Do you want to start your own business, but aren’t ready to drop everything for a plunge into the unknown? Starting your own business can be risky and being self-employed carries certain obligations that require the entrepreneur to have short-term profitability or savings to carry them over until their business takes off. There is a range of options available to reduce risk and maximise the chances of success of your entrepreneurial project. This article provides an overview of the assistance and support mechanisms available.
Of course, preparing your project well will be one of the key aspects to start your project while limiting the risks. However, that isn’t the purpose of this article. We’ll take a look at how to facilitate the phase that follows preparation, i.e., the start up of your business. Some of the financial aids presented in this article are already covered in an article on our website. Here, we’ll take a look at the benefits and disadvantages of each mechanism and at access conditions and the potential for combining some of them.
The self-employed allowance
The self-employed allowance is a declining allowance of €4,000 paid in six successive monthly payments after you open your business. The allowance is intended for unemployed jobseekers (at least one day) residing the Brussels Region who want to start a business as a full-time self-employed person. To obtain the allowance, you have to contact a support organisation approved by the Region which will ensure that the project is technically, financially and commercially viable. It is therefore important to submit the allowance request early.
- You can choose how to use the money. In addition, you don't have to repay the allowance if you discontinue the business. If the business closes within the first six months, you won’t receive the remaining payments.
- The allowance is individual. When you create the company, each of the partners will be entitled to the allowance, if they meet the eligibility conditions. Likewise, if one of the partners is not eligible, it won’t have any impact on the other partners.
- You will receive free support from an entrepreneur support organisation approved by the Region. The support will continue until the allowance has been paid in full.
Important points and drawbacks
- The allowance is classified as income. This means that it will be included in the calculation for your social security charges and your personal income tax.
- It's important to fully comply with all required administrative steps. The application process must be initiated BEFORE taking on self-employed status or you will run the risk of not receiving anything.
- When you become full-time self-employed, you immediately lose your status as a jobseeker and will no longer receive any unemployment benefits. Given that the application for the allowance is submitted after you’ve become full-time self-employed, there will be a short period between the last unemployment payment and the first allowance payment.
- The allowance is incompatible with the “springboard plan” (see point 2) and the business cooperatives (see point 3).
Why choose the self-employed allowance?
The self-employed allowance is interesting for entrepreneurs who have planned their business well, know their market and customer base, know that they should generate a certain amount of revenue quickly and who don’t require an intermediate status enabling them to continue receiving unemployment benefits. In some cases, it can also be an option for people who don’t meet the conditions for the springboard plan or business cooperatives.
It provides a good boost for someone who is getting started without, however, providing a significant argument for creating a business. The solution provides entrepreneurs who are starting out with freedom they won’t enjoy with the springboard plan (for example).
The springboard plan
The springboard plan enables the wholly unemployed receiving benefits to become self-employed while maintaining their unemployment benefits for 12 months. In this case, you will take on the status of part-time self-employed in addition to your primary status as a jobseeker with benefits. The fact that you have two statuses means that you must comply with the rights and obligations of both.
- You’ll retain your unemployment benefits (up to a point - see details in the next section) while starting your business. This will enable you to test the market while maintaining your unemployment benefits as a security net.
- If your business doesn’t succeed as you hoped it would, you can drop your part-time self-employed status at any time (before the end of the 12-month period) and continue to receive your unemployment benefits as initially planned.
Important points and drawbacks
- Your primary status will continue to be that of jobseeker. As a result, you will still be subject to the obligations associated with the status, such as looking for work.
- Some business sectors are excluded: artistic activities and those that should be exercised as a salaried employee (you have a single customer with whom there is a subordinate relationship - issue of people who are not truly self-employed). A business which doesn’t provide you with enough time to meet your obligations as a jobseeker will also be excluded by the Onem.
- Net daily income, which cannot be exceeded, has been set at €14.83 (as at 01/09/2021). Any amounts in excess of the €14.83 daily unemployment benefit amount will be deducted. The net daily income equals a little over €4,600/year or €385/month. However, your unemployment benefits will be paid throughout the year and the net daily income will be calculated based on your tax declaration. Any excess amount must be reimbursed at that time. It is therefore important to keep your records up to date and put aside everything that may have to be repaid to avoid any bad surprises.
- You are under no obligation to be monitored by an approved support organisation. But you can be if you choose. If you feel you need to, contact one of the organisations and they will help you limit the risks and prepare your project.
- Only jobseekers receiving unemployment benefits are eligible. The beneficiaries of CPAS (social assistance), mutual insurance and other equivalent allowances are excluded.
- The plan is not compatible with the self-employed allowance.
- The springboard plan and business cooperatives can be combined, but not simultaneously. These two opportunities must be exercised one after the other.
Why opt for the springboard plan?
The springboard plan does not provide the entrepreneur with significant income. It can be valuable for someone who is starting out knowing that it will take them some time to find customers/patients. For example, someone who works in the paramedical field and who is growing their patient list by word of mouth. This plan is also helpful for someone who has no idea yet about their market or their customer base. However, in this case, a market study and more in-depth project preparation can also have a part to play. Lastly, the plan can also help entrepreneurs who have high professional costs. It will enable them to decrease their net income.
