What does a freelance programmer do

Business registration for software developer or freelance work?

Anyone who wants to become self-employed in the future-oriented professional field of software developer must be able to describe their qualifications and the range of services offered in detail in order to be able to meet any obligation to register a business. With every business registration, the activity including the range of offers must be described as precisely as possible in the corresponding form in the course of the business registration. In general, it is not possible to say in general whether a Commercial activity or a freelance activity is present. In economic practice, however, it is the case that many independent software experts act as freelancers. The advantages of freelance work are obvious: In addition to simplified bookkeeping, there is another financial advantage in the fact that no trade tax has to be paid. In this article, the essential framework conditions are to be highlighted, on the basis of which a general orientation for independent software developers is made possible. In addition, central court rulings are used in order to be able to check one's own starting conditions.

Software developer: freelance or commercial?

It is generally the case that IT professions are generally not necessarily found in the catalog professions that are relevant for freelance work. But from that it can be not automatically a commercial obligation for self-employed software developers. In this area (as in other industries), by definition, a freelance activity can be assumed if this is based on a special qualification is based. A university degree can prove to be formal legitimation, but it is not mandatory, because self-taught career changers can also achieve the status of freelancer. Anyone who deals mainly with system software and technology usually works as a freelancer (provided that the range of services does not include any other focal points). However, if you only program application software such as mobile apps as a freelancer in this area, you may have to register a business. As a general orientation, the important statement of the Federal Fiscal Court can be used: According to this, a freelance activity can be assumed for a software developer if complex solutions are developed that require an engineering-like approach.

Current court rulings and trends on the status of software developers as an orientation

In 2012 that had Higher Administrative Court in Lower Saxony decided that a self-employed software developer is not a freelancer, but a trader. The self-employed was a qualified business informatics specialist who focused on software development in the field of multimedia and databases. After a change of registration, the software developer was asked to register a trade. He sued this decision and was of the opinion that he was doing a freelance job, since he was doing an 'engineer-like' job in which he created individual software solutions. The Higher Administrative Court contradicted this view: It argued that the predominant requirements for a freelance activity are not met. From the court's point of view, there is a particular lack of professional independence and insufficient personal responsibility. The court also pointed out that, from a purely objective point of view, no university degree is necessary for a freelance activity. In 2009 the Federal Fiscal Court had judged or recognized that system administrators, software developers and IT project managers can be freelancers, provided that the range of services is comparable to the methodical approach of an engineer. The jurisprudence sends different signals to some extent. In any case, it is possible as a software developer not to have to register a business. If a business is to be registered, this is not subject to any special authorization requirements or monitoring requirements. It is sufficient to submit the relevant application to the responsible trade office before starting work (or at the latest 14 days afterwards).


Conclusion and recommendations for starting your own business as a software developer

Whether software developers have to register a business depends primarily on theirs qualification as well as the im Individual case offered range of services. Those who act like engineers and make free decisions can, by definition, benefit from freelance work. Those who tend to focus only on programming customer-specific software will usually not be able to ignore the business registration. Since the solutions and technologies are just as complex as the entire professional field of action, no generally binding statements can be made. The skills and performance determine the specific status of self-employment in each individual case. The court rulings listed here have a certain signal character, so that they allow an assessment of one's own starting conditions. It can therefore be advantageous to follow current court rulings on this topic in order to identify new room for maneuver and to use it consistently for yourself.

Summary with the most important aspects: Registering a business as a software developer?

  • A general commercial obligation for software developers cannot be determined across the board: in practice, many software developers act as freelancers
  • A university degree alone is not yet a formal legitimation for a freelance activity (career changers also act as freelancers)
  • Activities that focus primarily on programming customer-specific software solutions tend to be commercial
  • For the status of freelance work, an engineering-like working method with a high degree of freedom of action are decisive criteria according to case law
  • The court rulings on the status of software developers contradict each other in part. In the reasons for the judgment, however, relevant delimitation criteria can be recognized (see above)
  • Interested parties are advised to precisely record their own range of services and to follow current court rulings in order to make consistent use of new room for maneuver, if necessary
  • In the case of a necessary business registration, neither special permit requirements nor monitoring requirements need to be observed