Remote jobs and incidental wage costs: What do I have to consider?
In the US we have social security taxes, where for a full time employee the company pays half and the employee pays half.  When you work as a business, what we call 1099 for the form that the wages are reported on, then the contractor pays the full amount of social security tax. There are times when a contractor can negotiate a higher rate because the company does not have to pay that tax.  However, most of the time the company just prefers to negotiate the rate based on your value.  If you are a 60K year guy, then that is what they will pay you.  From the company's perspective it does not matter what your tax rate is, only the value you can bring to the company.  If you can add about 180K to the bottom line, then they will be happy to pay you 60K, and you should be happy to get it. Here in the US a contractor can expect to make about 7.5% more of an equivalent employee because of the social security tax savings to the company.  However, not all companies are willing to provide that in compensation.  Some companies see the legal and administrative costs of employees as normal, and the same costs with contractors as extra so they don't perceive a cost savings.  There are other things that would preclude employers from giving the bump although it is logical to do so. First you will really have to feel out your employer for the attitude on the subject.  Then I would make a logical case if they are open to providing extra compensation in return for tax savings.  If I am an employee at 60K, you would also have to pay the government 18K.  How about you pay me 75K as a contractor instead? That would be a great deal for all in the US. "An employee costs the company in four ways: Salary, taxes, benefits, and capital. Salary: The obvious one, what they pay you. Taxes: There are several taxes that an employer has to pay for the privilege of hiring someone, including social security taxes (which goes to your retirement), unemployment insurance tax (your unemployment benefits if they lay you off), and workers compensation tax (pays if you are injured on the job). (There may be other taxes that I'm not thinking of, but in any case those are the main ones.) Benefits: In the U.S. employers often pay for medical insurance, sometimes for dental, life, and disability. There's usually some sort of retirement plan. They expect to give you some number of vacation days, holidays, and sick days where they pay you even though you're not working. Companies sometimes offer other benefits, like discounts on buying company products, membership in health clubs, etc. Capital: Often the company has to provide you with some sort of equipment, like a computer; furniture, like a chair and desk; etc. As far as the company is concerned, all of the above are part of the cost of having you as an employee. If they would pay a domestic employee $60,000 in salary and $20,000 in taxes, then assuming the same benefits and capital investment, if a foreign employee would cost them $0 in taxes they should logically be willing to pay $80,000. Any big company will have accountants who figure out the total cost of a new employee in excruciating detail, and they will likely be totally rational about this. A smaller company might think, ""well, taxes don't really count ..."" This is irrational but people are not always rational. I don't know what benefits they are offering you, if any, and what equipment they will provide you with, if any.  I also don't know what taxes, if any, a U.S. company has to pay when hiring a remote employee in a foreign country. If anybody on here knows the answer to that, please chime in. Balanced against that, the company likely sees disadvantages to hiring a foreign remote employee, too. Communication will be more difficult, which may result in inefficiency. My previous employer used some contractors in India and while there were certainly advantages, the language and time zone issues caused difficulties. There are almost certainly some international bureaucratic inconveniences they will have to deal with. Etc. So while you should certainly calculate what it would cost them to have a domestic employee doing the same job, that's not necessarily the end of the story. And ultimately it all comes down to negotiations. Even if the company knows that by the time they add in taxes and benefits and whatever, a domestic employee will cost them $100,000 a year, if they are absolutely convinced that they should be able to hire an Austrian for $60,000 a year, that might be the best offer you will get. You can point out the cost savings, and maybe they will concede the point and maybe not."
eallan already touched on this, but generally speaking there is a tendency in this country to lump unions together and put the shortcomings of one local or one unit or one member onto all of them. An example would be the issue of corruption; many people cry about rampant corruption in unions when in fact only somewhere between 1-2% of locals have ever had any corruption charges, whereas I'd be willing to bet that the corruption rate is much higher in the corporate world.  &gt; Honestly, I cant think of any reason for minimum wage paying jobs to have a union. If you think the wages are too low for cost of living then the minimum wage should be raised. These people have no special skills, little to no training, and usually no education.  Genuine question: What reasons do you think someone would/could have for joining a union? Why would base pay/education/skill level of the job be a consideration?    Just so we're on the same page: Collective bargaining came about because workers in certain areas were pissed-off enough that they realized that to improve their situation they had to come together as a group, because only as a group did they have any leverage. All workers have the right to collective bargaining, rights which were signed into law because pissed-off workers were doing it anyway, and the regulation of the practice helped smooth it out and drastically cut down on violence and debilitating drops in production.    It takes quite a feeling of injustice and exploitation when not friends, not family, but colleagues, some of which may not even like each other, start seeing that they share common problems, and decide to tie the fate of their working lives to one another. And give up like 1-2% of their paychecks. Especially in a country with an individualistic culture like the US.   