Invoicing, tax obligations, contracts, even the simple act of getting paid: all this can feel so overwhelming for an independent contractor. Fortunately, there are solutions to eliminate the time and frustration of managing admin. Use this guide as a blueprint to get set up to take payments with speed and confidence so you can put your focus back where it matters: your clients.
As an independent contractor, you’re responsible for handling 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 handling taxes.
It can be nerve-wracking to draw up a contract if you’re unsure of what employment laws might impact your business, especially if your client is based outside your country. You may also find yourself wondering how to get paid without huge processing fees getting sliced out of your hard-earned paycheck.
We are here to assure you that you can manage all of these things. In fact, getting set up and paid as a freelance contractor can be fast, easy, and efficient — no matter where your clients are based.
This guide is full of practical support for independent contractors, especially if you’re new to being the boss of your business. We’ll explain how you can set up a process to manage your work and discuss how automation can make this process easier.
We’ll discuss the four scariest problem areas for freelancers and show you how to manage this side of your business with ease:
Contracts
Payments and fees
Invoicing
Tax
Ready to learn more about simplifying your freelance business? Let’s start at the very beginning: setting up your business.
To begin working as an independent contractor, you’ll first need to choose a legal structure for your business. This will dictate what your tax and legal obligations are. The structure you choose will depend on where you’re claiming tax residency. Countries, and in some cases, specific regions have their own laws governing independent contractors.
Most countries offer a few common options
Individual entrepreneur. This is a simple structure for independent, individual contractors. In some countries, like France, there is a distinction between the individual and the business; in others, there is not.
Partnership. A partnership agreement. Often there is no separation between the partners as individuals and the business entity.
A limited liability company. A formal, legal entity that is separate from the individual running it. In most cases, all income and losses are attributed to the company as opposed to you personally.
Other options may exist depending on the country in which you are operating. Australia, for example, offers a trust model, in which a trustee manages a business and all of its activities on behalf of beneficiaries.
There are pros and cons to each of these structures, but most independent contractors choose the individual entrepreneur model, as it is fairly simple to set up and operate.
For more information about labor laws in a specific country, check out Remote’s Country Explorer — our global hiring guides are packed with useful information that can help you establish your freelance business.
Many contractors don’t enjoy writing up contacts for clients and may find it intimidating, especially if it isn’t their area of expertise. They may even consider not having a contract at all.
Forgoing a contract, however, is an unwise move. Contracts are critical; they protect you in a variety of ways. Typically, a contract will cover:
Contracts outline specific tasks, deliverables, and project requirements. This helps freelancers avoid scope creep and ensures they are not expected to perform tasks beyond the agreed-upon scope without proper compensation.
Contracts clearly outline the payment terms, including the amount, method of payment, and any applicable milestones or deadlines.
Contracts address the ownership and rights to intellectual property created during the project. Clear provisions regarding intellectual property protect freelancers from potential disputes.
Contracts outline the conditions and procedures for terminating or suspending the agreement. This can help protect contractors from sudden terminations.
Contracts clarify the relationship between the contractor and client, protecting both contractor and client from potential misclassification issues.
Helpful though they are, there’s no doubt contracts can be tricky as contractor rights and working conditions differ around the world. If you’re using a random contract template you found online or drawing up your own, your document may not be legally binding in some countries. It might also actively work against your interests.
Contractors can make sure their work with local and international clients is legal and above board by using one of Remote’s compliant and personalized contract templates. These templates are customized according to country-specific legislation to help contractors stay compliant regardless of where the client is based.
If you have your own contract that you’re happy with, you can keep it. When you onboard as a contractor to the Remote platform, you can upload your own contracts instead of using ours.
Learn more about contracts here.
In nearly every country, independent contractors are classified differently than employees. Many of the protections and benefits employees enjoy, such as health care, pensions, and stock options, do not typically apply to contractors. As an independent contractor, you give up those benefits for the freedom of choosing your own clients and working when, where, and how you want.
Despite this distinction, some companies may deliberately misclassify you to circumvent their legal obligations. Other times, it may happen accidentally. Whether it’s intentional or not, misclassification can result in penalties and fines for both you and your client. Your client can face hefty penalties in their country, and you may face the consequences of not having paid the correct amount of tax in your own country.
Remember that it’s in your best interest to be properly classified as a contractor.
Firstly, a contractor has the freedom to work as they please. In the United States, for example, companies are not allowed to tell a contractor how to perform a job or require set work hours. The contractor is able to work in their own way and time, and the only requirement is that the project for which they are engaged is completed. Secondly, being properly classified as a contractor gives you more control over your income.
Every country has different penalties for misclassification. To avoid these, work with your clients to ensure you are not misclassified. Discuss your role and responsibilities with them, and review the working arrangement regularly. If your working relationship changes over time and you become more integrated into a client’s company, you can ask to be converted into an employee.
As an independent contractor, it’s down to you to handle your invoices and payment collection. Unfortunately, this means billing each client individually and collecting payment through their preferred payment method — which can be inefficient and time-consuming.
Some of the most common ways to collect payments include:
Bank transfers, A transfer of funds between two bank accounts, While these transfers are quick, they typically come with hefty service fees.
Direct deposits. A deposit directly into your bank account. Also quick, but can cost your client fees. It can also become complicated if you’re doing business with multiple clients or clients in different countries.
Paper checks. Paper checks can easily be deposited via an app, but this method is becoming increasingly outdated due to long processing times. Besides, physical checks can also be lost or stolen.
