Remote working has a strong lure, especially these days. COVID-19 forced the world to think differently about workspaces, leading many companies to decide that working from home will be maintained to some degree in the future as well. While most people will remain on payroll-based working contracts, more and more people are deciding to set up their own freelance business. Are you thinking of making the switch as well? If so, you may be wondering what the legalities of remote working are and what you need to register as a freelancer. Let’s dive into that.
What is a freelancer?
To some degree, freelancer is not the right word for someone who decides to work independently. Did you know that as a freelancer you are actually considered to be a company? Legally, you are seen as a business. Your business consists of one person: You. In many countries the word freelancer does not exist. Instead, the formal name is more in the direction of a solo entrepreneur. In a sense, that is also true.
But why is all this important? From a legal standpoint, you need to understand that you will have to run your freelance business in a similar way as a regular company. That means keeping track of expenses, making invoices, filing yearly taxes etc.
Many countries are lagging behind and do not really understand the concept of freelancing well. Freelancing is a grey area for countries such as Spain, as such you are required to pay an exorbitant amount of taxes and freelance fees to be able to operate your freelance business.
A different model exists, namely the LLC. It may well offer a better agreement from a legal standpoint to register as an LLC instead of a freelancer.
What is an LLC
LLC is short for “limited liability company.” LLCs are a type of legal entity in which you can own and operate a business as an individual. They are relatively easy and cheap to set up but provide a similar liability as corporations, making it attractive for the self-employed.
The benefits of registering an LLC
You can run your freelance business as a sole-proprietor. However, there are some benefits to registering an LLC, a single-owned business. The main benefit is that you can limit your liability exposure. In some countries such as the USA, you can save some money by setting up an LLC instead or registering as a freelancer.
While freelance registrations are a bit of a grey area, LLC offers a solid business structure agreement. You may find it easier to open a bank account for your business, request expense deductions and to get an Employer Identification Number (EIN). In general, LLC structures provide a little more professionalism to the way you work, and may land you more remote offers in the years to come.
Other things to consider and be aware of
We briefly touched on this earlier. As a freelancer or LLC, you need to keep track of your incoming earnings and outgoing costs, and subsequently file taxes. You need to file taxes in the country where you have registered your freelance business.
As a freelancer, you enter into partnerships with other businesses. Since you are a business, you are basically working with instead of for other companies, or clients. Your client may determine the scope of the project, yet you have the freedom to perform this activity anywhere you want (if you are working from a laptop). People often think that the freelance life gives them tons of freedom. While that is true, there is also something that comes along with freedom: Responsibility.
With increased freedom comes increased responsibility. When entering into an agreement with clients, you will probably need to ensure the following things:
- NDA or confidentiality agreement
- Contract with scope of tasks and terms of termination
- Payment arrangements
- Intellectual property arrangements
- Secure file and password storage
As a Buslifer, remote working may have already caught your attention. You realized that you can live on the road while making a living. You see it as a way to increase the duration of your travels. The remote life gives you even more freedom. You decide to stay in a place for a while but, when traveling, you often need to arrange visas to stay for longer periods. Unless you decide to do location-based remote work, you will likely request a tourist visa (3 months in most cases). Just keep that in mind 🙂
You may be wondering if you can actually work on a tourist visa? This is again a little bit of a grey area. The main question is whether your work is truly remote (location independent) and thus not related to the country you are visiting. Let´s say your work is done with your laptop for clients around the world and you decide to travel to Bali for a couple of months. In this scenario you do not need to report to the local authorities that you are working, because your income is not related to being in a specific location. If you were to be asked to work in a specific location in Bali for a specified amount of time, you would need to request a work-related visa.
Ready to become a remote worker?
Here at Buslifers we are dedicated to providing you with information and inspiration regarding remote working. You can read more about how to combine Buslife and working in the following articles: