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Ask HN: How many of you are self employed?

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Re: Ask HN: How many of you are self employed?

#91

Post by lifestyleguru »

V-2 wrote: post #90
lifestyleguru wrote: post #88

Earlier quoted context omitted.

> How do you recognize "software from Poland" anyway? Whatever is created in all these nearshoring and outsourcing centers in Warsaw, Kraków, and Wrocław. Currently mostly Azure, SAP, business Java and Angular.

Yeah, but how do you know which application was and which wasn't? Apart from some big customers, it usually isn't public knowledge. Eg. my previous project was a banking app for a rich Middle Eastern country. There's no "acknowledgements" section in the app. My original question still stands - by what metrics do you regard "software from Poland" as "tacky crap"? I'm not being belligerent about it, but somewhat curiou…

Ain't gonna fight. Good luck.

Re: Ask HN: How many of you are self employed?

#92

Post by poisonborz »

V-2 wrote: post #82
poisonborz wrote: post #74

Earlier quoted context omitted.

My home country also regulates this scenario - one-man companies with ~single client - for businesses strongly. This is hidden employment. How would it be beneficial to anyone? - the subcontractor doesn't get any social security. Has to provide everything for himself from the private sector. And pensions (however meager). Theoretically he's free to have multiple clients or vary prices but I guess for most this is a p…

> How would it be beneficial to anyone? Most programmers provide outsourcing services for companies from abroad (including outside of the EU). Low taxes help them - and the umbrella companies AKA software houses - to remain competitive on the global market. So even if they only pay a smaller fraction of their income to the budget, it's still better than if they didn't get the gig to begin with, because the contracts…

My point is that this is a very wrong direction for any country but especially eastern europe. It's like: welfare/health care system is bad, taxes are not used well. Top earning knowledge workers want an exit hatch, let's cater for them and they can hop off the welfare tax system. This way they can also provide cheap prices to foreign companies.

So many problems. These are just top off my head:

- Countries should want internally organised production, strong companies with own IP, not one-man "companies" producing IP to external entities.

- Those foreign companies will switch to other countries with better prices (Asia, Africa) any time if their programming scene improves. It's not like they have stakes like when building a factory.

- Lot of people think they can invest better, create a better future pension for themselves. This is often true, and why would we want to allow exits, further eroding the whole system? There should be a base pension fund with everyone involved.

> the government loses oversight of actual corporate structures

To the government the company could be a 5 person shell, while it actually employs/pays salaries of 100s of families. Theoretically you could roll up the contracts, but that would be very complicated.

Re: Ask HN: How many of you are self employed?

#93

Post by ori_b »

I am currently working on helping small companies solve technical problems, build a strong technical culture, and scale their engineering orgs. Both hands on code and leadership, as needed.

For a summary, https://orib.dev/consulting.html

I'm just starting out with this, but it's looking promising.

Re: Ask HN: How many of you are self employed?

#94

Post by lotsofpulp »

V-2 wrote: post #89
jacquesm wrote: post #63

Earlier quoted context omitted.

That's for tax reasons only though, technically it is just another form of long term employment. As soon as you have multiple customers that you send invoices to with some regularity and you have autonomy would you pass the 'self employed' test in other countries. If you refer to them as your client and you only have one then you're technically an employee, if you refer to your contact at your client as 'your boss' t…

I can't see why a company couldn't have one long-term customer. It's not unusual eg. in the building sector (where large construction projects, not unlike software projects, can take years to complete). Another common example is MDs - quite a lot of private doctor's offices are contracted by the National Health Fund, basically providing their services for the public healthcare that way. Clearly having multiple custom…

> By the way, you can insure yourself against loss of income. Many insurance companies offer this service.

In the US, I am not familiar with insurance for loss of income due to simply not being able to sell products/services. Usually, the loss of income has to be a result of covered natural disasters, vandalism, legal issues, etc. Most business insurance policies even specifically exclude pandemics, as many found out recently.

