At the beginning of 2016, the Netherlands had more than 1 million self-employed people. People who start their own company full of energy and good intentions and who have the knowledge and skills that the market is hopefully waiting for. Most of these people have already had a career and have worked as an employee for an employer.
Every beginning is difficult Now that the self-employed person is on his own two feet, there is a lot to consider, your registration with the Chamber of Commerce has been done and before you know it the first blue envelope will arrive in your mailbox, digitally or otherwise. You will be assigned a VAT number and it will be clearly stated that you must file a tax return every quarter. The tax authorities are so proactive that they will even send you a username and password to log in to their website to file returns without a request.
However, no one explains how it works with all those declarations that have to be filed. When you were still employed, you completed your income tax return and, if you had to pay extra, you received an assessment with a giro collection form. You do not want to know how many self-employed people have to pay their first fine because they do not know that you have to pay the VAT return yourself and that you will not receive a tax assessment for this.
Then, as a self-employed person, you really get to work, you send out invoices to your customers and incur some business costs. You live off the income and use this money for your private expenses. But… not every self-employed person is aware of the fact that this money is a kind of gross amount, and that income tax still has to be paid on it.
A smart tip for sales tax Your client also pays the invoice including VAT, which must also be paid to the tax authorities at the end of the quarter. Has your client not yet paid? Well, then you will have to pay the VAT and therefore actually have to advance this.
The advice is therefore to always use a somewhat shorter payment term of, for example, 14 days and to use the first of the month as the invoice date. Finally, the second quarter declaration must be filed on your invoices up to and including, for example, June 30. If you invoice on July 1, it only needs to be included in the third quarter!
How much to save for your taxes? In order to avoid unexpected surprises with regard to income tax, it is advisable to reserve money for this during the year. I recommend keeping the 21% VAT separate from each invoice you send and another 25 - 30% of the amount excluding VAT for your income tax assessment.
If the total income exceeds 40,000 euros, you even have to put a little more aside. To be cautious, I recommend saving 40 - 45% for the income tax assessment, which is often not received until sometime in June the following year.
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