Hartz iv for freelancers: entitlement and application

Around four million self-employed people work in Germany. Many decide to become self-employed mainly because of the independence, freedom of decision and free time management. However, it is becoming apparent that especially self-employed persons without employees, so-called solo self-employed persons, are increasingly having their salaries reduced by Hartz IV and state support have to top up. These often earn less than self-employed people with employees and so in 2016 around 105 were.000 Solo self-employed persons are dependent on Hartz IV benefits, in order to be able to cover their living costs. But why do many self-employed people need Hartz IV at all?? And under which conditions can freelancers receive Hartz IV??

Hartz IV for Freelancers: Entitlement and Application

➠ Contents: What you can expect

What exactly is Hartz IV and who is entitled to it??

The term Hartz IV stands for the Unemployment benefit II (ALG II), which was introduced in the course of the Hartz reforms in 2005. It combines social assistance and the previous unemployment assistance and is intended to provide jobseekers with a basic level of security. ALG II is granted for an unlimited period of time, as long as one is actively trying to re-enter the labor market, and is purely a social benefit from the state.

To be distinguished from this is unemployment benefit I (ALG I) as an insurance benefit, which is paid for a limited period of time – depending on the duration of the deposit. As a social benefit, however, the ALG II is linked to the need. The state sets standard rates: a single person is currently entitled to support in the amount of 416 euros per month – the cost of housing, health insurance, etc. is also assumed.

In general, anyone who is at least 15 years old and has not yet reached the statutory retirement age, is fit for work, can work at least three hours a day, and has his or her Not being able to secure a livelihood on their own can. This also includes the self-employed, if they temporarily earn too little to live on in their work.

Background: Why do many freelancers need Hartz IV??

Although self-employment brings numerous benefits, solo self-employment in particular can be very challenging if, for example, there is a temporary lull in orders. In general, when looking at the Income situation of the self-employed determine a very strong disparity: according to the DIW, however, single entrepreneurs earn more on average than dependent employees.

The current Freelancer Compass 2018 also shows, using the IT and engineering sector as an example, that freelancing appears to be very lucrative, with an average hourly rate of over 90 euros. However solo self-employed persons dispose relatively frequently across industries of a monthly net income of only about 1000 euros, while self-employed with employees shows a peak at over 2000 euros.

For freelancers in particular, it can therefore be difficult to, earn a profit in the long term and build up reserves. These are then lacking if orders fail to materialize or other unforeseen events occur. Since an entitlement to ALG I after self-employment only exists under certain conditions, for example, if voluntary unemployment insurance has been taken out, an ALG II application may be necessary if the income is not enough to live on.

Even if, for example, your partner loses his job for a short time and you are a self-employed person suddenly a sole earner is, the freelancer salary may not be enough to support the common household.

Requirements: Receive Hartz IV as a freelancer

According to the German Social Security Code II (SGB II), ALG II recipients are allowed to work as freelancers. This means that, conversely, the self-employed are also generally entitled to ALG II, if according to §7 SGB II as an employable and in need of help be considered. A person in need of assistance is one who cannot independently support himself with his income.

If you receive ALG II as a self-employed person, you must no upper limit for weekly working hours note. It is important that the continuation of freelance activity is granted only if there is a positive forecast for the future. It must be appropriately foreseeable and proven by clear figures that the state support is needed only temporarily and the neediness can be overcome in the near future.

The approval period for ALG-II benefits is basically initially for six months. Important: The application for ALG-II benefits should be filed as soon as possible – as soon as the need arises, since the benefits are paid at the earliest from the month in which they were applied for.

Financial tips for the self-employed

Identifying shortfalls, securing bottlenecks at an early stage

Since one as a self-employed do not plan with a fixed monthly salary If you are self-employed and you are confronted with larger salary fluctuations, it is especially important to keep a good overview of your budget and to act in time if the worst comes to the worst.

Create and develop a solid financial concept

A Financial concept in the business plan is especially important at the beginning of self-employment to have an orientation. Included should be the capital requirements planning, all investments (whether short, medium or long term), as well as the planning of financing and liquidity. As time goes on, the numbers should continue to be monitored and adjusted depending on the current situation.

Straight one at the beginning of the Selbstst?ndigkeit often the establishment costs or larger investments stand in the focus, current costs may also not be neglected. This includes not only costs for professional activities (e.g. Internet, electricity, insurance, taxes, etc.), but also the costs for the company itself.), but also the current private costs.

Also these must be covered by the independent activity. The running costs should therefore calculated in at an early stage become. In addition, both for larger investments at the beginning and for running costs, one can check whether there are cheaper alternatives and whether savings can be made in one area or another.

Keep an eye on taxes

The expected tax burden as a self-employed person can be reduced with the help of the Tax calculator of the tax office roughly calculated. The tax office sets regular advance payments for tax payments, which must be made during the year. However, additional payments can be demanded, which were not planned in the own budget. For this a financial cushion is particularly important, which should be built up in times with higher profit margins.

With larger expenditures and investments it is worthwhile, Act with foresight: while smaller purchases worth up to 410 euros can be written off immediately for tax purposes, larger investments can be written off over several years.

Even if an acquisition is planned only in a few years, it can be worthwhile to save for it already now, because such a annual savings amount written off from the tax can be. Any investment that is tax deductible will reduce your taxable income, so it pays to review your expenses carefully.

