How to establish yourself as a freelance contractor
Embrace freelancing’s independence and remove the administrative burden
Invoicing, tax responsibilities, contracts and even simply getting paid can feel overwhelming for an independent contractor. Fortunately, practical solutions exist to cut down the time and frustration of admin work. Use this guide as your blueprint to set up payment processes quickly and confidently so you can refocus on what matters: 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 remove frustrating admin
As an independent contractor, you take responsibility for all aspects of your business: winning and retaining clients, delivering projects, handling admin and marketing. You may also be asked to perform tasks outside your core skills, such as preparing everything about your business: getting and keeping clients, working on projects, handling admin, and marketing your business. You are also responsible for tasks that might lie outside your expertise, such as writing up contracts and managing taxes.
Drafting a contract can feel daunting if you’re unsure which employment laws apply, especially when working with a client based overseas. You may also worry about receiving payments minus large processing fees that eat into your earnings.
We want to reassure you that you can handle all these matters. In fact, setting up and getting paid as a freelance contractor can be quick, straightforward and efficient — regardless of where your clients are located.
This guide offers practical support for independent contractors, particularly if you are new to running your own business. We outline how to put in place processes for managing work and explain how automation can simplify those processes.
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 learn how to simplify your freelance business? Start at the beginning: setting up your business.
How to set up the right business registration
Before you start working as an independent contractor, choose the legal structure for your business. This determines your tax and legal responsibilities and depends on where you claim tax residency. Countries — and sometimes regions — apply different rules to independent contractors.
Most countries offer a few common options
Individual entrepreneur. This simple structure suits lone contractors. In some jurisdictions, such as France there is a legal distinction between the individual and the business; in others the separation does not exist.
Partnership. A partnership agreement between parties; often there is no separation between partners personally and the business entity.
A limited liability company. A formal legal entity distinct from the individual who runs it. Typically, income and losses are attributed to the company rather than to you personally.
Other legal forms may exist depending on the country where you operate. For example, Australia offers a trust model where a trustee operates a business on behalf of beneficiaries.
Each structure carries advantages and drawbacks, but many independent contractors opt for the individual entrepreneur model because it is straightforward to set up and run.
For country-specific employment law guidance, consult Remote’s Country Explorer — our global hiring guides contain practical information to help you establish your freelance operations.
Read more on how to become an independent contractor
Contractor Management
Setting up contract agreements for new clients
Many contractors find drafting contracts unpleasant and intimidating, particularly if it falls outside their expertise. Some may even be tempted to proceed without one.
Skipping a contract is unwise. Contracts are essential because they protect you in multiple ways. Typically, a contract will cover:
Contracts specify tasks, deliverables and project requirements. This helps freelancers prevent scope creep and avoids being asked to perform work beyond the agreed scope without additional pay.
Contracts set out payment terms clearly, including the amount, payment method and any milestones or deadlines.
Contracts deal with ownership and rights to intellectual property produced during the project. Clear IP clauses protect freelancers from future disputes.
Contracts outline conditions and procedures for terminating or suspending the agreement, which helps guard against abrupt terminations.
Contracts clarify the relationship between contractor and client, protecting both parties from potential misclassification issues.
Contracts are useful, but they can be complex because contractor rights and working conditions vary worldwide. If you rely on a generic template or draft your own, the document may not be legally binding in certain countries and could work against your interests.
Contractors can ensure their engagements with local and overseas clients are compliant by using Remote’s personalised contract templates. These templates are tailored to country-specific legislation to help contractors stay compliant no matter where the client is based.
If you already have a contract you trust, you may continue to use it. When you onboard to Remote as a contractor, you can upload your own contracts 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 than employees. Many employee protections—such as health care, pensions and share options—do not usually apply to contractors. In exchange for personal freedom over clients and working hours, contractors give up those employee benefits.
Despite this distinction, some companies may intentionally misclassify you to avoid legal responsibilities; at other times it happens by mistake. Whether deliberate or accidental, misclassification can lead to penalties and fines for both you and your client. Your client may face significant fines in their jurisdiction, and you could suffer consequences for underpaid taxes in your own country.
Bear in mind that proper classification as a contractor is in your best interest.
Firstly, a contractor retains the freedom to choose how and when to work. For example, in the United States, companies cannot dictate how a contractor performs their work or demand fixed hours; the contractor simply needs to complete the agreed project. Secondly, proper contractor classification gives you greater control over your income.
Penalties for misclassification differ by country. To avoid them, collaborate with your clients to confirm you are correctly classified: discuss responsibilities and review the working arrangement periodically. If your role becomes more integrated with a client’s company over time, you can ask to be converted into an employee.
Learn more about the risks 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 invoicing and collecting payments. This often means billing each client separately and accepting payment via their preferred method — which can be inefficient and time-consuming.
Some of the most common ways to collect payments include:
Bank transfers
Bank transfers, a transfer of funds between two bank accounts. While typically fast, these transfers often incur significant service fees.
Direct deposits. A deposit straight into your bank account. Also fast, but clients may face fees. It becomes more complex when you work with multiple clients or clients in different countries.
Paper checks. Paper checks can be deposited via apps, but this method is increasingly outdated due to long processing times. Physical checks can also be lost or stolen.
