Freelancing in IT is an excellent opportunity for those who want to manage their time independently, choose projects at their discretion, cooperate with different companies and develop their skills in information technology. It may benefit IT companies in Belarus hiring freelancers to perform various tasks. In this article attorneys explain the features, the pros and cons of companies working with freelancers in IT, how to start working independently as a freelancer in IT, and how freelancers receive payment.
Who is a freelancer?
The word “freelancer” means a free worker.
A freelancer in the IT field is a specialist who works independently, without an employment relationship. He performs various projects, usually remotely, via the Internet. He can do web development, design, programming, testing, SEO optimization and other tasks.
Why is hiring freelancers beneficial?
There are many advantages in the cooperation of IT companies with freelancers. It can be beneficial to work with freelancers for several reasons:
1. Cost reduction.
When working with freelancers, you do not need to pay: “salary” taxes, rent for the place of work, calculate and transfer “sick leave” in case of freelancer illness.
The costs of staff maintaining office space and equipment are also being reduced.
2. The speed of work completion.
A freelancer will complete the tasks quickly since he is interested in finishing the work on time and receiving payment. It distinguishes cooperation with a freelancer from an employee who can delay the completion of tasks by the days of payment of wages, and not to the needs of the company.
3. Expertise.
IT professionals who are closely connected within the same company and who have achieved expertise in their field usually go freelance. When a freelancer’s level of knowledge does not match the stated one, it is easier to part with him than with an employee.
4. Remote work.
Companies do not need to rent and maintain premises or equip workplaces for freelancers. It reduces the company’s costs and provides psychological comfort to managers who are uncomfortable with close personal communication.
5. The opportunity to work through exchanges.
IT companies can choose professionals on freelance exchanges, where you can see a specialist’s portfolio and select professionals to solve specific tasks for any period.
Disadvantages of working with freelancers
Hiring freelancers is sometimes the best way to solve an IT company’s problems. There are disadvantages to working with freelancers:
1. They are challenging to monitor.
Freelancers use their independence and perform the customer’s tasks at a time of day convenient for them, not the customer. Therefore, it is only sometimes possible to immediately get an answer from them in messengers or discuss work issues when necessary.
2. Sometimes, there are no guarantees.
It happens that freelancers disappear, sometimes along with unfinished projects. Unlike salaried employees, freelancers are not required to report their movements and adventures, which prevents them from completing the work on time or at all.
3. Sometimes, you need to find out who you’re working with.
This risk is related to the previous risk of lack of guarantees. There may be an exceptionally high risk when cooperating through freelance exchanges, when it is not possible to verify the ownership of an account and portfolio to a particular expert, and when fraud cases are possible.
4. Payment issues that need to be addressed.
Unlike salaried employees paid through a bank, IT freelancers cannot and do not always want to receive payment for services in this way. They may be located in countries where Belarusian banks are under sanctions, or they are not interested in bank transfers. Sometimes, IT freelancers may require payment in cryptocurrency or through payment systems unavailable at the company’s location.
How to register a freelancer’s activity
A freelancer needs to conduct business in a form approved by the state to receive money from customers and avoid excessive attention from the tax inspectorate.
Conducting business without registration as an individual entrepreneur
A freelancer in the IT field who works remotely via the Internet, not in the customer’s office, can, under certain conditions, register as a payer of professional income tax (PIT). You do not need to go to the tax inspectorate for such registration. It is enough to download a free application from the website of the Belarusian Ministry of Taxes and Duties (when the freelancer is a citizen of Belarus) and register for this application. Subsequently, receipts must be generated after accepting cash and non-cash service payments. The tax rate, in general, is 10% of all payments per month. The tax amount is calculated automatically in the application. At the beginning of the activity, you do not need to pay tax from the first 2000 Belarusian rubles. The tax already includes social security contributions. You can work with individuals and companies.
What it takes to become self-employed with the payment of the PIT:
1. Perform one or more activities:
- Website development.
- Installation (configuration) of computers and software.
- Restoring computers after a crash.
- Repair and maintenance of computers and peripheral equipment.
- Computer training.
2. Work independently, without hired employees and contractors.
3. Not to be an employee of the customer, not only during the execution of the order but also three years before that.
Registration as an individual entrepreneur
To register as an individual entrepreneur, you need to come to the executive committee at your place of residence with a photo of three by four centimeters and with a passport or residence permit. Additionally, at the executive committee or home, you need to fill out the prescribed application form for state registration, a photo of which is attached.
Registration as an individual entrepreneur is paid: You need to pay a state fee of 0.5 basic value—20 Belarusian rubles.
A person is considered an individual entrepreneur from the date of submission of documents to the executive committee, which issues a certificate of state registration the day after the application is submitted. The Executive Committee also issues notices on registration with the Tax Service and the Social Protection Fund.
To establish an accounting business, you need to register the audit book with the tax inspectorate and submit a copy of the certificate of state registration.
Individual entrepreneurs in the IT sector pay income tax. The basic rate of this tax in 2024 is 20%.
Confirmed expenses related to activities and tax deductions are considered when calculating income tax. IT entrepreneurs can use a professional deduction of 20% of income instead of documented expenses.
It is also possible to use standard tax deductions:
- 174 rubles with an income of less than 1,054 Belarusian rubles.
- For each child and dependent – 51 Belarusian rubles.
