30 degrees, sun, beach, feet in the sand. The umbrella provides shade, nature sounds in the ears. Waves, birds, wind. Sounds like a vacation, but it could also be work. You would have to be a freelancer. Work, no matter how and where. You want that too? Then read here how you can soon get started as a freelance recruiter.
What is a freelance recruiter?
A freelance recruiter is a self-employed person who supports companies in recruiting as an external employee. Due to their qualification and specialization in the topics of recruiting and HR, they can be quickly deployed in the company without much training. This means that growth phases or "peaks" in which many hires are planned can be supported without having to search for, hire and train permanent employees. Freelance recruiters work on a temporary service or work contract and are billed on an hourly or daily basis. They are not integrated into the organization and are not bound by instructions.
Advantages and disadvantages of self-employment
For companies, the use of freelance recruiters is very interesting in order to flexibly compensate for personnel bottlenecks without having to rely on notice periods and social security obligations. But what are the advantages and disadvantages of working as a freelance recruiter?
Advantages of self-employment
One of the most significant advantages of self-employment is definitely the freedom of action. You are not bound by instructions. You can decide with whom you want to work and with whom not. You can scale your income. There are few limits. You are also completely flexible, rarely bound to working hours or location. Whether you work at home, in a café or under palm trees in the Bahamas - you decide. Of course, everything is subject to the condition that you produce your best performance. Because that's what you depend on.
Disadvantages of self-employment
Self-reliance can be tough. It's the free wilderness, where there's no protective, comfortably warm nest. No hand to hold you. Just you alone. You're sick and can't work? You don't earn any money. You're not doing well because things aren't going well in terms of sales? No one is interested. You have calculated wrong and the tax is due? The tax office takes your money anyway.
It can be hard to be alone. But by the same token, it also means that you're in control. Whether you manage well or badly is up to you. From freedom comes responsibility and you can use this. You are responsible for your income, for your insurance coverage, for the growth of your business and also for taking time off.
Become a freelance recruiter: The most important at a glance
If you are considering or have already decided to work as a freelancer, there are some preparations to make. Please note that the explanations in this article apply to Germany.
Before the foundation
Before anything is registered or invested, network! This point is deliberately at the top of the list. Your network determines your success. Especially in the beginning, where you still have to build up a reputation, can't fall back on recommendations and clients aren't beating down your door, you have to keep your cost base low and your motivation high. It can take time before the first orders come in. Therefore, start networking as soon as possible, talk to the right people about your project and land potential orders. The necessary formalities are quickly cleared up and then you start directly with an order. The most important thing for an entrepreneur, which you are as a self-employed person, is liquidity. If you can start in the plus, do it. But for this you must first and permanently invest time in networking.
Your first order is on the horizon. Now you need to clarify the formalities. To be self-employed, you must register a trade. To do this, you go to the Trade Licensing Office and register a trade as a main or sideline business, stating a business purpose and personal data about yourself. With the registration you are a trader and can go directly. At the same time, however, this also triggers further processes in other authorities, which will subsequently come your way. For example, you become a member of the local Chamber of Commerce and Industry, receive mail from the waste disposal and the tax office.
The tax office requires you to fill out a tax registration form. However, you do not have to wait for the tax office to contact you directly. You can also find it on the Internet and fill it out directly and send it to your tax office. For example, you can indicate how much turnover you expect for the current and coming fiscal year. You will then receive a new tax number that identifies you as self-employed at the tax office. You must indicate this number in your invoices. Therefore, it must be available at the latest during your first invoice run. Please note the "speed" of the German bureaucracy.
As a self-employed person, you are essentially confronted with three types of tax. On the one hand, you show your invoices with sales tax (19 % or 7 %). Depending on your expected turnover, you can also apply for the small business regulation and be exempted from the VAT.
Second comes the income tax. Just like employees, freelancers pay between 14 % and 42 % in taxes (plus solidarity surcharge and church tax, if applicable). The tax-free amount is €10,908 in 2023.
Thirdly, you pay business tax. This is levied by the municipality and varies depending on the municipality in the trade tax rate. However, the tax-free amount of €24,500 is the same for all municipalities.
As a freelancer, you generally use the net income statement to determine your profit. You simply compare the operating income with the operating expenses and determine the profit. You were paid for a successful assignment? Operating income. There are annual costs associated with a recruiting tool you use? Operating expenses. The difference achieved is the profit (or loss) and is accordingly the annual income and thus the basis for calculating income tax.
Building your business
You've done a lot of networking, you've got your first job lined up and you've registered your business. Let's move on to building your business.
For your first assignment, you need to determine an hourly rate. When calculating the hourly rate, you need to take into account that you will cover, for example, days off work and sick leave, as well as training and the purchase of a new laptop. All of this is financed by your turnover, which is determined by your hourly rate. As a freelance recruiter, the average hourly rate is between €70 and €80.