The business cooperatives enable project leaders to test the economic profitability of their project on the market without becoming self-employed. The test phase can be initiated for a maximum period of 18 months following a first individual and collective support phase. During this phase, the entrepreneur will invoice using the VAT number of the business cooperative and receive support during the entire process. Once the test is completed, the aspiring entrepreneur will have enough knowledge to decide whether to become self-employed or not.
If the entrepreneur receives a replacement income via their primary status (unemployment, CPAS, etc.), they can retain the allowance for the duration of the test.
Job Yourself is a general-purpose cooperative with a branch (Baticrea) dedicated to manual trades. Reload Yourself, also managed by Job Yourself, is intended for people who want to transfer, take over or restart a company. Lastly, Rcoop is positioned in the beauty field (hairdressing, beauty, care).
- The aspiring entrepreneur on unemployment will continue to receive their benefits during the whole test period with freezing of the gradual decrease in the second stage.
- Administration and accounting are managed by the business cooperative.
- The aspiring entrepreneur is provided with support by the organisation throughout the process.
- The test phase can be initiated without basic management skills. In this case, the Jury Central examination must be taken during the test phase.
- Rcoop can lend you professional qualifications, if you don’t have them. You can also rent their beauty salon by the day or month.
- This measure is compatible with the springboard plan, but not simultaneously (if you meet the requirements of the plan).
Important points and drawbacks
- Some projects and business sectors are excluded.
- The business cooperatives take a percentage of your gross margin for the support they provide.
- To enter the test phase, you have to have at least two customers and €500 in confirmed gross margin per month for the first six months of business activity.
- Depending on the status of the project, it’s likely that you will have to complete a preparation phase before entering the test phase and invoicing. However, it’s possible to start the test phase immediately if your project is mature enough.
- This measure is incompatible with the self-employed allowance, but compatible with the springboard plan.
Why choose the business cooperatives?
The business cooperative is ideal for the aspiring entrepreneur who doesn’t want to become self-employed immediately and take on the associated obligations (social security charges, accounting, etc.). The aspiring entrepreneur can focus on their core business without having to worry about administrative aspects. It also enables project leaders to take the time to prepare their project and provides support throughout the process.
Lastly, this solution enables the beneficiaries of allowances (unemployment, CPAS, mutual insurance, etc.) to keep them for the duration of the process with no maximum net daily income.
These organisations enable you to develop a professional activity under the employee status. Payroll organisations are intermediaries between you and your customers. For this purpose, they offer a contract (fixed-term contract or permanent contract under certain conditions) thanks to which you can provide services or sell your products in a legal and secure setting.
- This is a good solution for occasional and irregular services.
- You don’t have to worry about administrative management and receive net income, which avoids bad surprises.
- You can use these organisations regardless of your status.
- You don’t need professional qualifications or basic management skills.
- If you receive unemployment benefits, you simply need to check off the box for the days you worked. You retain your allowances for all of the days during which you don’t exercise your profession.
- Once the service provided, your salary is guaranteed for seven days and, if the customer doesn’t pay, the organisation will send a reminder.
Important points and drawbacks
- These organisations take a percentage on your services.
- The solution isn’t financially advantageous for a regular or recurring activity.
- If you receive unemployment benefits, you won’t receive them for the days you are working under the payroll services.
Why choose the payroll organisation?
Payroll organisations are useful for occasional and non-recurring services. They enable you to sell products and services within a legal framework without becoming self-employed. They enable you to avoid the administrative and accounting formalities associated with self-employment. In addition, this is a flexible solution you can set up quickly.
Erasmus for Young Entrepreneurs
Erasmus for Young Entrepreneurs (EYE) is somewhat different from the other alternatives discussed in this article because it doesn't allow you to exercise your profession immediately. It provides assistance to help you prepare to become an entrepreneur and further the preparation of your project.
It’s a cross-border exchange programme that offers young people and future entrepreneurs the opportunity to train, for one to six months, with seasoned entrepreneurs who run small businesses in the various participating countries.
EYE lets you experience the daily life of an entrepreneur while expanding your network and testing your own entrepreneurial skills. The programme also allows you to discover a new country and a new market and build international contacts, while also benefiting from the financial support of the European Commission.
To take part, you must have at least three years of experience as an entrepreneur and reside in one of the participating countries. In addition, you have to have a business plan which includes a financial projection over two years.
- You become familiar with the requirements of being an entrepreneur.
- You develop new entrepreneurial skills and attitudes.
- There is no age limit, and no status restrictions. The access requirements are quite open.
- You receive monthly financial support of between €550 and €1,110 (based on the destination selected).
- You have access to a database of aspiring entrepreneurs in all participating countries.
- All business sectors are eligible.
Important points and drawbacks
- It's important to get an early start to complete the formalities (business plan, entrepreneur search).
- This isn’t a programme to launch a business, but rather to get prepared. You can, however, participate if you have a business (if you have less than three years of experience).
Why choose Erasmus for Young Entrepreneurs?
The programme is for you if you want to find out exactly what being an entrepreneur entails. It will allow you to follow an experienced and passionate entrepreneur who will play the part of a mentor for your project. In addition, you can develop new skills specific to your business, a foreign network, your knowledge of languages, etc. The experience will help you expand your vision of your project.