Self-employment

Under independence refers to an economic activity that does not take place solely on the account of the workers on the behalf of an employer.

• 3.1 United States

Spelling

By 1996 the spelling of independence was written language predominantly used. The under the spelling reform recorded in the official dictionary and recommended by Duden form of self-employment is now also widely used, is not so far been found only in some recent legal texts and is used by the German news agencies, while various newspapers such as the Frankfurter Allgemeine Zeitung and Der Spiegel after how to use before the old spelling. The Council for German Orthography continues to recommend the old spelling.

Self-employment in Germany

The definition of independence is derived from § 7 paragraph 1 of the fourth book of the Social Code (SGB IV). This contains definitions that allow a definition of self-employment to dependent employment. The inclusion of a self-employment is also a successful business. Where a self- reported work as the features of the dependent labor, one speaks of bogus self-employment.

Definition

VGR

According to the European System of National Accounts 1995 (2007) are self-employed (ESVG 1995 11:15 ) defined as persons who are the sole or joint owners of a company are unincorporated, in which they work.

The compensation for self- employment is mixed income.

Among the self-employed and the unpaid family workers are statistically counted, including make up about 10 percent.

Legal definition

An employment in the social insurance law is acc. § 7 paragraph 1 of the SGB IV defined as employed labor, especially in an employment relationship. From the words " especially in an employment relationship " can be concluded that it always is an employment relationship if an effective working relationship has been established.

The essential characteristic that makes the work of employment within the meaning of the Social Security, is the non independence. This feature, however, is not defined, but substantiated by the extensive case law of the BSG to question the existence of an employment by other characteristics.

The characteristic feature of the main non- independence is the personal dependence. The BSG is based in the grounds of the status of an employee from the main feature of the personal dependence of the employee against the employer, with virtually the personal dependence is used synonymously with the non- independence.

After the highest courts of appeal, both the labor courts and the social jurisdiction considers beyond § sentence 2 HGB contains 84 para 1 is a general legislative vote, which is to be considered for the definition of self-employment of a dependent employment relationship. Assuming the Federal Labour Court (BAG ) as well as the Federal Social Court (BSG ) have developed in the case law criteria, allowing a determination of dependent employment of other contractual relationships.

Here, in the opinion of BSG all the circumstances of the individual case must be considered. Decisive is always the overall picture of the performance taking into account the traffic intuition.

One of the basic rules of jurisprudence heard that the actual conditions form the basis of the assessment, not primarily the contractual agreements. However, they are - as well as other features - to use in the assessment of the overall picture. Here, the name of the activity in the employment contract, but only subordinate importance, especially since there is very often false or inaccurate names are chosen to suggest the existence of an employment relationship.

It is in the area of ​​public social security permitted to provide the insurance coverage and the related obligation to contribute to the contractual discretion of the parties involved ( legal form of coercion - § 32 SGB I).

A typical feature of an employment relationship is the authority of the employer, that is, the employer is responsible for management powers, due to which the employees whose activity may substantially determine itself does not, but in terms of time, duration, location and type of work a comprehensive right of instruction subject. For services of a higher kind, the Subordination refined to " functionally serving participation in the labor process."

However, then there is a self-determined service if the task to be accomplished is characterized by the order of the operation, that arises from practice or custom and the work force is employed in the service of the company.

The self-employed features contrast their own entrepreneurial risk, the right of disposition of one's labor and the essentially free-form activity and working time.

Difficulties arise in practice again and again the question of when a business risk as an indication of the independence exists and what importance of this criterion in the assessment of the overall picture. The Court of BSG is a business risk if the success of their own economic use is uncertain. It means regularly use their own capital, which may also be associated with the risk of a loss.

However, the existence of an entrepreneurial risk is not absolutely critical. Exposure to risks rather can only speak for independence if the business risk is offset by a greater freedom in the design and determining the extent of the use of their own labor. The burden of a working population, which could be defined by the way according to the design of the mutual relationship as employees, with additional risks can be justified no independence. The imposition of additional risks may gain in importance so only if they are accompanied by a significant increase in freedom of disposition and profit opportunities.

