Self employed

What does it take to become your own boss, and live as an independent or freelancer?

We have collected everything you need to know to get started, answer the stupid (and the smart) questions, and prepare you to take the first step as a freelancer.

What is a freelancer?

When it comes to independent living, there are a few different aspects that are worth looking at. Because being self-employed – including a freelancer – is more than just the opposite of being an employee.

In Denmark, we have a tradition of being wage earners, and it is also the case today that there are more than 2,750,000 wage earners only exist around 200,000 self-employed.

The official term for being self-employed is that you have founded a company and/or have a decisive influence in the company you work for. But when you are independent, you suddenly become your own, and sometimes other people's, boss.

And that's the part we think is a little more fun to look at - because one thing is the dusty definition of what a self-employed person is, another thing is what the reality looks like on your own two feet.

As an employee, you are essentially helping to earn other people's money, in return you get one a lot of security return. When you jump into independent life, you also say goodbye to the security you could enjoy as an employee.

The big, and naturally very enticing change, is how you are now the captain of the boat and can skim the cream yourself.

Below, we uncover step by step the various aspects of a life in freedom, because there are of course both good and bad sides to life as one's own boss.

Start out as self-employed

What does it take to start out as self-employed?

When you start the engine in the direction of the free, independent life, there are of course some things you must have in place, and some things that are rare to have in place.

In essence, the pendulum swings between nice and need to have also based on your own risk profile. Are there bills to be paid from day one, or can you run for a period of time without paying customers?

First of all, life as an independent and freelancer requires a certain amount of hustle.

Customers rarely come rushing through the door as soon as you have put the "for hire" sign in your window. They must therefore be pursued relentlessly, and to that extent you must be able to swallow a no - and not take it personally.

Shifting gears from being employed, one thing many people underestimate is how many repetitions it takes to break through.

As an employee, you often have tasks and objectives dictated from higher ups, and you don't have to go from door to door asking if there is anything you can help with.

On the other hand, you have to as your own boss, and many freelancers push the cold calls in front of them, in return for busy work on their own business.

As a self-employed person, you must encourage your perfectionist gene in the ground, and dare to ship before you feel ready for it.

What you need to have in place as a self-employed person:

When you start out, there is a foundation that needs to be in place.

The most basic include:

• Legal basis: here you have the option of registering your own CVR number, or you can be smart and run your business through Factofly.
• A defined niche: especially when you're starting out you can't be everything to everyone. A well-defined niche will help you land customers.
• A product package: Give your customers something to say yes to. The more specific you are, the easier it will be.
• A portfolio: Customers often need a little help to see why you are the right one. A portfolio can be a well-polished one Homepage, but it can also be a collection of your work on a Notion page or a Google Drive for a start.

Advantages and disadvantages of being independent

Life as a freelancer isn't always big boats off the coast of Capri hanging lazily on the water's surface while the chef prepares lunch below deck.

Of course, it has its advantages advantages of being independent, but before you jump into the free life, you must also think about whether you can swallow the less glamorous sides of that existence.

Economics as self-employed

The financial aspect of independent living is what determines whether you fly or fall.

The market is (for better or for worse) relentless, and you quickly get signals about whether you can exchange your service for dollars, or you must go home empty-handed.

When you are in the honeymoon phase, especially as a first-time freelancer, you can tend to be a little naive about how easily the flow of money will flow.

You don't need to start with big accounting solutions from day one, but make sure you keep a close eye on the finances: what does a new customer actually cost, how much goes in and out of the cash register, and what is left in cool cash?

If you are starting out on your own full time, we recommend one financial buffer that can cover your expenses for between 3 and 9 months. The actual period of course depends on your risk appetite.

Invoicing

When there are customers in the network, you must also be able to get paid, and especially if you work with business customers, you do not need to think about flexible integrated payment solutions from the start.

A good old-fashioned invoice does the job here, and when you've just started you also have the opportunity to invoicing without a CVR number.

(You can catch one, by the way free invoice template right here.)

When you have to invoicing as a self-employed person for the first time, there are some rules you need to be aware of to ensure everything is done by the book:

1. VAT registration: If your turnover exceeds DKK 50,000 in a year, you must be registered for VAT. This means that you must collect VAT from your customers and of course report it. 🔥Pro tip: Instead of bothering with a CVR number and VAT report, you can easily and conveniently invoice through Factofly.
2. Content of the invoice: An invoice must contain at least: invoice number, invoice date, seller's name/address/CVR number, buyer's name/address, a description of the product or service sold, the price without VAT, the VAT and the total price incl. VAT.
3. Payment terms: It is important to state the terms of payment clearly, e.g. the payment deadline. According to the Interest Act, the customer has 30 days to pay an invoice, unless otherwise agreed.
4. Save copies: It is important to keep copies of all issued invoices for at least 5 years in accordance with the Accounting Act.
5. Invoicing abroad: If you invoice customers outside Denmark, you must be aware of the rules for VAT within the EU and in third countries. Depending on your customer and the work you have delivered, there may be some special rules for how and whether VAT must be charged.
6. Follow up on unpaid invoices: Make sure you have one procedure for follow-up on unpaid invoices. This may include reminders and ultimately recovery through debt collection.
7. Updating information: If your business details change (e.g. address or bank details), make sure you also update your invoices.

Of course, you can also save yourself all the trouble by creating a free profile at Factofly, and send your invoices that way.

We take care of the headache for you, so you can focus on doing what you do best.

Budgeting

You don't need an accounting degree to run a tight budget, but do yourself a big favor by familiarizing yourself with the very basics. Yes, in fact, budgeting is a fairly essential exercise in order to have a full overview of your business, and helps you keep track of your income and expenses.

Of course, there are different software you can buy. If you're just a little bit firm, a fairly ordinary Google Sheet can also make it a start, so that you have an overview of future income, fixed and variable costs, and can lay out a strategy for handling profits and losses in the business.