Self-employed as an author - and how does it work with taxes and insurances?

And what about the business tax?

If you're a trade registered you have to pay trade tax in addition to income tax and, if applicable, sales tax. You submit the application to the trade office, which then forwards your trade license to the responsible tax office. However, you only have to pay trade tax if your annual turnover exceeds 24,500 euros. At the end of the year, you must submit a trade tax return.

Social insurances as a freelance author

As a full-time self-employed person, you have to pay both the employee and the employer's social security contributions. After all, you no longer have an employer who pays half. Your gross fee is therefore not quite comparable to the gross salary of an employee. Pension insurance is voluntary for the self-employed, so think about whether you want to make private provisions or pay voluntary contributions to the statutory pension insurance. You should also consider taking out additional unemployment insurance, legal protection and professional liability or accident insurance. As a general rule, as a self-employed person you cannot take paid vacation or sick leave. You only earn what you earn.

What is the Künstlersozialkasse?

For many self-employed people, health insurance is a significant cost item, because depending on the tariff, around 800 euros can be due each month. Many freelancers completely neglect pension insurance, as they can hardly bear the monthly costs. For artists and many freelancers there are therefore the artists' social insurance fund (KSK) for financial security and the avoidance of poverty in old age.

The advantages of the Künstlersozialkasse

Normally, self-employed persons have to bear the social security costs completely on their own, as the employer's contribution no longer applies. Here, the KSK steps in and takes over this share, so that insured persons only have to pay half of the contributions. The other half is covered by the federal government at 40 percent and from the amounts paid by companies that commission artistic and publishing services at 10 percent. The contributions of the insured are tied to income, while voluntarily insured self-employed persons have a minimum contribution of currently about 160 euros. Incidentally, the KSK is not a health insurance fund, but only helps with the payment of contributions. You can choose statutory or private health insurance independently of the KSK.

The disadvantages of the Künstlersozialkasse

Of course, as the fee increases, the absolute amount that you have to pay into the pension scheme also increases. In addition, the application process is somewhat tedious, as you have to submit numerous documents. But: Once you are insured via the KSK, you won't get out again so quickly as long as you work as a journalist.

Requirements for admission to the KSK

Anyone who works full-time as a writer and has an income above the low-income limit of 3,900 euros per year has good chances, to be admitted to the KSK. An exception applies to newcomers. It is possible to earn less in the first three years after taking up the job. But: The writing or publishing work must be the main occupation. Also, one may not employ more than one employee subject to social security contributions, since the activity is then mainly no longer journalistic, but entrepreneurial.

How do the contributions come about?

At the end of the year, the KSK will ask you to estimate your income for the following year. If changes occur during the course of the year, these should be reported subsequently. The contributions will then be adjusted upwards or downwards. However, a retroactive increase or decrease is not possible. Every year, the KSK checks about five percent of insured persons to see whether their income was estimated correctly or whether changes were reported. However, minor deviations are permitted. Currently, the rates are 18.6 percent for pension insurance and 14.6 percent for health insurance. Here, 3.05 percent nursing care insurance is added, and 3.4 percent for childless persons. As a member of the KSK, you pay half of these percentages in relation to your annual income, i.e. business income minus business expenses.

Conclusion

If you start out as a part-time writer, you can take a step-by-step approach to registration and tax returns. As soon as it becomes your main job, however, you should also deal with membership in the KSK, so that you don't have to pay the full social security costs. Whether your book sales skyrocket from day one or you only sell a few copies, don't forget to register your freelance work with the tax office.