Individual entrepreneurs pay income tax quarterly and contributions to the Social Protection Fund annually. Contributions are 35% of income based on the monthly minimum wage in Belarus—626 Belarusian rubles. For 2024, contributions must be paid by March 1, 2025. Contributions can be paid only when an individual entrepreneur provides services.
Work on a civil contract
A civil law contract is concluded to perform one-time work with a freelancer, as with an individual, but can be concluded both with an entrepreneur and as a payer of the PIT. The contract prescribes the type of services, the deadline for their performance, and the payment procedure. As a result, an act is drawn up. The money is transferred to the bank account that the freelancer specified in the contract. Income tax and contributions to the Social Protection Fund are withheld by the customer, who has agreed with an IT freelancer, as with an individual.
Registration of employment relations with the employer
This method does not apply to freelancing, however, the IT freelancer can cooperate with several customers on different terms, including as a temporary employee on the terms of an employment relationship. In this case, the employer pays all taxes and contributions, and the employee is entitled to sick leave, paid work leave and receives wages twice a month on the days specified in the employment contract.
Payment methods
IT freelancers have quite a few options for receiving payment from customers.
When working with Belarusian customers
Belarusian customers can pay with PIT payers in cash and non-cash forms. To legally accept non-cash payments, you need to specify your bank account in the application PIT to which the non-cash payment is received.
Individual entrepreneurs can receive payments to their bank account.
It is possible to pay using the details of a bank payment card (money is credited to a bank account). The bank card details (except CVV) are transferred to the customer for payment.
You can pay with electronic money, which is issued only by Belarusian banks. Firstly, you need to open and register an electronic wallet to receive electronic money. A Belarusian e-wallet can be registered online or at a bank branch. Secondly, an identity document is required for registration. Once registered, the customer can transfer money from his electronic wallet or cash via a bank to an electronic wallet or make a bank transfer using a payment card. You can withdraw electronic money from a Belarusian e-wallet into cash for a fee to the bank. For example, electronic money is represented in Belarus in the form of Berlio, MTS Money, V-coin, Pay, iPay, ePay, and EasyPay.
Freelancers who have signed an agreement with the Non-Bank Credit and Financial Organization Unified Settlement and Information Space (NCFO ERIP) can receive online payments using ERIP. Then you need to tell the customer how to pay in ERIP or send a QR code to do this. However, freelancers pay a 1.2% ERIP commission. This method of accepting payments is called E-POS.
For freelance clients of some Belarusian banks, payments can be received by phone number. For example, it works in Alfa-Bank, Priorbank, Belarusbank, and Statusbank. The transfer is made using a mobile banking application or online banking. The phone number of the payee must be linked to the bank card. The commission is paid by the customer when transferring money to another bank. You need to find out about the specific conditions in the bank that provides such an opportunity.
When an IT freelancer has his own website, you can place a form for accepting payments there – make online acquiring. Customers can enter their bank card details on the website to make payments. For online acquiring, you need to agree with a provider of such services, an aggregator, for example, with EPIP, Webmoney, WEBPAY, bePaid, Assist, EasyPay, ArtPay. When concluding an agreement with an aggregator, you need to pay attention to the amount of the commission who pays it (the customer or recipient), the speed of money transfer, the requirements of the aggregator for the site and the compliance of the payment document with the customer’s requirements.
You can connect the ApplePay service to the site when the selected payment aggregator provides such an opportunity.
When working with foreign customers
In Belarus, payments are allowed only in Belarusian rubles. Sometimes, because of this, non-resident customers do not want to cooperate with freelancers who are geographically located in Belarus. However, freelancers can accept payments in foreign currency from non-residents. To do this, a foreign currency account is opened in the bank. The currency needs to be converted into Belarusian rubles to calculate taxes. Another way is to instruct the bank to sell the currency by transferring Belarusian rubles to the freelancer’s bank account.
When IT freelancers work on the Internet, you can use other ways to receive payment from non-residents:
- Using the details of the IT freelancer’s bank payment card, which are transferred to the customer. It is possible to receive money from Russia with a Belkart-MIR card or a card issued by a Russian bank.
- With the help of money transfer systems available in Belarus. To date, these are three systems: Golden Crown, Unistream, and MoneyGram. It is necessary to clarify whether sending such a transfer is available in the state where the customer is located.
- To an electronic wallet. For example, Yumopeu (former Yandex Money, this is how customers from the Russian Federation can pay), RauRal (in Belarus, you cannot withdraw cash through this system, but you can make purchases, transfer to your bank account), WebMoney (from this electronic wallet you can transfer electronic money to a regular bank account).
Is it cheaper to hire freelancers or hire staff?
The company can calculate how profitable it is to attract freelancers compared to hiring employees. It is essential to involve those who will help achieve the project’s goals on time within a given budget. When certain specialists are needed for a project, you need to determine whether to hire a full-time employee or hire a freelancer.
In general, it is preferable to hire an employee for large, long-term projects, and for short-term projects, it is preferable to hire a freelancer.
In general, freelancers need to evaluate their competencies to conduct activities in the IT field, choose a form of business, consider ways to receive payment and comply with project deadlines in order to establish themselves as reliable performers.
Companies can choose the form of cooperation with project team members, taking into account the deadline for completing tasks and the cost of freelancer services or the price of hiring and paying an employee.
How to contact us
For more information or advice on the cooperation of companies with IT freelancers or on registering freelancers in IT, do not hesitate to contact us. We are here to help and support you.
For your convenience, phone and e-mail communication options are available:
- +375293664477 (WhatsApp/Telegram/Viber);
- info@spex.by.