The freelancer market is similar to the employee market. There are many people vying for jobs and many who are very good and offer good value. So how do you stand out? What makes you special? Why should I choose you as a business? Take time to consider these questions. Develop a brand, your own branding and specialize. Maybe you're particularly good at recruiting SAP profiles. You know every shortcut and have an initial network in this area. Expand it. Position yourself and you will attract the right clients and emerge as a specialist.
With every completed job, no matter how short, someone has experienced a work sample of your skills. Ask for references! References are the foundation of your success. It helps a lot more to have someone else say about you that you're good than it does to say so yourself. Use this as much as you can.
You are specialized, have thought about your own branding and ideally already have references? Summarize all this on your own website. Here you can present yourself and showcase your services. You can include this on your LinkedIn profile and in your sales process. If necessary, potential customers can also send an inquiry via your website to get in touch with you. Use your website to show the world what you do, why you are good at it, and what projects you have already successfully completed. You can also put the same in a sales presentation that you can send to your contacts.
Cash is the fuel that keeps the business running. For this reason, you need to ensure a steady flow of orders. The Distribution will therefore be your everyday companion.
As a freelance recruiter, you're looking for recruiting or HR jobs. To do this, go through the popular job boards to see where recruiters are currently being sought. Even if they're posted for permanent positions, it's worth networking with the recruiting lead in charge. Introduce yourself to him, send him your website and presentation. Even if he is not interested in freelance work at the moment, this may change at a later date. And then he will have you in mind and your contact details at hand.
Sales are a long process. Sometimes a collaboration doesn't take place until years after the initial contact because there was no need beforehand. But as soon as the decision is made to involve freelancers, you are ready.
But since this should not be the standard and you need business in the short term, use databases. There are many freelancer portals or staffing agencies where you can submit your profile. They will then approach you directly and offer you options. This can be very attractive, especially for an entry-level position. You can also approach staffing agencies directly and submit your application for the freelancer pool.
As already mentioned: "The network determines your success". Therefore, network as much as you can, but always with the relevant people. Approach decision makers in HR, especially in the companies that fit your specialization. But also approach other freelance recruiters. Especially with your specialization it happens that you are asked by other freelancers if you can support a project. For example, because several freelancers are needed or because the other freelancer does strategy and you could take over the operational side.
Continue to build the pool of candidates in your specialization. The company always buys into your network in addition to your expertise. If you can come up with a good network, you're in demand.
As a self-employed person, you are responsible for everything. Also for the acquisition of your infrastructure. While in your private life you often already have a laptop or PC with which you can start your self-employment, there are some tools that you probably don't have. Very few people probably use a LinkedIn recruiter or XING talent manager privately. The purchase may also be far too expensive for the beginning. Therefore, use other options. With Google, for example, you can source free of charge. You may also be able to get a contract where the company gives you a license for Active Sourcing-tools, such as LinkedIn or XING. This could affect how you negotiate your hourly rate. It's just important to be clear up front how you're going to manage your work in the beginning until you can afford the tools you're probably used to. You may also need to set aside some start-up capital for your self-employment first.
Freelancer Recruiter: Tips & Tricks
Now you are ready for the start of your self-employment. Finally, a few tips.
As a freelance recruiter, you work on an hourly basis and bill according to your working hours. At the same time, you can also use the possibility of recruitment. If your sales activities show that a company is interested in recruitment, support them. This can scale with your network building and support you well financially. Optimally, your hourly based business becomes your base business and staffing is pure profit.
Become a brand
Continue to focus on your expertise. Build your brand by, for example, creating a blog and writing about your specialization. This way you reach your target audience and show them why you are good. At a certain point, this can also be reflected in your hourly rate.
One of the most important words you should know as a self-employed person is "bogus self-employment". You absolutely have to pay attention to this. As a freelancer, you are not bound by instructions and are free to choose your clients. If you work permanently for only one client who tells you where and how to work, this can be interpreted as pseudo-self-employment. If this is established, you may have to pay additional social security contributions. So make sure you have several clients and contracts that identify you as a freelancer.
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What does a freelance recruiter do?
A freelance recruiter is a self-employed individual who provides recruiting support to companies as an external workforce.
What are the advantages of self-employment?
A big advantage of self-employment is the freedom. You are not bound by instructions, you can decide with whom you want to work and with whom not and you can scale your income almost arbitrarily.
What are the disadvantages of self-employment?
Self-employment can be tough. You work alone and have no safety net if you are ever sick or unable to work.
What hourly rate can I charge as a freelance recruiter?
As a freelance recruiter, the average hourly rate is between €70 and €80.