Money orders. Money orders are a secure payment method accepted in many countries but can be inconvenient. They must be bought in person and, like checks, can be lost, stolen or delayed in the post. Their use can also raise suspicion because scammers sometimes favour them.
Virtual wallets. Virtual wallets are becoming popular and can be a fast way to receive funds, but some clients may not accept them. There are also security considerations with digital wallets.
Digital transfer services like PayPal and Wise. These services are fast and convenient and often support invoicing. However, they may take a cut or apply unfavourable exchange rates, which can be substantial.
Alternatively, you can use a trusted provider like Remote. Our platform offers a simple, secure and reliable way to receive payments quickly in your local currency — with no hidden fees. Add your bank account as a withdrawal method in your Remote dashboard and client payments are deposited directly into your account.
You don’t need to keep checking the dashboard to confirm payment: Remote emails you as soon as your invoice is paid. Learn more about how our platform can help with payments.
Your practical guide to freelance invoicing plus a free template
How to invoice as a freelancer: a straightforward guide and a free invoice template
How to get paid by international clients
International payments are more complex than domestic ones. Currency conversion, arranging wire transfers and costly processing fees can make accepting international payments stressful.
Remote simplifies the process. Our contractor management service covers more than 200+ countries and territories, making it simple to receive payments in your chosen currency, regardless of the invoiced currency. Here’s how it works:
1. Invoice
You invoice your client in whatever currency suits them and upload the invoice to Remote’s contractor management platform.
2. Payment is made
The client pays their invoice in their local currency.
3. Payment is received
When Remote receives the payment, we convert it to your preferred currency before disbursing it to you.
Contractors have two payout options. Add your bank account details in Remote and our payouts are powered by Wise, or use a Stripe Connect account. You can update your preferred currency and payment details at any time.
What about fees?
We work with several partners to ensure our pricing is fast and as affordable as possible. We do charge your clients a $29 USD 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 contractors end up using a mix of tools to create, send and track invoices manually. That approach is inefficient: manual processes are slow, repetitive and prone to errors.
By automating your invoicing, you can streamline billing and devote more time to paid work. Remote can help you achieve that.
With Remote you no longer need spreadsheets, email threads or other manual tools to invoice. Our platform lets you create invoices, submit them for approval and receive payment in your local currency without switching to additional software. Simply upload invoices in Remote; we route them to your clients and provide status updates as they progress through approval.
Setting up billing
As a contractor, submit invoices to clients via your Remote dashboard. You can do this in one of two ways:
1. Upload your own invoice
Create an invoice that includes the invoice date and total amount, then submit it as a PDF.
2. Create an invoice on Remote
Use our templates to build an invoice on the platform. You can also set up recurring invoices that are sent automatically to your client.
To learn more, read this article in our Help Centre.
Managing independent contractor taxation obligations
As an independent contractor, you are responsible for paying your own taxes. Tax systems differ between countries, so the way taxes are handled varies by jurisdiction.
For example, in the US you pay taxes directly to the government, whereas in other countries clients may be required to withhold tax from payments. For details on contractor tax obligations in your jurisdiction, visit Remote’s Country Explorer page.
This is another reason proper classification as a contractor matters: it affects how you are taxed.
Liability considerations for independent contractors
When you are an employee, the employer manages liability. As a sole proprietor, you assume greater responsibility — you are personally liable for financial and tax debts, which means personal assets could be used to satisfy business debts. To reduce this risk, many contractors purchase liability insurance.
It is also important to protect yourself legally when negotiating and signing client agreements. Remote’s legal team vets our contract templates to help ensure compliance in the country where you work.
Accounting requirements for independent contractors
As an independent contractor you don’t need to publish annual financial statements, but you must keep organised records of accounts, including all client invoices and business purchases, to track income and handle taxes.
You can manage these records yourself with accounting or bookkeeping software, or engage a professional bookkeeper or accountant.
Consider opening a dedicated bank account for business expenses; some jurisdictions require a business account once turnover surpasses a threshold.
How do I ask the company I’m working with to convert me to an employee?
Open a constructive dialogue with your client and explain the risks and benefits of changing the relationship to employer–employee. Be explicit about how the change helps both parties — not only you. There are several reasons a company might wish to convert you to an employee. For instance, the client may gain greater control over hours and how work is completed.
Listen carefully to client concerns. Some international clients may be reluctant to hire you without a legal entity in the country where you will work. In such cases, suggest using an Employer of Record (EOR).
An EOR acts as the local employer on behalf of a company, managing HR administration and local payroll, benefits and tax compliance. Typically, an EOR handles those responsibilities.
Remote, for example, is an EOR and can assist with the transition by keeping your client or employer compliant with local laws.
For guidance on advocating for yourself as a remote worker, download our Remote Toolkit.
5 ways Remote makes life easier for contractors and their clients
There’s a lot to consider when setting up 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, but administrative duties can distract you from what you want to do: serve clients, get paid promptly and grow your business.
Using a reliable platform like Remote helps you manage these obligations efficiently so you can focus on business objectives.
Our onboarding process is quick and seamless — we guide you through identity verification for security and prompt you to upload any required tax documents for secure storage.
Learn more about how Remote can save you — and your clients— time and resources.
Get started with Remote today.