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' then you also are an employee.
We have a lot of this in NL as well, the long term effect is the slow erosion of the social safety net. Because good luck if your client decides they no longer need your services, suddenly you find out what the downside of being self employed is. Nothing to fall back on. So save like your life depends on it.
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 customers isn't a reasonable requirement for a small company. Software engineering isn't like private residential plumbing - "sink drain unclogged, next please!" :)
> good luck if your client decides they no longer need your services, suddenly you find out what the downside of being self employed is.
That goes without saying, and the same obviously applies if you're running a "regular" company, with employees, like a restaurant or whatever.
The risk is arguably even greater, as you will usually pile up some financial obligations (such as credits) and other commodities limiting your financial fluidity (remember Covid? Restaurant owners do).
By the way, you can insure yourself against loss of income. Many insurance companies offer this service.
This is definitely a source of friction with the tax service.
A couple of years ago, the Dutch tax service was trying to tackle the problem of fake self-employed people who were really just employees without the same rights, pensions, etc. The Dutch postal service PostNL was notorious for firing firing all their mail deliverers and hiring them back as self-employed people who still had to wear their uniform and work according to their schedule. And somehow the tax service approved that. But self-employed programmers who hop between big projects, negotiate their own pay (which tends to the high side) and have a lot of control over the projects they work on and the way they work on them, suddenly have to prove that they're really "zelfstandig", self-sufficient.
It's frustrating. I recently went back to regular employment and I hated it. Tons of extra rules, limited vacation days, and significantly lower pay. I guess I prefer being in control, saving for my own retirement, and going on vacation as often or as little as I like. Seriously, how many vacation days I had left used to give me stress. It's significantly healthier for me to be self-employed.
The way I see it: if a large company can have a single client and just rent out all their employees to that single company, why can't a small one-man company do the same?
And I think I'm a lot more self-sufficient than that company; if my contract ends, I can easily get a new contract elsewhere for myself. But if their contract ends, they need to find new work for all of their employees at once, and they'll likely fire some or all of them, making the whole job security argument moot. Their risk is higher than mine, and their security isn't. I really think having lots of self-employed contractors like me is better for the industry than the overhead of having to organise into companies.
In Poland the government is in on it when it comes to specialists of any kind, as this is how they prevent people from emigrating to the west or "emigrating" (tax-wise only) to the Czech Republic, which offers a similar deal.
For a while it was possible to have a flat 5% income tax rate, but I guess someone pointed out that it's too generous, so the best option now is a flat 12% and 3% healthcare contributions.
> 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.
> I can't see why a company couldn't have one long-term customer.
Let's hope you won't find out why that's a very bad idea.
> Clearly having multiple customers isn't a reasonable requirement for a small company.
On the contrary, it's a must.
> Software engineering isn't like private residential plumbing - "sink drain unclogged, next please!" :)
That's a strawman.
Sorry, but if you have just one customer and you're developing software other than taxes and your rights you are less than an employee. Don't kid yourself, that tends to lead to rude awakenings. If at the end of the year you've only sent invoices to a single customer then you are simply at risk. You need multiple customers to be stable and secure. Two is better than one and three is really the minimum.
Loss of income insurance is to take care of mishaps, not to insure against market downturns or other normal risks that a business is exposed to.
> > I can't see why a company couldn't have one long-term customer.
> Let's hope you won't find out why that's a very bad idea.
The way you phrased it feels needlessly patronizing (perhaps unintentionally), but more importantly, it does not really address my comment.
I wasn't arguing if it is a good idea or not. I was responding to the argument that having multiple customers is necessary to be regarded as "truly" self-employed in the eyes of the taxman. My point is that it's not uncommon nor unusual for a small company to be invoicing only a single customer. Hence my examples. Whether it is safe business-wise is another story.
> If at the end of the year you've only sent invoices to a single customer then you are simply at risk. You need multiple customers to be stable and secure. Two is better than one and three is really the minimum.
Noone denies that having diversified sources of income is (other things being equal) the safer option. But the subject was legal recognition, not optimal business strategies.