Keep an eye on payment deadlines

Since self-employed people often make advance payments on orders, it can happen that despite lucrative orders temporarily hardly any money is collected becomes. Among other things, this can be due to long payment periods or customers being late with payments.

It is therefore possible, Invoice to be issued promptly and generally set payment deadlines so that current costs can be covered. In the case of longer-term orders, it is possible to agree on payment in installments or an advance payment.

Form reserves

If customers do not pay their invoices within the set deadlines, if one temporarily does not receive any new orders or if back taxes become due, it can quickly lead to Liquidity bottlenecks come.

In order to prevent this, it is important, in phases when things are going well financially, to take out, as far as possible Putting money aside, which is quickly available as needed. Here, for example, a call money account would be advisable.


In order to protect oneself both privately and at work, there are numerous insurances available. Relevant for private risks are, among others, the legally required health insurance, occupational disability insurance, accident insurance, pension insurance as well as voluntary unemployment insurance.

insurance policies for company coverage make different sense depending on the business world. It is therefore advisable to find out exactly about the different Inform insurance offers and consider which ones might be important for your professional situation.

Submit an ALG-II application: How freelancers get money

Visit job center

If, as a self-employed person, you find yourself in a situation where you are no longer able to secure your livelihood without state support, you should first apply to the relevant job center. On the spot, a make an informal application. The applicant’s data will also be recorded here, which is why it is advisable to bring a curriculum vitae, proof of any state benefits already received, as well as documents on the start and type of self-employment. The documents and checklists required for the application are also handed out there. Alternatively, these can also be downloaded online and printed out.

Proof of income and assets

The application includes, among other things, proof of income and assets. Assets are understood to be everything that is already available at the time of application. The legislator grants a the various tax-free allowances depending on age and life situation and non-creditable assets such as residential property or motor vehicles, as long as these are deemed appropriate. Income, on the other hand, is everything that is added after the application has been submitted.

NoteThe income of self-employed persons in the grant period can only be estimated. Therefore, the EKS form of the Federal Employment Agency must be filled out, in which the expected income and expenses must be stated. By the way: since the beginning of 2008, income is only determined on the basis of the grant period. This means, for example, that only expenses that fall within the period for which support is granted and that are assessed as reasonable will be taken into account.

On the basis of the information provided, the job center assesses whether Support through ALG II can be granted. In addition, it is possible to request proof of actual income and expenses for the previous six months or an income/surplus statement for the last calendar year.


After submitting the application, the applicant will receive a preliminary decision from the job center based on the preliminary EKS, whether support for the requested period was approved. However, this is only done conditionally: no later than two months after the end of the grant period, the applicant must complete and submit a final EKS with actual income and expenses. If the Estimate too high or too low If the claimant fails to pay the invoice, he or she must either pay back benefits that have been granted or is entitled to an additional payment.

By the way: As a ALG II recipient you are entitled to the entry allowance from the Federal Employment Agency, which, as a temporary supplement to the standard benefit, offers a jump-start to full-time self-employment. However, this is only possible if it is a new entry into full-time self-employment or a transition from a part-time to a full-time self-employed activity.

Behind it the idea is that by the additional promotion of the successful start into an independent self-employment should be facilitated. A positive prognosis is fundamental for the granting of the start-up money: it must be foreseeable that the self-employment will generate sufficient income in the long term to secure one’s own livelihood.

Hartz IV or back into the employment relationship?

If it is foreseeable that the self-employed activity will not be profitable, one generally no longer wants to bear such a large financial responsibility or even give up the self-employment, the way back to employment remains. Here it is important to think carefully for yourself, which Aspects of self-employment for the own situation problematic are, which one would like to change and which goals one sets oneself for the future.

Such a change can often a lot of patience require, can be worthwhile itself however. It is particularly important in the application process to emphasize your strengths that you have gained from self-employment, such as the know-how, independent work or organizational skills. You should generally rely on a strategy "towards the new job" and specifically refer to your own desire to change in your cover letter, but do not justify yourself. Rather, you should focus on the added value you bring to the company, as well as your own goals.

Conclusion: What freelancers need to know

Despite the many benefits of being self-employed, freelancers find themselves many risks exposed, which can threaten the own existence. Under certain circumstances, state support through Hartz IV is temporarily the last possibility to be able to cover one’s own living expenses.

Being self-employed has generally entitled to ALG-II benefits, if their own income is not sufficient, and at the same time are allowed to continue working in their self-employed activity without an upper hourly limit. However, applying for government support is a relatively laborious process, as self-employment does not generate a regular income, and therefore the approval of benefits is based on estimates, among other things.

Thus later additional payments, but also reclaims are possible. However, the following applies in principleIt must be proven that the support is only needed temporarily and that the professional activity will bring sufficient profit again in the foreseeable future.

Generally speaking, especially at the beginning of your self-employment you should and expenses exactly in the view keep and continuously update its financial plan on the basis of this, so that, if necessary, timely possibilities of financing can be found and support by ALG II can be avoided.

About the author

Thomas Maas already worked as a freelancer yourself. Today, he is the CEO of freelancermap and uses his platform to help professional freelancers, freelancers, self-employed individuals and companies come together to work on exciting projects.

Like this post? Please share to your friends:
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: