Contracting · 7 min read
Employee vs self-employed tax
Why changing employment status changes contributions, deductions and risk—not only the rate.
Self-employed workers may pay both sides of social insurance, but can also deduct legitimate business costs. Comparing only headline income-tax bands misses the main differences.
Separate revenue from profit
Employees are usually taxed on compensation after limited payroll deductions. A business is generally taxed on profit after allowable expenses. The same invoice value and salary are not equivalent.
Price the missing benefits
Paid leave, equipment, insurance, accounting, pension matching and gaps between projects belong in a contractor rate. Employer payroll savings do not all become worker take-home.