The BSG has also established other criteria that may assist in the determination of a dependent employment of self-employment:

Characteristics that favor the adoption of a social insurance contributions

• No right of disposition of one's labor, the other-directedness of the activity characterizes the employment relationship.
• No own establishment,
• No essentially free-form work activity.
• No wearing of the business risk.
• Inclusion in the operation. Below is each and not just a commercial organization of work to understand, such as the presence of a superior who governs the employment process.
• Make deductions from wages agreement, agreement of vacation.
• Documentation requirements of the contractor about his work ( detailed reporting requirements ).
• Binding the contractor to only one contractor ( exclusivity ).
• The benefits are provided exclusively in the name and on behalf of the client.
• The contractor must submit a comprehensive treaty of the client without their own discretion.
• Contract and monitoring systems are designed so that a continuous monitoring ( eg, through an operational radio system ) for the client at any time.
• The Contractor refers mainly from the profit and loss based remuneration.

Characteristics that favor the adoption of self-employment

• Discretion of the contractor, when and how much equipment / means of transport / production equipment to be purchased and how the acquisition is financed.
• Discretion of the contractor on the payment method the customer ( for example, immediate Bareinzug, deferment options, etc.).
• Discretion of the contractor with respect to the pricing.
• The contractor is free in the use of assistants.
• In operation of the contractor on more staff may be employed.
• At the contractor 's own resources (eg fleet ) available.
• The contractor sets his own working capital.
• The Contractor is allowed own customer acquisition.
• The Contractor shall be liable to the customer for damage to products or production goods or means of production, if the client is made by a customer to complete.
• The Contractor shall own advertising possibilities.
• The contractor maintains its own business premises (if he runs not a so-called home office ( domestic agency ) ).
• The Contractor shall perform its own books and records.
• The contractor has significantly more office work to do as a non- self-
• He receives no support from the state
• The retirement plan is independent and not by the state

Formal features

• Where appropriate business registration
• Where appropriate entry in the commercial register
• Payment of commercial, sales and income tax instead of income tax
• Non-payment of social security contributions ( exceptions in the statutory pension insurance )
• Self- financing of a private health and old-age insurance of the party
• Alternatively you can also voluntarily pay into the national health insurance
• The guidance of professional designation
• Using your own letterhead
• Sign the telephone directory
• No maintenance of personnel files by the contracting authority
• No participation of the stakeholders in council elections

Mostly concern the occurrence of both parties towards third parties ( authorities, customers, other persons for the client ). They document merely states that the contracting parties behave the outside world over in a way corresponding to the contract wording in the rule.

Whether someone is employed or dependent is self-employed, depends on which characteristics predominate. All the circumstances of the individual case must be considered accordingly. Here, the contractual arrangement of the legal relationship between the parties must be observed. If the actual circumstances but on the contractual arrangements from, so do the realities of decisive importance.

The next expression in the contractual arrangements governing concurrent will of the contracting parties is, however, then crucial importance to be attached when the actual design of the activity equally talking about for an independence as for paid employment and mandatory provisions of the social security law are not violated. In these cases, not " in doubt " an insurable employment are accepted.

Allow neither the facts nor the contractual arrangements make a decision about whether a dependent employment or self-employment exists, it must be considered which of the two types of economic activities, the working life of the insured person is actually influenced. This could be justified with the fact that it can be concluded from the previous status in employment on the will of the insured, not to change this status.

Self-employment in the labor market policy

To combat unemployment transitions are encouraged to self-employment. This program increases the likelihood that the unemployed can be reintegrated into the labor market.

Situation in other countries

United States

In the U.S., must self-employed, have a net annual income is $ 400 or more, report this income directly to the IRS, and also pay a social security contribution there. However, if the net income is less than $ 400 gross income a year is 600 dollars or more, the income may be reported to the IRS voluntarily so that they merit time is counted for Social Security. If the revenues are generated by the spouse of a person who is taken into the ( in the low-income self-employment ) partner in your own tax return, the income must be stated and taxed in any case. In addition, self-employed also pay contributions for Medicare. Rules concern are the obligations in self Self-Employed Contributions Act ( SECA ) of 1954. Codified this law in § § 1401-1403 of the Internal Revenue Code. Low-income self-employed can deduct half of their SECA contributions from tax ( Federal Tax ).

A business registration (business license) is required only at the federal level, if the industry is controlled by the state (eg, transportation, broadcasting, sale of alcohol). In some states, as well as lawyers, doctors, nurses and architects need a license. At local level, additional regulations may be made prescribing a business registration for even larger groups of people, if not all traders. When registering a company in the U.S. must be noted that current in many parts of the city zoning laws or zoning ordinances authorizing commercial activities - even a pure online business - exclude in principle.