Step-by-step guide: Becoming a freelancer
If you haven’t already, we suggest that you read the first article from our freelance guide on what you need to know about going from permanent employment to being a freelancer. In the following, we will present some more tangible steps you need to take to become a freelancer in Denmark, and where you can find the right resources and help on your path to self-employment.
1. Registering your company
If you’re considering freelance work as a career path – even if it’s not full-time in the beginning – you need to have a CVR number, i.e. a registered company. Most freelancers register a one-man business, which is free to register and only requires tax accounting, rather than an annual account submitted to the Danish Business Authority.
You can find more information about how to register a company and get a CVR number from the Danish Business Authority, right here.
2. Create a plan for your bookkeeping
Now that you have a CVR number, you’re technically ready to start invoicing clients. However, we advise you invest some time in seeking out knowledge both on how to best structure your administrative tasks and the legal requirements for bookkeeping.
When you’re self-employed in a one-man business, your company’s finances are not separated from your own (although you should definitely keep separate bank accounts). This means that you are personally liable for your company’s finances, but also that you do not pay out a salary per say. Instead you will take out your company’s profit as your income – a profit which is of course taxed. Something which you need to do yourself, as opposed to being a salaried employee. This is done through an advance registration, where you inform SKAT of your expected profit throughout the year (not your turnover). You can adjust this continuously throughout the year should you get in less or more projects than expected. You can read more about how to register your taxes when you have a one-man business here.
Furthermore, you need to register and pay VAT for the services you offer as a freelancer, if you expect to earn more than 50.000 DKK per year. The first year and a half you have to report VAT quarterly, and then moving forward, every six months (up to a yearly turnover of 5 million DKK). Here you can read about how to register and pay VAT.
Finally, keep in mind that you have to take care of your own pension payments, as well as vacation and sick pay.
If numbers and tax rules are not your strong suit, you may consider investing in an accountant or bookkeeper, or at the very least software for bookkeeping – this usually costs a couple of hundred DKK per month.
3. Create a CV and a strategy for how to sell yourself
Just like when you want a regular job, you have to create a convincing CV – but, you should definitely take a different approach to creating your CV as a freelancer. First of all, you need to make your availability clear. This is one of the most important pieces of information, as hiring a consultant is usually about getting the right skills at the right time. You can make this clear in several ways; right underneath your contact details, but also list the expected completion date of your current project in your career history.
Secondly, one of the most important things to hiring managers and recruiters, is an overview of your skills and technological capabilities. One of the main selling points of a contractor, is after all that you’re ready to ‘plug-and-play’; if they want to spend resources on training, they will usually do so on a permanent employee. If you’re applying for a specific project, it can be a good idea to highlight the skills you think will be particularly applicable in the given project. Depending on which field you work within (e.g. UX design or developer), you may also consider presenting your CV more like a portfolio.
Furthermore, LinkedIn will be one of your most important tools when going freelance. It’s a great tool for self-promotion; you can upload your CV and references, share business cases, get involved in professional discussions to boost your visibility, you can network with colleagues and recruiters, and you can position yourself as an expert within your field, by sharing some of your knowledge and insights.
On the topic of networking, this is really one of the most efficient tools when it comes to promoting and selling yourself as a freelancer: Let your network know that you’ve made the move to freelancing. Attend events on interesting subjects within your field. Think long-term; cultivate your relationships with your colleagues. If you’re approached about a project and you don’t have the time yourself, let the recruiter know if you know someone who may be interested – they will likely be happy to do the same thing the other way around. You may also be able to find network groups for freelancers within your area of expertise.
Lastly, you should be prepared for some companies wanting to see examples of previous work or test your technical capabilities.
4. Acquiring your first project
Now that you have all the formalities in order, it’s time to start looking for potential clients and projects. You should start out by making your availability visible to recruiters on LinkedIn and uploading your CV to freelancer databases, such as the one we have on hays.dk – these will be the first places recruiters look to fill projects, and projects are not always advertised online, as they are often filled through our database and network.
However, projects may not always come easy, especially if you’re just starting out as a contractor. Therefore, you should keep an eye out on project portals; although you may not be the best candidate for a project you apply for, this will put you on the recruiters’ radar.
It’s important to remember that as a self-employed professional, you’re subject to the Danish Marketing Practices act. This means that you cannot just reach out to companies by e-mail, offering your services.
5. The contract
It should be needless to say, that you should have a contract whenever you perform a freelance task for a company. This is a precautionary measure for both parties, to avoid misunderstandings about e.g. the scope of the project or payment. Often either the company or the recruitment agency will have a standard contract, but here’s some of the things you should look out for and make objection to if necessary:
- Description of the project and your tasks
- Where the job should be performed (remote, on-site, mixed (and if so, how many days are you required to be on-site))
- Major deadlines
- Your remuneration (hourly or for the entire project), as well as information regarding taxes and VAT
- Invoice details
- Whether the company will make equipment (computer, phone, etc.) available
- Any expenses associated with the project and if you should be compensated (e.g. transport, material, hotels)
- Copyright and non-disclosure agreements if relevant
- Liability in case of breach of contract
- Any other circumstances regarding the contract, e.g. extension or termination
So you’ve started your first project, and you’re ready to actually start invoicing your client. If you’ve found your project through an agency, such as Hays, you will likely receive a template you can use, as well as a thorough guide on how to fill it out, who to send it to/where to upload it and a point of contact for any further questions.
If you’ve found the project yourself, you need to create a system yourself for invoicing, including creating a template (you can also pay for an invoicing software to help you out), and keep track of how your clients want to be invoiced (some may have a portal where you need to upload your invoices, whereas others just want it sent by e-mail).
Here’s a list of the information which should always appear on an invoice:
- Date of invoicing
- Due date
- Payment terms
- Invoice number
- Your CVR number
- Your name and address
- Your client’s name and address
- What you’re invoicing (description of tasks, hours, rate, currency, amount)
- Period/date of delivery
- VAT basis (i.e. price per unit without VAT)
- The price including VAT
- The total amount
We hope this has provided some insight into the process of becoming a freelancer – however, as it is a complicated process which will depend on your individual circumstances, we recommend to seek personal guidance when necessary, from e.g. Business in Denmark when it comes to registering your own company, SKAT for tax questions or Hays for project acquisition. Finally, we suggest you read the last chapter of our freelance guide: The biggest challenges to becoming self-employed. Here you will find some great tips on how to decide on your hourly rate, how to deal with difficult clients and how to acquire projects and clients.