The million dollar question How much does it cost to be autonomous? What initial investment will I have to make? We help you to orient yourself and make the first investment when opening your business as a freelancer.
Being self-employed in the United States has advantages, it would be missing more, but also the disadvantages of having to anticipate certain tax payments. But is it really that expensive to be self-employed or is it a huge exaggeration?
- How much does a freelancer pay?
- Start the activity as a freelancer
- Variable taxes: VAT and personal income tax
- Hire a manager being self-employed Yes or no?
How much does a freelancer pay?
The first question that comes to mind when we want to register as freelancers is how to do it. The answer is that we must register in the census of employers of the Tax Agency and present the TA.0521 model to social security. Registering as a freelancer is free , you can do it yourself and the only thing you will spend is time.
2020 autonomous fee
The first expense that you should take into account as a freelancer is the fee. This is fixed for each month and, unless you are entitled to a discount, its amount is € 283.30 in 2020 . If the SMI rises, the quota of self-employed will also rise in proportion.
Remember that there is a flat rate for those under 30 or 35 years old : you will pay only € 60 for 1 year, € 141.65 (from month 13 to 18), € 198.31 (from 19 to 24). If you are a man, this bonus is up to 30 years old and if you are a woman up to 35.
If you are self-employed, you must pay € 364.23 per month.
What does the freelance fee cover?
The freelance fee offers coverage of:
- Healthcare: a self-employed person in the United States has the same coverage as any other worker and can access the same public health services.
- Maternity: It is in the same conditions as an employed person.
- Coverage for cessation of activity: when the activity of the self-employed person ends, coverage for cessation of activity is activated. You have access to a benefit that is 70% of the regulatory base from the contribution base of the 12 months prior to the end of the activity.
- Professional contingencies: All the self-employed must contribute for professional contingencies, which include occupational accidents and diseases. It is a subsidy of 75% of the contribution base of the last 2 months.
- Vocational training: the self-employed can access the offer of the State Foundation for Employment Training (FUNDAE).
Start the activity as a freelancer
At the time of starting the activity, you may have to invest a good amount of money. You must take into account a forecast of freelance fees for the first months or even the first year, as well as the purchase of material to work or the rental of a space, vehicle or other means to carry out your work.
Many freelancers choose to apply for a loan in order to carry out this first investment. From here we recommend that you consult the best loans for freelancers .
Variable taxes: VAT and personal income tax
Answering the question of how much it costs to be self-employed, you must bear in mind that there are two taxes that you will have to face and that they are the ones that, in the short term, make the net benefits lower: VAT and personal income tax.
The VAT on invoices, that headache
The VAT is not yours and, as a freelancer, you are only a manager of this tax. VAT is the tax on the sale of services and products and goes directly to the Tax Agency. Never consider it a benefit, since at the end of the quarter you will have to declare it and it is always preferable that you have saved it. The most advisable thing is to have a separate account where you keep this money.
Keep in mind that the VAT to be declared is a very simple operation. First you add all the VAT of the invoices issued. Then you add the VAT of the invoices that you have paid and that you can declare. The subtraction of one and the other will result in what you must pay. If you have paid more VAT than you have invoiced, you will not pay anything and that difference will be accumulated to the following quarter.
Personal income tax: a percentage that leaves, but returns
Personal income tax is a tax that all workers must pay and is proportional to the billing. You must declare it every three months coinciding with the payment of VAT, unless you are a self-employed person that works by modules, something different from the usual operation that we have explained here.
The most common personal income tax for freelancers is 15% , but you have a reduced rate during the first year of registration and the following two, you will declare 7%. If you are registered in activities in objective estimation by modules, you will declare 1%. Each month you must declare this tax in a way similar to VAT. Your personal income tax will be declared by your clients and you will declare that of your suppliers.
At the end of the year in your income statement, you will tell the Treasury how much you have invoiced and how much you have invoiced net and how much you have declared as personal income tax and it will return (or not) all or part of this concept. To understand us, you are advancing this money and making it return it to you or not at the end of the fiscal year.
Hire a manager being self-employed Yes or no?
The manager that makes the VAT and personal income tax return for you will depend on how willing you are to fill in the forms in question. Some freelancers choose to self-manage their accounts and settlements and others to hire the services of a manager. In this second case, you must take into account the money that this service is going to cost you.
So in the end, how much does it cost to be self-employed? There is no answer because there are many variables that will determine the entire cost. However, to reduce expenses it is essential to be aware of what it means to be self-employed in the United States.