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How to be self-employed in 2022?

Working on your own can be, on the one hand, very exciting, and on the other, quite challenging. Before starting to provide services, it is important that you know what the rights and responsibilities of this type of professional are. If you are thinking of becoming a self-employed person, then go through our article to find out everything you will need to get started.

What is an independent worker?

A self-employed person is defined as a natural person who carries out a professional activity without being subject to an employment contract or equivalent in legal terms and who is not obliged to provide the results of his work to others.

Essentially, a self-employed person works for himself, with his income solely dependent on the amount of work produced. In legal terms, he cannot be bound by an employment contract for someone else.

According to Social Security, the following professionals are included in the self-employed regime:

  • Worker performing commercial, industrial, or service professional activity (including activities of a scientific, literary, artistic, or technical nature);
  • Individual entrepreneur with income arising from the commercial or industrial activity he carries out and who owns an individual limited liability establishment;
  • An agricultural producer who carries out his professional activity on his agricultural holding or of a similar nature;
  • Holder of rights over agricultural holdings or similar holdings to exercise management functions over the property on a repeated and permanent basis;
  • Partner or member of a society of free professionals or group agriculture (only partners in the latter case);
  • Member of a production cooperative whose services, according to its statutes, opt for this regime.

If the respective spouses or partners perform effective professional functions, on a regular basis and on a permanent basis, together with their partners, they are also covered by this regime.

Take note:

The inclusion of spouses and partners in the regime applies to self-employed workers performing professional activities, sole traders, and agricultural producers described above.

Who is not covered by the self-employed regime?

There are, therefore, some self-employed workers who are not included in this regime. This is the case for the following professionals:

  • Owners of agricultural holdings whose products are essential for their own consumption and that of their families and who have an annual income of less than €1,755.24 (four times the value of the Social Support Index);
  • Lawyers and solicitors;
  • Holders of category B income resulting from the production of electricity for self-consumption, from small renewable energy production units, or from urban lease and lease contracts for local accommodation in a house or apartments;
  • Owners of local and coastal fishing vessels and who carry out professional activity on these vessels, integrated into their crew;
  • Marine species catchers;
  • Farmers who benefit from support under the Common Agricultural Policy whose value is less than 1,755.24 (4 x IAS);
  • Workers who perform temporary self-employment in Portugal but who are under another mandatory social protection regime abroad, which includes the contingencies of old age, disability, and death.

For those who prefer to work at their own pace, then being self-employed is a career opportunity that is more adaptable to their projects. However, this flexibility brings with it some challenges.

What are the advantages and disadvantages of this scheme?

Self-employment may seem advantageous many times, but it also requires a high degree of responsibility to be able to earn a steady income from your activity.

There are thus some advantages and disadvantages to consider.

Advantages of self-employed workers

An obvious advantage of being your own boss is being able to choose where and when to work. This means you can choose your own hours and place of work, either at home or somewhere else appropriate for your duties.

There will always be deadlines to meet. For a self-employed person, it is essential to achieve results, regardless of the path they take to get there.

This flexibility in terms of working conditions also extends to the choice of clients with whom they work. As a service provider, a self-employed person may choose not to provide a service to a particular contracting entity.

These conditions allow self-employed workers to exercise their profession in the way they most want.

Disadvantages of self-employed workers

The lack of a fixed schedule means that a self-employed person will always have to be available to meet the needs of the clients they work with. This effort can be quite burdensome for many professionals.

Added to this instability is the lack of a constant source of income. A self-employed person is only paid for the provision of certain services, which means that if there is no need on the part of the client, he will not receive.

In addition to not having a fixed salary, another disadvantage for employees is, for example, the lack of holiday or Christmas allowances, or food allowances, because the volume of work is proportional to the income. collected.

How to become self-employed?

The first step to becoming a self-employed person involves opening an activity in Finance. You can carry out this step via the internet, on the Finance Portal, or in person, at a branch of this entity.

You will have to identify the type of activity that you will carry out and a forecast of the annual income that you hope to obtain. This information is crucial to get approval from the Schedule 1 Tax and Customs Authority, and once you have it, you can start issuing green receipts.

When opening an activity for the first time as an independent worker, it will also be communicated to Social Security in order to be framed with the civil protection regime of this entity. For spouses or de facto partners of the self-employed person, their registration must be done in the month in which they start their activity.

Once they are part of the Social Security self-employed regime, then these professionals have certain privileges and responsibilities before this entity.

What rights and duties do you have before Social Security?

Professionals included in the Social Security regime for self-employed workers are entitled to various support benefits, generally provided by the latter upon payment of the due contributory obligations.

In this way, protection is guaranteed for the following eventualities:

  • parenting ;
  • unemployment ;
  • old age ;
  • Disability ;
  • Disease ;
  • Professional diseases;
  • Deficiency;
  • Dependency;
  • death.

For each of these eventualities, the self-employed worker belonging to the scheme is entitled to various allowances as long as he guarantees the payment of contributions due to Social Security.

These contributions will have to be paid from the moment they are included in the scheme, every month, between the 10th and 20th of the month following that to which the contributions relate. The amount to be paid depends on the income earned, and there is a minimum of 20 euros to be paid.

In the event of non-compliance with this contributory duty, the right to the support provided is suspended. You will be able to receive the benefits again if you regularize your situation.

Heads up:

If you do not regularize your contributory situation within the three months following the suspension, you will lose your right to benefit payments.

In addition to paying contributions, workers included in this regime will have to declare, on a quarterly basis, the total amount of income associated with the provision of services, production and sale of goods, and other relevant income. They will have to make this declaration until the last day of the months of April, July, October, and January.

Another duty of the self-employed person is the annual declaration of activity, carried out by completing the SS annex of the Model 3 declaration of the Personal Income Tax.

When starting, suspending, or ceasing activity as a self-employed person, you will also have the duty to communicate to the Finance Department, which will automatically transmit this information to Social Security.

What are the self-employed tax responsibilities?

Regarding the Tax and Customs Authority, self-employed workers will also have to comply with some rules, so as not to present any tax irregularity.

In addition to the mandatory quarterly declaration already mentioned, they will also have other duties to fulfill before the Finance Department.

It is essential that they issue green receipts through the Finance Portal, as it is through this mechanism that it is possible to prove that a worker has been paid for the provision of a particular service. One should be sent to the customer, but additionally, it is also important that the worker keeps one for himself.

They are also obliged to pay tax to the State on their income through withholding tax, just like employees. After issuing a green receipt, you will need to deduct it from the applicable fees.

See if you are exempt:

Self-employed workers who did not exceed 10,000 euros in income in the previous year are exempt from withholding tax.

If you are self-employed and have to use your own resources, for example, having to acquire materials and equipment, then you must also declare the expenses incurred in carrying out your professional activity to the IRS. Expenses are only supported by invoices.

Just like the IRS, they are also subject to the payment of Value Added Tax (VAT) if the income obtained in the previous year exceeds the threshold of 10,000 euros.

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