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I'm not a lawyer, but this seems illegal on its face. Just from a tax perspective for the government, I feel like people would immediately start trying to game

I'm not a lawyer, but this seems illegal on its face. Just from a tax perspective for the government, I feel like people would immediately start trying to game it for taxes.

CalRobert 4y ago
I don't know if it matters but I have a limited company and am an employee of said company, which means I deal with taxes on my own and can perform work for (almost) any company in the world - I just invoice them like any supplier. Maybe this is the future? Though some companies would rather you were their employee I suppose.
- chii 4y ago
  > I have a limited company and am an employee of said company, which means I deal with taxes on my own and can perform work for (almost) any company in the world which means you're a contractor, rather than an employee. I do think this is a better way tbh, as you can potentially own all of your healthcare costs, and optimize your taxes properly. And you can probably charge a lot more as a contractor, to make up for the lack of job security etc.
  - CalRobert 4y ago
    I don't get a lot of tax optimisation (my home country makes it really hard to do anything useful) but I DO have a much easier time getting better-paid work from the US. Otherwise I'd need to go through something like oysterhr.com, boundlesshq, etc.
  - jjeaff 4y ago
    It might be a better idea for high income people. But it is often used to take advantage of regular employees. It is a poor reflection of our tax system that running your own entity that you then pay yourself out of can have lower taxes than simply earning money as an employee.
- ejb999 4y ago
  I think an awful lot of employers would prefer you were a contractor; in the USA at least, it is the IRS/government that prevents this from happening more by putting the fear into said employers that they will be fined and forced to pay back taxes for anyone improperly classifying people as contractors when they are in fact employees.
  - Tangurena2 4y ago
    It was the tax reform act of 1986 that removed the "safe harbor" provision for engineers and computer professionals. In the city where I currently live, lots of small businesses try to claim that their employees are contractors. Those businesses depend on the ignorance of their workers.
  - vladvasiliu 4y ago
    Are contractors taxed less than companies in the US? In France, companies also like to contract out a lot, either to "freelance" or regular outsourcing shops. The reason I put freelance in quotes is that there's no such thing here, legally. You have to have some form of company, through which you invoice the client. But then, whenever you want to get the money out of the company to pay rent and eat, you'll be hit by, more or less, the same taxes the employer would pay. For a given unit of work, it's not cheaper to contract out, there's no real tax loophole. As far as I know, the state doesn't really care. It may even prefer it, since contractor rates are usually higher than salaries, so they get to get more tax. The only situation where it would crack down on this is if the would-be employee complained. Since this is considered a "precarious" arrangement, if the contractor can prove that they're basically an outsourced employee, they can ask to be converted to an actual employee and the state will back them up.
    - jjeaff 4y ago
      Contractors are taxed at a higher rate, or really, the same rate, but in an employee situation, the employer must pay half of the tax. However, depending on what you do, people can end up paying less in taxes overall as a contractor because you have more flexibility for deductions. There are very little options for an employee to deduct any expenses in the US, whereas, a contractor could potentially deduct the cost to commute to an office, their cellphone and home internet (if used for work) and even a portion of their rent/mortgage for a home office.

I'm not a lawyer, but this seems illegal on its face. Just from a tax perspective for the government, I feel like people would immediately start trying to game it for taxes.

CalRobert 4y ago

I don't know if it matters but I have a limited company and am an employee of said company, which means I deal with taxes on my own and can perform work for (almost) any company in the world - I just invoice them like any supplier. Maybe this is the future? Though some companies would rather you were their employee I suppose.

chii 4y ago
> I have a limited company and am an employee of said company, which means I deal with taxes on my own and can perform work for (almost) any company in the world which means you're a contractor, rather than an employee. I do think this is a better way tbh, as you can potentially own all of your healthcare costs, and optimize your taxes properly. And you can probably charge a lot more as a contractor, to make up for the lack of job security etc.
- CalRobert 4y ago
  I don't get a lot of tax optimisation (my home country makes it really hard to do anything useful) but I DO have a much easier time getting better-paid work from the US. Otherwise I'd need to go through something like oysterhr.com, boundlesshq, etc.
- jjeaff 4y ago
  It might be a better idea for high income people. But it is often used to take advantage of regular employees. It is a poor reflection of our tax system that running your own entity that you then pay yourself out of can have lower taxes than simply earning money as an employee.
ejb999 4y ago
I think an awful lot of employers would prefer you were a contractor; in the USA at least, it is the IRS/government that prevents this from happening more by putting the fear into said employers that they will be fined and forced to pay back taxes for anyone improperly classifying people as contractors when they are in fact employees.
- Tangurena2 4y ago
  It was the tax reform act of 1986 that removed the "safe harbor" provision for engineers and computer professionals. In the city where I currently live, lots of small businesses try to claim that their employees are contractors. Those businesses depend on the ignorance of their workers.
- vladvasiliu 4y ago
  Are contractors taxed less than companies in the US? In France, companies also like to contract out a lot, either to "freelance" or regular outsourcing shops. The reason I put freelance in quotes is that there's no such thing here, legally. You have to have some form of company, through which you invoice the client. But then, whenever you want to get the money out of the company to pay rent and eat, you'll be hit by, more or less, the same taxes the employer would pay. For a given unit of work, it's not cheaper to contract out, there's no real tax loophole. As far as I know, the state doesn't really care. It may even prefer it, since contractor rates are usually higher than salaries, so they get to get more tax. The only situation where it would crack down on this is if the would-be employee complained. Since this is considered a "precarious" arrangement, if the contractor can prove that they're basically an outsourced employee, they can ask to be converted to an actual employee and the state will back them up.
  - jjeaff 4y ago
    Contractors are taxed at a higher rate, or really, the same rate, but in an employee situation, the employer must pay half of the tax. However, depending on what you do, people can end up paying less in taxes overall as a contractor because you have more flexibility for deductions. There are very little options for an employee to deduct any expenses in the US, whereas, a contractor could potentially deduct the cost to commute to an office, their cellphone and home internet (if used for work) and even a portion of their rent/mortgage for a home office.