-employed person – as a main or supplementary profession – to call on the services of a chartered accountant. This entails some additional costs and it is not mandatory, but it is in any case very strongly recommended. These fees will earn you money quickly and will prevent a lot of worries.
A person who is self-employed as a supplementary profession therefore has more or less expenses, depending on his or her activity. The good news is that he or she can of course deduct these expenses from his or her income.
Self-employed as a main or supplementary profession? See what NN can do for you.