It may come across as patronizing because that's roughly how I see this. I'm at the end of my career after a very productive stint and have absolutely nothing to lose by letting you have the benefit of my experience to date, which spans a couple of continents, six countries and a substantial amount of money. Whether you are open to that kind of experience backed input is entirely up to you, I have no upside here, but you do and you also have a possible downside. But: when I was 27 or so I might have still seen things your way so maybe in 30 years you'll be telling someone else the same things. I sincerely hope that you will never find the true measure of how important those things are and if I could give my younger self some advice that would be it.
As for legal recognition: the only reason this is a thing right now is because the social contract is broken, in any other setting you'd be an employee.
I have multiple customers over time; 3 years ago, I worked on a different project, for a different client, than I do now. But with the kind of projects I work on, it's hard to do several of these projects at once, and they're too long to do several in a year. Expecting self-employed contractors to have multiple clients is unreasonable.
As for job security, employment doesn't give a shred more job security than being a self-employed contractor these days. My job security comes from my skills and the succession of successful projects I've worked on.
And there are a lot of companies that have a single large customer. I think I have a lot more flexibility than they do.
> I have multiple customers over time; 3 years ago, I worked on a different project, for a different client, than I do now. But with the kind of projects I work on, it's hard to do several of these projects at once, and they're too long to do several in a year.
So please be very careful and if you can find a side gig that doesn't interfere with your main one so you have at least some protection. It could be a low hours but high pay job that way you don't end up eating into your time too much, for instance a coaching job.
> Expecting self-employed contractors to have multiple clients is unreasonable.
On the contrary: it's a must. Without multiple clients you are super fragile, don't have a strong negotiation position and in case of any kind of headwind you're immediately on the ropes. If you insist on doing long running contracts try getting two that do not overlap in terms of run-time, make one two days a week, the other two days a week or three days a week and bill the smaller job a higher rate.
> And there are a lot of companies that have a single large customer. I think I have a lot more flexibility than they do.
That's true, but they tend to have a much stronger position than you do due to the kind of contracts that get written between large entities. In a conflict with a much larger entity you usually end up drawing the short stick. They could stiff you on a bill and it would already pull you under water.
> Without multiple clients you are super fragile, don't have a strong negotiation position and in case of any kind of headwind you're immediately on the ropes.
Not at all. I can walk away and I have my financial reserves. My negotiation position is stronger than when I'm an employee.
> If you insist on doing long running contracts try getting two that do not overlap in terms of run-time, make one two days a week, the other two days a week or three days a week and bill the smaller job a higher rate.
This sounds like an absolutely terrible idea. I'm not going to undermine myself like that.
> They could stiff you on a bill and it would already pull you under water.
One (very small) client did stiff me on a bill. I won't work for them anymore, and I tend to prefer larger clients now that simply do pay their bills. I have considered suing them, but the amount was too small to be worth it. It didn't pull me under water.
I think jacquesm is advocating that you have multiple sources of income (clients) to protect from the possibility that you lose your one and only client and suddenly have zero income.
I take a different approach to my consulting. It sounds like you do too. I typically have just one client, but I charge them a metric shitload and tell them quite specifically that I do that in part to protect myself should I need to go months and months without a replacement client. Obviously there are limits to this and I'd have zero clients if I charged too much, but between that and a savings buffer built up from previous clients, I don't feel like this is a precarious situation at all.
But I also have to admit/concede that I do not think my advice is replicable. I only started being so aggressive about my rates once I already had the privilege of being able to survive for years without any income. For someone who _needs_ reliable income, jacquesm's advice is probably more useful than mine.
What rude awakening? The situation is exactly the same as losing a job: you are now jobless and need to find the next one. The "safety net" for a high earning individual does not exist anyway.
You're funny. I've been self employed for the last 30+ years and I really enjoy it. But I know the risks and I'm making sure I don't get burned because having only one customer is just setting yourself up for various kinds of failure.
I love freelancers and I love freelancing. But I know the difference between being a freelancer and running a company and being an employee in all but name and you really don't ever want to be in that position.
the way not to get burned is to charge high enough with trustworthy clients, take some insurances and to be aware of your pension provisions that will vary by country. whether you have 1 or 3 clients at one point in time is immaterial as long as it doesn't sour your relationship with your clients
I appreciate that it sounds like you had a bad experience with a client though.
> the way not to get burned is to charge high enough with trustworthy clients
That helps. What helps even more is to have a nice fat savings account that allows you to negotiate properly, to weather the inevitable dry spells, to build a solid base of clients that value you and that will repeatedly hire you.
