Contract work
Perspectives & advice from the community
u/arjinium shared the following advice on a post titled, Should i switch to contractual full time remote job?.
Purely comparing a Contractual role and a regular Vanilla Employee setup in India - especially when the Contractual role pays better - I would advise you to go for the Contract.
However, the caveat is - please make sure that there is a decent job security where you are going. In your case you said that they have 1 year's runway, what after that? Remember if it's know that you may have to let go of the job after a year, that means you will have to start looking 3-4 months prior. Try to address this and talk to them.
Advantages: On a pure monetary level, a Contract role is better off than a standard Employment:
- You essentially become a sole person business, and can get some taxation advantages based on that (you will need to get a GST number)
- You can take advantage of the 44ADA Taxation law and save a huge chunk of your income from falling prey to the taxman. Your effective %age of income that goes towards tax is usually 10% in Contractual roles vs 25% in standard roles above 15LPA - huge savings.
- You said the role is remote and with a non Indian organisation - both mean that you now save even more money and have relatively better work culture than an Indian organisation.
- You will directly work with the US org - which hopefully should give you better opportunities to work on actually good tech and infra. Whereas Indian dev centres usually get outdated projects or sub par projects to work on in India.
Cons:
- A contractor is never an employee - and that distinction may be prominent if there are more employees than contractors.
- You have to get used to a lot of procedures - getting GST number, Filing GST returns regularly, Keeping track of time and filling in timesheets at the company etc
- Contractors are basically mercenaries - hired-with-pay for work - and there may be a general difference in attitude, what I mean is, there is a possibility that one may be used to cushy employee treatment, while that may not be the case here.
- No ESOPs or RSUs for you in contract roles
- Job security and finding your next client - you will have to build a freelancer/mercenary mindset where you are always looking for your next client, are building your portfolio, marketing your skills etc.
- You can definitely include this on your rsume - but be aware that in the US they do not give out appointment and experience letters to contractors, plus being a contractor you don't have the usual paper trail that is expected from employees in India when an Indian HR recruits - so no payslips etc. - I do not have personal experience, but this could make it more difficult than usual to get recruited as an employee again (mind you your experience will be counted).
Your question:
•If I don’t quit and continue as a full-time contractor with the startup, could this cause issues? Would my employer find out, given the time zone difference?•If I don’t quit and continue as a full-time contractor with the startup, could this cause issues? Would my employer find out, given the time zone difference?Why would you want to work full time at two places especially when one overworks you for 15 hrs a day - that is recipe for disaster.
u/user501230 on a post titled Does anyone use Deel for payroll management? shared the following advice on working with overseas clients:
Hi folks, so I am using Deel for last 4 months now so this is going to be the long post as I will cover every important thing which is needed for one to be employed by overseas companies. I went through lots of hassle to understand how this entire system works. Here are some points from me:
Deel: The Deel Inc is an US based company and it helps companies in hiring/contracting people overseas. In India, Deel is registered as Deel EOR PVT LTD. Read here to know more about EOR. Deel platform is intuitive and easy to use. My employer uses it to for my payroll management. It helps employer to share the contract with employee/contractor. Once you and employer agree on the employment terms you can sign the contract. The Deel will auto-generate an invoice for you based on the terms in your contract and share it with employee and transfer the money to your Deel wallet. Deel wallet(it's free) is nothing but a place where it shows how much money you have earned. Having money parked in your Deel account does not mean money has reached to you. One has to withdraw the money in his/her bank account. You select a payment method to withdraw the amount from the different payment options that are provided by Deel. I will come back to you on why you should add your bank account and in payment method later. For India, Deel does not handle tax compliance so you are on your own. As of today, there are two health insurance options available on Deel platform for Indians but both are useless.
Taxation: When you are working for an overseas company you are providing them your services and billing them(remember auto-generated invoices on Deel in above sections) and that's where taxation gets complicated. Now you will be entitled to pay GST(Goods and Services Tax) along with income tax. Yes, both GST and income tax. Before you get disappointed by the taxes let me tell you as of now, export of Goods and Services are taxed at 0% i.e. you will pay ZERO GST. Although you don't have to pay GST, you will have file GST every month. Sounds funny but that leads us to next part i.e. Compliance.
Compliance: So far you know you have to file GST even though you will be exporting your services and are entitled for zero GST. As you have to pay GST, you will need a good CA who does GST registration and files it on your behalf. CA will be responsible for your entire taxation and compliance work. Find a CA you know or people recommend. I personally feel if your CA asks for more 40k/year, consider a different CA. Your CA will handle everything from taxation to compliance but it's good to understand the taxation and compliance relevant for you. It will help you make wise decisions as it's your money. Let's begin certain important points:
You will have to register for GST which takes around two weeks of all the documents are fine. Sometimes more documents and clarity is asked from GST team and that will make the GST registration process longer, good thing is without GST you can take 20 lakhs INR in your account. in respect to Deel, you will keep working for your company and raise invoice bi-weekly/monthly and get paid in your Deel wallet. After you have pulled(withdrawn) 20 lakh INR from your Deel wallet to your bank account you ave to stop and sort out your GST registration.
FIRC(Foreign Inward Remittance Certificate) this is one of the most important compliance documents. As you will receive money from foreign hence it is important for authorities to know the purpose of receiving foreign fund. FIRC document is provided by banks when you receive foreign fund(your salary in this case), this document contains all the relevant details like sender and it's address, receiver and it's address, amount, currency exchange rate, purpose code, etc. Each time you receive foreign fund you will have to get an FIRC for the same from your bank.
FIRC can be issued by banks only thus it is important to add your bank account on the Deel for withdrawing money from your Deel wallet. Most of the banks do not provide FIRC so choose some correct bank which does it. For example , SBI has very good exchange rate(dollar to rupees) but they told me they would provide only one FIRC per Financial year but I needed FIRC everytime I received money so I went ahead with HDFC bank. I opened a current account in HDFC and they provide me FIRC every time I receive money their currency exchange rate is almost 80p less than SBI but I negotiated well and got +50p on current day's exchange rate.
If your annual salary is less than 50 lakh rupees you will be entitled to claim presumptive tax. For annual income more than 50 lakh you will have to get your income audited by CA. Either ways you will have a CA to take care of it. I recommend reading presumptive tax.
You will have to pay Advance Income Tax every quarter.
u/mobihack shared the following advice on a post titled, Work for US company as Independent Contractor..
- Yeah. My employer uses wise. (Make sure to have KYC complaint bank account else the money may be put on hold until completed)
- You can make use of the Presumptive Taxation Scheme under Section 44ADA of the Income Tax Act, and pay tax on freelance income on only half of their gross annual income, provided the total income for the year is less than Rs. 50 lakhs. For example if you had 18 lakhs rupees deposited as earnings, you will have 9 lakh rupees taxable income. And you can have further deductions based on which tax regime you are selecting.
- I did my tax filing last year by myself and I intend to do the same this year too. It's fairly straightforward but I would suggest you have a list of deposits related to your earnings in a spreadsheet. Contrary to Indian salaried people, none of our details are prefilled in the application. (Because there is no AIS data for our kind of transactions)
An issue you may run into is that your company may give some money for remote setup or equipments deposited this way. But from tax point of view, this amount is also taxable and don't remove it from the calculation.
Just assume you are a freelancer and most questions will be answered easily.