Money orders. Money orders are a secure form of payment that can be used internationally in many countries but can be inconvenient. They must be purchased in person, and like checks can be stolen, lost, or delayed in the mail. Additionally, using money orders might be considered suspicious as they are often used by scammers.
Virtual wallets. Virtual wallets are gaining popularity and are a quick way to get paid, however, they may not be accepted by some clients. There are also some security concerns about using digital wallets.
Digital transfer services like PayPal and Wise. Digital transfer services are quick and easy to use and often allow you to invoice clients. However, they may take a cut of the profits or charge high currency exchange rates, and that amount can be sizable.
Alternatively, you can use a trusted solution like Remote. Our platform is a simple, secure, and reliable way to get paid quickly in your country’s currency — and with no hidden fees. You simply add your bank account as a withdrawal method in your Remote dashboard, and payments from your client are deposited directly into your account.
You don’t have to keep checking the dashboard to see if you’ve been paid, either: Remote sends an email as soon as your invoice has been paid. Learn more about how our platform can help with payments.
International payments are more complex than domestic ones. Converting currency, negotiating wire transfers and other payment methods, and expensive processing fees can make accepting international payments stressful.
Remote makes this process much easier. Our contractor management service covers more than 200+ countries and territories, making it easy for you to get paid in your currency of choice, no matter what currency you invoice in. Here’s how it works:
You invoice your client in whatever currency works best for the client and upload the invoice to Remote’s contractor management platform.
The client pays all their invoices in their own currency.
When Remote receives the payment, we convert it to your preferred currency before paying it out to you.
Contractors have two options when it comes to payouts. You can add your bank account details directly on Remote where our payouts are powered by Wise or you can use a Stripe Connect account. You can change your preferred currency and payment details at any time.
We work with several partners to make sure our pricing is both fast and as affordable as possible. 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 center article.
Invoicing as an independent contractor can be a hassle. You might find yourself using a patchwork of solutions to manually create, send and track invoices. It’s not an efficient system. Manual processes are slow, tedious, and error-prone.
By automating your invoicing, you can simplify billing and get back to your paid work. Remote can help you do that.
With Remote, you no longer need to rely on spreadsheets, email, and other manual tools to invoice for payments. Our platform lets you create invoices, submit them for approval, and get paid in your local currency without needing to switch to any other tool or software. That means no more email back-and-forth; you just up your invoices in Remote. We’ll route them to your clients, and you’ll see status updates as your invoice moves through the approval process.
As a contractor, you submit invoices to clients through your Remote dashboard. You can do this in one of two ways:
Create an invoice that includes the invoice date and invoice amount, then submit the invoice as a PDF.
Use our templates to create an invoice on our platform. You can also create a recurring invoice that is automatically sent to your employer.
To learn more, check out this article in our Help Center.
As an independent contractor, you’re responsible for paying your own taxes. However, every country has its own tax code, which means that taxes are handled differently from country to country.
In the US, for example, you are responsible for paying your taxes directly to the government. In other countries, your clients may be responsible for deducting tax from your payment. To learn more details about the tax obligations for contractors in your country, visit Remote’s Country Explorer page.
This is part of the reason it’s important to be properly classified as a contractor; your classification will impact how you pay taxes.
When you’re an employee, the company handles liability issues. However, with great freedom comes great responsibility. As a sole proprietor, you are personally liable for things like finance and tax debts. This means your private assets can be forcibly used to settle your business debts. This sounds scary, but many independent contractors purchase liability insurance to help mitigate this risk.
It’s also important to protect yourself legally when drafting and signing agreements with clients. Remote’s team of legal experts helps by vetting our contract templates so that you’re compliant in the country you’re working in.
As an independent contractor, you do not need to publish financial statements each year. However, you do need to keep organized records of your accounts, including all your client invoices and business purchases, so that you can track income and manage taxes.
You can manage these records yourself using an accounting or bookkeeping tool, or hire a professional bookkeeper or accountant.
You should also consider opening a separate bank account for your business expenses; some countries may require a business bank account once your turnover exceeds a certain amount.
Open a dialogue with your client and carefully discuss the risks and benefits of moving to an employer-employee relationship. In particular, be clear about how it can benefit both parties — not just you. There are a number of reasons a company might want to convert you to an employee. For example, you may want to highlight that the client will have control over the hours you work, and the way you complete tasks.
Listen to client concerns carefully. International clients may not feel they can hire you without a legal entity in the country you’re working in. In that case, suggest that they use an Employer of Record (EOR).
An EOR is a company that helps employ workers in other countries by acting as the local employer on a company’s behalf. Typically, an EOR will handle human resources administrative work as well, including local payroll, benefits administration, and tax compliance.
Remote, for example, is an EOR, and can help ease the transition by keeping your client (or employer) compliant with the laws in your country.
To learn more about advocating for yourself as a remote worker, download our Remote Toolkit.
As you can see, there’s a lot to take on board when setting up as an independent contractor. Remote can help you with many of these challenges, allowing you to focus on growing your business and delivering to your clients. Here’s how:
Learn more about how Remote can help you as an independent contractor here.
Having the freedom and flexibility to work on your own terms is liberating. But your administrative responsibilities can distract you from what you really want to be doing: helping your clients, getting paid quickly, and growing your business.
By using a stable, trusted platform like Remote, you can manage these obligations quickly and efficiently, allowing you to focus on your business goals.
Our platform makes it quick, simple, and seamless to get started as an independent contractor — we guide you through onboarding and the steps involved to validate your identity for security purposes. You’ll also be prompted 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.