So if workers at certain Wal-Marts feel like working conditions are that bad for them, then I can't see why they shouldn't organize. "You can pontificate about how life is so hard for her because shit costs money and you're right, she can't support herself and kids. However, that doesn't change the basic economic reality that working full time at Popeyes simply DOES NOT provide enough value to her employer and there are two many people with her very low skill set that she cannot command a higher wage. No amount of government programs will change that. Robbing the tax payers through welfare, killing businesses and destroying jobs by imposing a wage that simply is infeasible is counter productive, unsustainable, and simply misguided. Don't believe me? Ask the University of Washington who have the numbers on Seattle's ever escalating minimum wage and the effect on [jobs.] (http://www.zerohedge.com/news/2017-06-26/shocking-study-finds-seattle-min-wage-hikes-has-cost-works-14mm-hours-year-6700-jobs) This is, of course, assuming you care that people are being put out of work so a few can be paid a ""living wage"". Welfare is an endless tap of free money, [right?] (http://www.usdebtclock.org)    The irony of your oh so well cited comment is that you didn't apply it to your own proposed solution of a minimum wage increase. [Here's](http://www.heritage.org/jobs-and-labor/report/higher-fast-food-wages-higher-fast-food-prices) a great analysis of effect of this change on consumer prices, how it affects the capital side of the equation of whether to operate a restaurant at all, and how a higher minimum wage impairs the creation of entry level jobs.    Succinctly, minimum wage jobs were never meant to be able to support a family of three, no matter how much you wish it could. By creating artificially higher wages you'll get higher unemployment, more substitution of labor with more capital intensive solutions (ordering kiosks, etc), and higher taxes and consumer prices.   Edit: Link B.S.  Edit 2: **trigger warning** Also, it's a lot easier to raise kids with two working parents, that's just math for you. Talk about a bad personal choice that no one has touched on. Poor kids :(" &gt;I cant think of any reason for minimum wage paying jobs to have a union. If you think the wages are too low for cost of living then the minimum wage should be raised.  I like how you say something in one sentence and then answer yourself in the next sentence.  What the hell do you think unions are for?  They're for bettering working conditions.  Where do you think any sort of worker protection laws came from in the first place? To be honest I've had rather poor experience with unionized workers in the US... I've seen union electricians wire emergency power off circuits backwards (such that they wouldn't work when the firefighters try to cut power to the facility, or wouldn't work when on battery power)... I've seen unionized construction workers seal garbage under a floor because they couldn't be bothered to pick it up (it was their own too, food waste). Other unionized trades that will just leave their garbage / cuttings / mess for someone else to clean up.   From what I've seen / experienced Unions today are nothing like what they should be, protecting the most incompetent among them and constantly demanding increased wages for poor performance.   Why should I have to pay someone more to do a shittier job just because they're in a members only club? Honestly, I cant think of any reason for minimum wage paying jobs to have a union. If you think the wages are too low for cost of living then the minimum wage should be raised. These people have no special skills, little to no training, and usually no education. There is no fixed formulae, its more of how much you can negotiate Vs how many others are willing to work at a lower cost. Typically in software industry the rates for part time work would be roughly in the range of 1.5 to 2 times that of the full time work for the same job. With the above premise roughly the company would be willing to pay $100,000 for 2000 hrs of Part time work(1), translating into around $50 per hour. How much you actually get would depend on if there is someone else who can work for less say at $30 at hour. (1) The company does not have 2000 hrs of work and hence its engaging part time worker instead of full time at lesser cost. HMRC may or may not find out about it; the risks and penalties involved if they do find out make it unwise not to just declare it and pay the tax on it. Based on the fact you asked the question, I am assuming that you currently pay all your tax through PAYE and don't do a tax return. You would need to register for Self Assessment and complete a return; this is not at all difficult if your tax situation is straightforward, which it sounds like yours is. Then you would owe the tax on the additional money, at whatever applicable rate (which depends on how much you earn in your main job, the rate tables are here: https://www.gov.uk/income-tax-rates/current-rates-and-allowances ). If it truly is a one off you could simply declare it on your return as other income, but if it is more than that then you would need to look at setting up as Self Employed - there is some good advice on the differences here: http://www.brighton-accountants.com/blog/tax-self-employment-still-employed/ :  Broadly, you are likely to be running a business if you have a regular, organised activity with a profit motive, which continues for at least a few months. If the work is one-off, or very occasional (say, a few times per year), or not very organised, or of very low value (say, under £2,000 per year), then it might qualify as casual income. If you think it is beyond the definition of casual income then you would also need to pay National Insurance, as described in the previous link, but otherwise the tax treatment would be the same. Just earning the money would trigger a 1099 (assuming other requirements are met).  It doesn't matter where the money is. There's nothing illegal in hiring your friends to manage your property or provide you services, and it is definitely deductible. There's nothing specific to reference here, this is a standard deduction for a landlord just as any. I mentioned 1099 in the comments - if the total is over $600 and your friend is not a corporation, then you should issue 1099. That would provide you the necessary substantiation of the deduction (of course you need to keep some documentation that shows the relation between the money paid and the services provided, like a contract, or invoice or receipt). You can (but don't have to) issue 1099 for lower amounts as well. If you don't - you'll need to keep more documents as substantiation - cached checks, documents about the agreement and the amounts, etc. In addition, your deduction may be disallowed if your friend doesn't declare this as taxable income (issuing 1099 helps here since your friend will be forced to declare it, otherwise it will be recorded as a mismatch by the IRS and trigger an audit). As to reimbursements - that would go into the same bucket. They'll have to deduct their expenses from that income on their own taxes. So if you give them $300 for the work, $300 for the miles, and $300 for the materials they bought - you issue the 1099 for $900, and let them deduct the $600 on their own Schedule C.