> take some insurances
Against what? 90%+ of the freelancers are not even insured against loss of income from health related issues. The remainder is well off enough that they can probably afford to take the risk.
> whether you have 1 or 3 clients at one point in time is immaterial as long as it doesn't sour your relationship with your clients
Until: that one client goes bust, there is a 'policy change', the project/product you are working on gets axed, the economy burps, your main contact at the company gets fired and the new guy or girl doesn't like you and so on.
> I appreciate that it sounds like you had a bad experience with a client though.
I appreciate that it sounds like you haven't had a bad experience yet, but that makes you simply less experienced. Give it some time and you'll see all of the above and variations on those themes.
as I already mentioned having reserves is indeed very important
in my jurisdiction there are for example some excellent guaranteed income insurances covering various situations. they won't pay forever, but they'll pay. income replacement due to health issues is covered by normal social welfare in my jurisdiction as well
all of those things you mentioned happen regularly to employees. they are harder to let go, sure, but employers have a lot more leeway to make your job hellish enough to force a resignation, or if the economy is really bad overall they can throw their hands up and say we're cutting divisions of the business with no objections from the law in most places. sure you can go to your work council (hope they are on your side) about it, or to the union (hope they have time for you and you're lucky enough to have enough evidence to win the tribunal) or the lawyer (hope you have a legal assistance insurance and are ready for years of process and fees). employees without a savings buffer are similarly vulnerable in these circumstances
the biggest reason to stay an employee if you can consult instead where I am is really the unemployment benefits you can get, but that now takes up to 10 months to actually start paying out due to how understaffed the government is. so again, best have some reserves. the next biggest reason is you hate paperwork
The point isn't that they doesn't like freelancers, but doesn't like how the employers misuse that to get workers without rights. "Oh, you're not employed here, so we don't have to follow labor laws, we can just terminate the contract".
If I'm not mistaken, in the US employees can also be fired just like that. Meanwhile my contract specifies a month notice for both sides.
And that was their preference. I'm totally fine with being fired; that flexibility is also part of what I sell. It's why they pay me more than they pay employees.
the worker rights issue is mostly a concern for blue collar workers that are forced to become freelance by some companies to save on welfare costs. that is what tax authorities actually look for when they talk about "false self-employment" and that is why it is the company giving the assignment that gets punished in these situations and usually not the freelancer.
that's not really a concern for high billing consulting professionals. it is a common misunderstanding (as you can see from comments here) though and is variously used by companies to undercompensate people who could be far more profitable consulting
If you're not jumping around contracts regularly every 2 years in NL and are not billing the approximate annual wage for your role every year (assuming that you work the 40-44 weeks) then you're an employee and shouldn't be contracting.
The market now is interesting - there are a huge number of low experience / low skill people flooding the market which has driven prices down for some very good people whilst also making it hard for companies to actually find qualified people. It actually lead to me rejecting a project who really wanted me and I fancied (Government but with a chance to have a really big positive impact on society; I moved mountains with the last project and learned some valuable lessons, seemed a shame to let that dull... oh well).
I've been doing it for about 8 years now, I enjoy it and it has allowed me to both grow like crazy and do things I've always been capable of but wouldn't have attempted as an employee.
The other thing: funding in Europe for ventures is horrible compared to the US. I'll be looking to raise for a project this year and I'm dreading it (Healthcare, we're going to try the public route first because it would be better long term.. although it will leave money on the table it will increase the probability of success we believe).
You should be billing a multiple of the approximate annual wage to offset the risks of freelancing. Twice is good, three times is better. If you can't do that you're much better and safer off to find employment so make sure you understand exactly what the risk/reward trade-off is for being a freelancer and set yourself up accordingly.
Find customers that value you and make sure they pay and pay on time. A single hickup in the payment department is a good reason to start looking for a replacement customer. And never ever rely on just the one customer: your negotiation position is now crap and if anything happens to that one customer, their customers, their market or the relationship then you're done.
If and when you are looking for funding for your healthcare start-up please contact me, I may not be able to invest myself but I do have a whole pile of contacts and some of those are doing regular medical investments.
We have a lot of this in NL as well, the long term effect is the slow erosion of the social safety net. Because good luck if your client decides they no longer need your services, suddenly you find out what the downside of being self employed is. Nothing to fall back on. So save like your life depends on it.