Working for a Startup as a Remote Contractor

As people and businesses across the globe have been getting used to remote work, the conventional boundaries have started fading away. With many more startups embracing remote work, we’ve started seeing talent opening themselves to remote work opportunities with companies from the other side of the world. If you’re considering working for a startup as a remote contractor, there are a few things to take note of.

Before we get into it, let’s first clarify why we specifically talk about working as a remote contractor. There’s a rather simple reason for it. When startups hire people from foreign countries to work remotely, they do so almost exclusively with contractor agreements. Normal employment relationships won’t fly, as it may cause significant problems for the companies, such as permanent tax establishment for jurisdictions they have no business in.

However, this contractor relationship peculiarity is something that interested talents should take note of as well.

Things you need to consider if you intend to work as a remote contractor

So let’s say you’ve found a startup you’d like to work with, and they’d like to work with you. When you negotiate an agreement, there are quite a few things to keep in mind. A note has to be made here; don’t take this as legal advice, but rather as helpful pointers.

First, salary. If you’ve been in a conventional employment relationship before, you’ve probably figured the number you like, but the number you’re negotiating now might not be directly comparable. Compared to normal direct employment, as a contractor, you’re generally responsible for your own social security, pension payments and so on. Naturally, details vary by jurisdiction. But in the case of Finland, for instance, a lot of these costs are ones that as an employee you’ll never see. They don’t show up on your salary slip. Therefore, it’s good to mark up your normal salary expectation, so these costs don’t surprise you.

Second, taxes. As a remote contractor working for a foreign startup, taxes are also something that generally falls under your responsibility. While handling your own taxes is not necessarily a big burden, it’s something for you to remember regardless. Naturally, how and when you pay taxes depends on how you yourself work as a contractor. For instance, many people choose to set up a company for the purposes of working remotely. And of course, companies can be anything from sole proprietorships to limited companies, each with their own tax rules.

Third, other benefits and incentives. Many companies – especially the ones with more experience in remote work – offer rather similar benefits to remote workers as their on-site employees. However, it’s good to check up on the details of any benefits policies. For instance, company-provided insurance might not be particularly useful in a different country, depending on the terms. On the other hand, tax-free benefits in one jurisdiction could be considered taxable income in another.

A word of of encouragement

While all the extra paperwork might seem like a daunting task if you haven’t done it before, it’s not. Once you get the hang of it, you might even enjoy the flexibility that the contractor work arrangement offers you. Also, when interacting with potential employers, it’s good to remember that they may not be aware of the differences either. Thus, they may initially seem like they do not understand your side of the coin. When hiring domestically, a contractor arrangement often looks very similar to normal employment, which may add to the confusion. In such situations, it’s always good to discuss your specific situation and see where you may find working solutions.