Bogus Self-Employment – 7 Tips for Startups Working with Freelancers

Did you know that working with freelancers can be legally risky? 

Many startups prefer to hire freelancers for specific tasks instead of permanent employees. The advantages are obvious: freelancers handle their own accounting, are often very flexible, and require no extensive training.  

However, anyone who wants to avoid legal consequences should definitely make sure to rule out bogus self-employment. 

Here are 7 tips for startups that want to work with freelancers: 

1. Ensure that freelancers also work for other clients in addition to you. A balanced distribution of assignments and remuneration is crucial here.  
2. Contractually exclude any subordination and let freelancers decide for themselves when and where they want to work.
3. Explicitly define the terms of cooperation in a so-called freelancer contract. The more legal risks you consider in advance, the better prepared and secured you will be later.
4. Ensure that freelancers are not too heavily integrated into work processes. Strong work integration and the obligation to regularly provide certain services (e.g., reporting) increase the risk of bogus self-employment.
5. Do not grant freelancers benefits that are generally only intended for permanent employees in your startup. This includes, for example, paid further training.
6. Keep in mind that in the event of bogus self-employment, high back payments may be due. Social security contributions, including interest, are often demanded retroactively for the entire period of cooperation.
7. Try to make young freelancers, in particular, aware of the problem. For them, bogus self-employment can mean that they have to pay taxes retroactively. What agreements do you make with freelancers in your startup?