How to set up as a freelance contractor
Enjoy the independence freelancing offers while freeing yourself from needless paperwork
Invoices, tax responsibilities, contracts and even receiving payment — these tasks can feel overwhelming for an independent contractor. Thankfully, practical solutions exist to remove the time sink and frustration of admin work. Use this guide as a practical plan to set up payment processes quickly and confidently so you can return your attention to what matters most: your clients.
How to set up the right business registration
Setting up contract agreements for new clients
How to get paid as an independent contractor
How to manage and monitor invoices
Managing independent contractor taxation obligations
Liability considerations for independent contractors
Accounting requirements for independent contractors
How do I ask the company I’m working with to convert me to an employee?
5 ways Remote makes life easier for contractors and their clients
Onboard with Remote and get set up in minutes
How to set up and get paid as a freelance contractor: your blueprint to eliminate annoying admin
As an independent contractor, you are accountable for running every aspect of your enterprise: securing and retaining clients, delivering projects, handling admin, and promoting your services. You may also be tasked with duties beyond your specialisation, such as drafting contracts and managing taxes.
Preparing a contract can be daunting if you are unsure which employment laws apply to your situation, particularly when a client is located overseas. You may also worry about receiving payment after substantial processing charges have been deducted from your earnings.
Please be advised that you can handle all these responsibilities. In truth, establishing your setup and getting paid as a freelance contractor can be swift, straightforward and effective — regardless of where your clients are located.
This guide provides actionable support for independent contractors, especially those new to running their own business. We outline how to implement a process to manage your workload and demonstrate how automation can simplify those routines.
We cover the four most worrying areas for freelancers and explain how to manage them with confidence:
Contracts
Payments and fees
Invoicing
Tax
Ready to explore ways to streamline your freelance business? Let us begin at the starting point: establishing your business.
How to set up the right business registration
To start working as an independent contractor, you must first select an appropriate legal structure for your business. This choice determines your tax and legal responsibilities. The correct structure depends on where you are tax resident. Different countries, and occasionally regions, apply their own rules for independent contractors.
Most jurisdictions provide a few standard options
Individual entrepreneur. This is a straightforward arrangement for solo contractors. In some places, such as France there is a legal distinction between the individual and the business; in other jurisdictions this separation may not exist.
Partnership. A partnership involves an agreement between two or more parties. Frequently there is no legal separation between the partners personally and the business entity.
A limited liability company. A formal legal entity distinct from the individual who runs it. Typically, profits and losses are attributed to the company rather than being treated as personal income.
Additional structures may be available depending on the jurisdiction in which you operate. For example, Australia, for instance, offers a trust arrangement in which a trustee administers the business on behalf of beneficiaries.
Each structure has advantages and disadvantages, yet many independent contractors prefer the individual entrepreneur option because it is generally the easiest to establish and operate.
For country-specific employment law guidance, please consult Remote’s Country Explorer — our international hiring guides contain practical information to help you form your freelance business.
Read more on how to become an independent contractor
Contractor Management
Setting up contract agreements for new clients
Many contractors dislike drafting contracts and can find the process intimidating, particularly if it falls outside their expertise. Some may even contemplate operating without a contract.
However, forgoing a contract is unwise. Contracts are essential because they protect you in multiple ways. Typically, a contract will include:
Contracts specify tasks, deliverables and project criteria. This prevents scope creep and ensures you are not expected to perform work outside the agreed scope without appropriate compensation.
Contracts set out payment terms clearly, stating the amount, payment method and any milestones or deadlines.
Contracts deal with ownership and rights to intellectual property created during the engagement. Clear IP clauses shield freelancers from future disputes.
Contracts define the conditions and procedures for terminating or suspending the agreement, helping protect contractors against abrupt terminations.
Contracts clarify the relationship between contractor and client, reducing the risk of misclassification issues for both parties.
Although useful, contracts can be complicated since contractor rights and employment conditions vary globally. If you rely on a random template from the web or draft your own without local legal input, the agreement may not be enforceable in certain jurisdictions and could even disadvantage you.