Re: Ask HN: How many of you are self employed?

#95

Post by Thorrez »

V-2 wrote: post #46

In Poland, where I'm from, it's pretty much the norm to be self-employed in Poland in the IT sector. I believe that around 50% of workers are technically contracted one-man companies, and this percentage is inversely correlated with the seniority level - the greater the earnings (and the sense of job security that goes along with expertise and experience), the greater the incentive. Going B2B makes a substantial diff…

What benefit does that provide? Some commenters are saying it reduces taxes. Why would it reduce taxes? Why would the government reduce taxes for people who jump through these hoops?

Re: Ask HN: How many of you are self employed?

#96

Post by KptMarchewa »

V-2 wrote: post #79
KptMarchewa wrote: post #73

Earlier quoted context omitted.

If you earn enough, the savings can easily surpass the risk for a singular person. It's worse for society overall, but let's not pretend the high earners don't mostly subsidize the safety net.

The IT sector in Poland (again) is a booming one, and most of the services are effectively exported, as we're talking outsourcing. I guess it translates into the lack of political will to curb the practice, too, as the government would risk that self-employed programmers (and whatnot) may not fall in line, but mostly log out of the system instead, registering their companies abroad, for example. I guess the governmen…

>registering their companies abroad, for example.

"Registering" the business only is a trap and a way to pay much much more _when_ the tax office decides you are avoiding taxes. To truly do that, you need to move your center of life abroad, which generally means being outside Poland for 183 days a year.

>I guess the government isn't eager to start this cat-and-mouse game, preferring a smaller slice of a bigger pie.

I agree that it mostly is the case, as I still pay few times more taxes (and VAT on consumption...) than average citizen, even when using 12% lump sum tax.

Re: Ask HN: How many of you are self employed?

#97

Post by atraac »

knallfrosch wrote: post #54
lqet wrote: post #51

Earlier quoted context omitted.

This would be quite risky where I am from, for both the freelancer and the employer. Being self employed, but only for a single customer, is false self-employment. If you get caught, your employer has to pay taxes and social security contributions retroactively for up to 4 years, and afaik both the employer and the freelancer are liable for the money owed to the tax office and social securities. If you are caught doi…

If you're from a country like Germany, most of what you're skipping financially is the insurance cost that's covered by the employer (social security etc.) Which means you don't have access to the social safety in case you need it.

In Poland(since I'm also from here), biggest chunk of savings when working as self-employed is income tax and mandatory public retiremend fund. Most Software Engineers go B2B/self-employment route because not only taxes are lower, but savings from paying minimal public retirement are pretty big with higher salaries. We're at a point where most people in Poland do not believe in retirement system anymore, it's unsustainable and will crash or will be kept with social, minimal retirement, no matter what you paid in. That's why most of us want to save on the side, put that into ETFs or housing rather than count on the government, especially that over last decade or so almost destroyed this country.

Re: Ask HN: How many of you are self employed?

#98

Post by bicx »

philip1209 wrote: post #2

I've been self-employed for the last ~18 months. In the past I started two VC-backed startups, then was a PM at some later-stage companies before returning to entrepreneurship. This time around, I'm building a solo "digital product studio" [1] instead of a startup. So, I'm staying one person, haven't raised money, and have multiple revenue-generating products. Product revenue doesn't cover my costs yet, so I do occas…

I have a similar story. I’ve been self-employed for the last 6 months after 14 years of startups. Started out as an engineer in TN, and moved to SF a couple years ago where I got into management just in time to help with rounds of layoffs. Got some severe burnout, quit, and now I’m working on my own products while doing consulting/contracting on the side through my agency. I live fulltime in an RV traveling the country and working remotely. At the moment, I never want to work for someone else again.

Re: Ask HN: How many of you are self employed?

