In the modern world of technology development, there are more and more opportunities for self-employment of specialists in various fields. Self-employed professionals work for themselves, offering their services to clients without forming a traditional employment relationship. In recent years, this employment format has been actively penetrating the field of information technology, opening up new horizons for developers and companies. This article aims to explore who the self-employed are and find out how well they can adapt and function in the rapidly changing IT landscape. We’ll look at who the self-employed are, the benefits and challenges they face, and highlight key aspects that will help them succeed.
Self-employed – who are they
In official documents, the term “self-employed” is not used.
The self-employed include specialists who are not registered as individual entrepreneurs but pay taxes for the types of activities established by the state that can be carried out without registration of personal entrepreneurship.
Taxation of the self-employed
This can be one of the following types of taxation:
1. Professional income Tax (NAP)
This tax is 10% of an individual’s income received as a self-employed person and, in some cases, 20%.
To register as an NAP payer and register for tax accounting, you must:
1. Download the app “Profdohod” and register for it. This can be done anytime without reference to the beginning of the calendar year.
2. Issue receipts for money received from customers using checks in the app or invoices for future receipts of money in the app.
The app calculates the tax and includes income tax and a contribution to the social security fund.
Receipt of the first 2,000 Belarusian rubles is not taxable. In the future, you will need to pay the tax calculated by the app yourself every month.
2. Single tax at the established rates
The types of activities available to payers of this tax do not include opportunities in the IT sector.
Types of self-employed activities for working in the IT sector
Among the types of activities that are available to self-employed NAP payers are:
- Graphic design.
- Website development.
- Set up computers and software and repair and maintenance of software.
- Execution of orders from other people: entrepreneurs, non-entrepreneurs, companies using the Internet to complete orders and transmit results.
To fulfill such orders, the contractor must be located in a different location than the customer’s office or other premises; the contractor must work remotely.
How companies collaborate with IT professionals
Usually, a company enters a civil contract with a self-employed IT specialist. The agreement provides for:
- Work (services) that the specialist must perform.
- Deadline for completing the work (rendering services).
- What should be the result?
- The price of the work.
These main conditions usually include technical requirements, quality requirements, and other conditions in the contract.
The procedure for cooperation between companies and the self-employed is similar to that of other business partners.
Possible risks of cooperation between companies and self-employed IT specialists
IT companies in Belarus are wary of attracting self-employed IT specialists to perform permanent tasks, as there may be questions from regulatory authorities about substituting civil labor relations and the possibility of companies “saving” on taxes bypassing mandatory requirements. Different cooperation options are possible for project-based rather than permanent tasks.
Other companies, including foreign ones, individuals and entrepreneurs, usually hire self-employed IT specialists to perform project tasks.
When the Company will not cooperate with a self-employed IT specialist
The Company will not cooperate with IT specialists as with self-employed NAP payers in the following cases:
1. When this specialist simultaneously works for the Company under an employment contract.
2. When the specialist previously worked for hire in this Company and has not passed three years after his dismissal.
Such cooperation carries risks for companies and may attract the attention of government agencies due to suspicion of substituting civil law labor relations for the Company’s tax evasion. When there is a need, companies can enter into civil contracts with such specialists, as with individuals, and pay the necessary taxes on the income of individuals. However, there are also limitations here.
What a self-employed IT professional needs to know to collaborate with customers
1. When an IT professional is registered as an NPA payer, companies and entrepreneurs using their services are exempt from withholding income tax and social security contributions from paying such a specialist. These payments are already included in the NAP, which an individual pays as a self-employed person.
2. If the specialist’s income as a payer of the NPD from Belarusian individual entrepreneurs and companies for the year exceeds 60,000 Belarusian rubles (this is about 17,000 euros), the excess tax will be recalculated at the rate of 20%. There is no tax recalculation for income from foreign customers. In this case, the NAP is calculated at the rate of 10%.
3. When receiving foreign currency from customers, receipts and invoices in the Profdohod app are generated in Belarusian rubles. To do this, use the National Bank rate on the day of receiving income.
4. You should not agree to cooperate with the Company where you are employed or have left as a payer of the NAP in the last three years.
5. You can work as a personal income taxpayer under or without a service agreement. In any case, the contractor must provide the customer with a receipt generated through the Profdohod application or issue an invoice in advance and transfer it to the customer through this application if such an agreement has been reached.
6. During the” preferential tax period ” until receiving 2000 Belarusian rubles of income and before self-payment of NPD, a self-employed person does not belong to taxpayers and persons employed in the economy if he does not have a job under an employment contract or a work contract.
Self-employed and freelancers – are there any differences?
Both of these statuses- self-employed payer of NPD and freelancer- assume that specialists work without registration of an employment relationship. Such specialists provide services under civil contracts.
State registration of such specialists in the registration authority is not required.
The differences between them are in the specifics of tax administration and restrictions on the types of activities in the IT sector:
- A self-employed NAP payer pays taxes on their own from their activities and is restricted to the activities allowed to NAP payers.
- Individuals who perform work or provide services under a contract do not pay taxes on their income. Income tax and contributions to the Social Protection Fund of the Population from such income are calculated and paid by the Company or individual entrepreneur customers. The types of IT services that a freelance contractor (not a NAP payer) can provide are not limited to any list.
What will help self-employed IT professionals succeed?
Self-employed IT professionals face unique challenges, but several factors significantly contribute to their success:
1. Continuous learning and adaptation
In the rapidly changing world of technology, it is essential to keep up to date with the latest trends and knowledge. The self-employed can stay competitive by constantly improving their knowledge, tracking trends in the field, and participating in courses, webinars, and conferences.
2. Network of contacts
Creating a solid professional network allows you to find customers and partners independently. Participating in events and being active on social networks such as LinkedIn significantly expands opportunities for collaboration.
3. Financial literacy
Managing your finances and paying your taxes correctly is the key to stability. Understanding financial flows and planning your budget can also help you avoid financial difficulties.
4. Customer-oriented approach
Successful self-employed professionals focus on customer needs. Quick responses to requests, timely delivery, and high-quality tasks lead to positive reviews and recommendations.
5. Effective time management
Properly allocating working hours and setting priorities allows you to achieve more in less time, which is especially important if you don’t have a clear schedule.
6. Personal Brand
Developing a personal brand and professional image helps attract customers who value your skills and experience. It also builds trust and increases your value in the marketplace.
7. Flexibility and innovation
The ability to adapt to changes and introduce innovative solutions allows self-employed IT professionals to remain relevant and advanced in their field.
Adhering to these principles will significantly increase the chances of self-employed IT professionals succeeding and enable them to build successful careers in an ever-evolving industry.
How to contact us
For more information or advice on issues related to self-employed workers in IT, do not hesitate to contact us. We are here to help and support you.
Phone and email communication options are available for your convenience:
- +375293664477 (WhatsApp/Telegram/Viber);
- info@spex.by.