Contractors can ensure their arrangements with domestic and international clients comply with local law by using Remote’s compliant, customisable contract templates. These templates are adapted to country-specific legislation so contractors remain compliant regardless of the client’s location.
If you prefer to use your own contract, you may continue to do so. When you onboard to Remote as a contractor, you can upload your existing agreements instead of using ours.
Learn more about contracts here.
More on independent contractor agreements
Independent contractor agreements: a guide for businesses
The dangers of contractor misclassification
In most jurisdictions, independent contractors are classified differently to employees. Many employee protections and benefits — such as healthcare, pension schemes and equity plans — typically do not apply to contractors. As an independent contractor, you exchange those benefits for the freedom to select clients and control how, when and where you work.
Nevertheless, some companies may deliberately misclassify contractors to avoid legal obligations, while in other cases misclassification happens unintentionally. Whether deliberate or accidental, misclassification can lead to penalties and fines for both you and your client. The client may face substantial fines in their jurisdiction, and you could be liable for unpaid taxes in your country.
Bear in mind that it is in your best interest to be correctly classified as a contractor.
Firstly, a properly classified contractor retains the freedom to work as they choose. For instance, in the United States, employers are generally not permitted to dictate how a contractor performs their work or impose fixed hours. Contractors may choose their working methods and schedule so long as the contracted deliverable is completed. Secondly, contractor status provides greater control over how you earn.
Penalties for misclassification differ by country. To mitigate risk, keep an open dialogue with your clients about your role and responsibilities and periodically review the working arrangement. If your engagement becomes more integrated with the client’s operations over time, you can request conversion to employee status.
Learn more about the dangers of misclassification in the guides below
Employee and independent contractor misclassification: Expert guide
The consequences of misclassifying employees as contractors
How to get paid as an independent contractor
As an independent contractor, you are responsible for issuing invoices and collecting payments. This often means billing each client separately and accepting whatever payment method they prefer — a process that can be inefficient and time-consuming.
Some of the most common ways to receive payments include:
Bank transfers
Bank transfers — transfers between two bank accounts. While generally fast, they frequently incur significant service fees.
Direct deposits. A direct credit to your bank account. This is usually quick but may attract charges for your client, and becomes complex when dealing with multiple clients or cross-border payments.
Paper checks. Paper checks can be deposited via mobile apps, but they are increasingly obsolete due to slow processing times. Physical cheques can also be lost or stolen.
Money orders. Money orders are a secure payment method accepted in many countries but are inconvenient as they must be purchased in person and can still be lost or delayed. They may also raise suspicion, as scammers sometimes use them.
Virtual wallets. Digital wallets are becoming popular and offer fast payments, but not all clients accept them and there are some security considerations.
Digital transfer services like PayPal and Wise. These services are convenient and often include invoicing features. However, they may deduct fees or apply unfavourable currency exchange rates, which can be significant.
Alternatively, you may choose a trusted service such as Remote. Our platform is a simple, secure and dependable way to receive funds quickly in your local currency — with no hidden charges. Add your bank account as a withdrawal method in your Remote dashboard, and client payments are deposited directly into your account.
You won’t need to keep refreshing the dashboard to check payments: Remote emails you as soon as an invoice is paid. Learn more about how our platform can help with payments.
Your essential guide to invoicing as a freelancer plus a complimentary template
How to invoice as a freelancer: a clear guide plus a free invoice template
How to get paid by international clients
Cross-border payments are more complicated than domestic ones. Currency conversion, arranging wire transfers and other payment methods, and high processing charges can make accepting international payments stressful.
Remote simplifies the process. Our contractor management service covers more than 200+ countries and territories, enabling you to be paid in your chosen currency regardless of the currency you invoice in. The process works like this:
1. Invoice
You invoice your client in whatever currency suits the client and upload the invoice to Remote’s contractor management platform.
2. Payment is made
The client settles their invoices in their own currency.
3. Payment is received
Once Remote receives the funds, we convert them to your preferred currency before processing the payout to you.
Contractors have two choices for payouts. You may add your bank account details directly on Remote where payouts are powered by Wise or you can use a Stripe Connect account. You may update your preferred currency and payment details at any time.
What about fees?
We partner with a number of providers to ensure our pricing is speedy and cost-effective. We do charge your clients a $29 fee for payment processing, but as a contractor, the only fee you pay is a mid-market currency conversion fee. If you’re being paid in your preferred currency already, there’s no fee at all.
You can learn more about our fees in this support centre article.
How to manage and monitor invoices
Invoicing as an independent contractor can be tedious. Many rely on a collection of ad hoc tools to create, send and track invoices manually — an inefficient system. Manual processes are slow, monotonous and prone to mistakes.
By automating your invoicing, you can streamline billing and return to revenue-generating work. Remote can assist with this.
With Remote, you no longer need spreadsheets, email threads or other manual tools to invoice clients. Our platform enables you to create invoices, submit them for approval and receive payment in your local currency without switching tools. Upload your invoices to Remote; we will route them to your clients and provide status updates as they progress through approval.
Setting up billing
As a contractor, you submit invoices to clients via your Remote dashboard. There are two methods:
1. Upload your own invoice
Prepare an invoice showing the invoice date and amount, then submit it as a PDF.
2. Create an invoice on Remote
Use our templates to build an invoice directly on the platform. You may also set up recurring invoices that are sent automatically to your client.
To find out more, see this article in our Help Centre.
Managing independent contractor taxation obligations
As an independent contractor, you are liable for your own taxes. Tax rules vary by country, however, so obligations differ across jurisdictions.
For example, in the US you are responsible for remitting taxes directly to the government, whereas in some countries clients may be required to withhold tax from payments. For specific tax guidance in your jurisdiction, consult Remote’s Country Explorer page.
This is another reason why correct contractor classification matters: it affects how taxes are paid.
Liability considerations for independent contractors
When employed, the company usually handles liability matters. As a sole trader, however, you bear personal liability for obligations such as financial and tax debts, which in some cases can put personal assets at risk. To reduce this exposure, many contractors purchase liability insurance.
It is equally important to protect yourself legally when negotiating and signing client agreements. Remote’s legal team reviews our contract templates to help ensure compliance with the laws of the country where you work.
Accounting requirements for independent contractors
Independent contractors are not required to publish annual financial statements. Nevertheless, you must maintain organised records of accounts, including client invoices and business expenses, to monitor income and meet tax obligations.
You can manage records yourself using accounting or bookkeeping software, or engage a professional bookkeeper or accountant.
Consider opening a separate bank account for business transactions; in some jurisdictions a business account may be required once turnover exceeds a specific threshold.
How do I ask the company I’m working with to convert me to an employee?
Begin a constructive conversation with your client and explain the risks and advantages of changing to an employer–employee relationship. Emphasise how the change could benefit both parties, not only yourself. There are several reasons a company might wish to convert you to an employee. For example, the client may gain greater control over your working hours and the methods you use to complete tasks.
Listen attentively to client concerns. International clients may be reluctant to hire you directly without a local legal entity. If so, propose that they use an Employer of Record (EOR).
An EOR acts as the legal employer for workers in another country on a company’s behalf. Typically, an EOR handles HR administrative tasks including local payroll, benefits administration and tax compliance.
Remote, for example, is an EOR and can assist the transition while keeping your client compliant with local laws.
To learn more about representing your interests as a remote worker, download our Remote Toolkit.
5 ways Remote makes life easier for contractors and their clients
As demonstrated, there is much to consider when establishing yourself as an independent contractor. Remote can assist with many of these challenges so you can concentrate on growing your business and serving clients. Here’s how:
Learn more about how Remote can help you as an independent contractor here.
Onboard with Remote and get set up in minutes
The freedom to work on your own terms is empowering. Yet administrative duties can distract you from core priorities: serving clients, receiving prompt payment and scaling your business.
By using a dependable platform such as Remote, you can handle these obligations efficiently, enabling you to focus on your business objectives.
Our platform simplifies onboarding for independent contractors — guiding you through identity validation for security and prompting you to upload any required tax documentation for secure storage.
Learn more about how Remote can save you — and your clients — time and resources.
Get started with Remote today.