#99

Post by mkaszkowiak »

Thorrez wrote: post #95
V-2 wrote: post #46

In Poland, where I'm from, it's pretty much the norm to be self-employed in Poland in the IT sector. I believe that around 50% of workers are technically contracted one-man companies, and this percentage is inversely correlated with the seniority level - the greater the earnings (and the sense of job security that goes along with expertise and experience), the greater the incentive. Going B2B makes a substantial diff…

What benefit does that provide? Some commenters are saying it reduces taxes. Why would it reduce taxes? Why would the government reduce taxes for people who jump through these hoops?

Taxes.

Standard tax rate (on UoP) is 12% up to ~30k USD, the rest is taxed 32%. On top of that, the employer pays a social security fee, its rate rises proportionally to income.

As an one-person business, you have two most popular options:

- 12% flat tax rate on income, with a flat rate social security fee; (1)

- 19% flat tax rate on revenue. The social security fee is dependant on income, but it's less than on UoP. You can write off expenses in this scenario, so the actual tax rate is actually lower. People generally try to write off as much as they can - for example, the tax agency is OK with programmers buying multiple bikes as a means of "transport to clients" ;)

You can also write off VAT in both scenarios, effectively making a lot of major purchases (desks, chairs, phones, etc) way cheaper. There's also a 5% tax rate, called IP Box, but it's tricky and doesn't apply for every scenario, so I'm taking this aside.

With the employer spending 5k EUR per month (21,7k PLN), you're left with:

- 14,6k PLN on UoP

- 18,5k PLN on 12% tax

- 16,7k PLN on 19% tax, out of which you can potentially recover 3,9k PLN

It's easy to see why software developers choose to start a one-person business. It's worth to jump through the hoops to save on taxes.

(1) There are actually 3 levels dependant on income, but it's lower than the UoP fee for basically most software developers

Re: Ask HN: How many of you are self employed?

#100

Post by V-2 »

poisonborz wrote: post #92
V-2 wrote: post #82

Earlier quoted context omitted.

> How would it be beneficial to anyone? Most programmers provide outsourcing services for companies from abroad (including outside of the EU). Low taxes help them - and the umbrella companies AKA software houses - to remain competitive on the global market. So even if they only pay a smaller fraction of their income to the budget, it's still better than if they didn't get the gig to begin with, because the contracts…

My point is that this is a very wrong direction for any country but especially eastern europe. It's like: welfare/health care system is bad, taxes are not used well. Top earning knowledge workers want an exit hatch, let's cater for them and they can hop off the welfare tax system. This way they can also provide cheap prices to foreign companies. So many problems. These are just top off my head: - Countries should wan…

> - Countries should want internally organised production, strong companies with own IP, not one-man "companies" producing IP to external entities.

Of course it's great to have domestic tech giants (and, sadly, Europe as a whole isn't doing very well in this regard, for reasons that deserve a separate conversation), but these things are largely orthogonal to eachother.

There is no reason why a domestic tech giant couldn't have local talents on contracts. Promising domestic start-ups, such as Tidio (mentioning them as they're from my home city) are doing that too.

> - Those foreign companies will switch to other countries with better prices (Asia, Africa) any time if their programming scene improves

Sure, but having people on employment contracts isn't going to protect you against it.

> Lot of people think they can invest better, create a better future pension for themselves. This is often true, and why would we want to allow exits, further eroding the whole system? There should be a base pension fund with everyone involved.

And there is. I can't see why preventing people from investing into a better future pension for themselves (on the top of the state-provided minimum) would be a good idea.

> To the government the company could be a 5 person shell, while it actually employs/pays salaries of 100s of families. Theoretically you could roll up the contracts, but that would be very complicated.

The government has got a centralized system, National System of E-Invoices (or KSeF). It's a fairly fresh thing, but it's becoming obligatory this year. Meaning the taxman gets to see all the invoices without having to jump through any hoops. So even if you are contracting (instead of hiring) a hundred people, it is still transparent.

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