3 Sep 2021
Hello everyone! Today I would like to talk about working with a foreign company through an individual entrepreneur, as well as receiving payment in foreign currency. The main idea is to work for a foreign company, without intermediaries, in compliance with all requirements. And receiving payment in dollars.
The article may be interesting and useful for those who are going to start with a foreign company but do not know where to start. Also, it may be of interest to employers planning to hire individual contractors for software development.
It all started a few years ago when I was working in the office as a Senior PHP Developer. The work suited me, but I did not like the constant stay in the office. Main reasons:
For the first 5 years of my career, I worked in an office. At certain points, I agreed with the employer for partly remote work. I was thinking in the direction of completely remote work and, finally, at the beginning of 2019, I seriously started looking for a new job, completely remote.
The job search process is described in separate article. You need to understand that the article is 2019, and a lot has changed since then. At that time, there were much fewer remote vacancies. Often there were frankly muddy options. But they also had to be seriously considered, several especially epic stories are described in the article.
I recommend looking for good deals on LinkedIn. You need to write a resume in English, fill out the profile as much as possible. Get enough contacts. It makes sense to develop a GitHub profile. If you have a large number of contacts, it might make sense to write a post about job search.
In 2020, a lot has changed all over the world. There weren't many changes for the better. But one of them concerns remote work. Almost everyone was forced to try this form of employment. Some eagerly rush back to the office, but many liked the new format.
Now it is quite possible to see remote vacancies from such large companies as Avito, Vk, etc. Often, registration is offered according to the Labor Code of the Russian Federation and a completely white salary. Before the pandemic, there were very few such options.
However, in the case of registration under the Labor Code of the Russian Federation, the employer pays about 43% of taxes. And it is clear that this indirectly affects the size of the salary. The option with a gray salary is also not suitable, because remote work and payment must be contactless.
Also, registration under the Labor Code of the Russian Federation is obviously not suitable for working with a foreign company that does not have a representative office in the Russian Federation. And here it makes sense to work through IP.
An individual entrepreneur (IE) is an individual registered following the procedure established by law and carrying out entrepreneurial activities without forming a legal entity. Registration as an individual entrepreneur in St. Petersburg is described in [this article] (https://www.malyi-biznes.ru/registraciya-ip/dopolnenie/sankt-peterburg/). When registering, you must specify one or more OKVED. For a software developer, you can select the following OKVED codes:
You also need to choose the form of taxation. For a remote developer, I recommend "USN only income", the tax rate is 6%. Besides, it is necessary to pay compulsory health insurance (compulsory health insurance) insurance premiums. However, if you pay everything on time, then those contributions can be deducted from taxes.
One of the unpleasant features of an individual entrepreneur is that the entrepreneur is responsible for all the property. Therefore, you need to carefully study the contracts and invoices that you are going to sign. When working with an hourly rate, the risks are minimal. However, it is worth considering that some companies offer to sign an NDA with a fixed amount of forfeit, for example, $ 100,000.
There are also known cases when companies draw up a contract and prescribe a forfeit if a person has worked, for example, for less than a year. Most likely, such "agreements" contradict the law and it will not be difficult to prove their case in court. But it is better not to sign such contracts and not to work in such companies.
Next, you need to choose a bank to service the IE account. After registration and exit from the tax office, the phone starts receiving calls from all possible banks with offers to open an account. It is important that the bank normally works with foreign currency accounts and does not fall under any sanctions.
With a preferential rate, the following costs are obtained:
Without a discounted rate, things are not so fun, commissions can be higher, there can also be commissions for withdrawals, withdrawals, etc. You need to carefully choose the tariff and negotiate.
The contract is concluded between the customer and the contractor. A foreign company acts as a customer, an individual entrepreneur acts as an executor. The agreement is signed in duplicate in two languages: Russian and English. The copy remains with the customer and the contractor. In general, this is all conditional, since all in electronic form (PDF), signatures are also embedded in PDF. Then the contract is registered with the bank for further currency payments and currency control. Example of a contract: Ivanov_Smith_Contract.pdf, Ivanov_Smith_Contract.doc.
At the end of each month, you need to count the number of days worked, and, accordingly, hours. Then, based on the hourly rate, calculate the payment amount. Perhaps the hours may not be indicated, but only the amount, it depends on the working conditions. Then the invoice is signed by both parties. This act will be required for making payments at the bank and passing currency control. The customer transfers funds to the Transit account of the contractor's individual entrepreneur, more on that below. Example of an act: Ivanov_Invoice_202103.pdf, Ivanov_Invoice_202103.docx.
To work with dollar payments, we need several accounts. Foreign exchange account of the individual entrepreneur (dollar), Transit account of the individual entrepreneur (dollar), and Regular settlement account of the individual entrepreneur (ruble). We also need a ruble and dollar account of an individual with the same bank.
An example of working with a transit account is well described in this article. The scheme of work may differ slightly depending on the bank. But the basic principles remain the same.
In the contract and invoices, it is necessary to indicate the Transit account of the individual entrepreneur, and the money from the customer will be received from it. After the money is received on the IP Transit Account, you need to create an order to transfer funds to the IP account. In the order, you need to add information about a currency transaction with the code 20200, as well as an act of completed work. After confirmation, the payment is sent to currency control. After some time (usually 1 business day), funds are transferred to the IE account.
It is not recommended to keep funds in an individual entrepreneur's account if they are not needed for work, payment of taxes, other services, etc. as a rule, all expenses for maintaining an individual entrepreneur will be in rubles. Dollars must be transferred to a personal dollar account of an individual. To do this, you need to create a new order marked "Transfer own funds" or similar, currency transaction code 61130. After confirmation, the payment is again sent to the currency control and after a while, the funds appear on the personal dollar account.
Further dollars can be disposed of at your discretion. For example:
The signed acts of completion can be used as proof of the origin of funds.
You will have to pay taxes, there is no escape here. Taxes are not very high, 6% for individual entrepreneurs on the taxation system "USN only income". True, this tax is paid from the entire amount credited to the account. You will also have to pay insurance premiums for compulsory health insurance (compulsory health insurance).
Taxes can be paid at the end of the year, but it is better to do this once a quarter. So the amount spreads throughout the year and is not so shocking. Besides, when paying quarterly, you can deduct MHI insurance premiums from taxes.
You can do bookkeeping manually, for example, in Excel. But, most likely, it will turn out rather dreary. Plus, there are places where you can make mistakes. For bookkeeping, I recommend using the Kontur.Elba service.
Elba is good at doing bookkeeping. Everything is well automated, for example, calculating the cost of taxes, receiving a list of payments from the bank, creating payments in the Internet bank, etc. The first year of work for individual entrepreneurs is provided free of charge. Then, to work with foreign currency accounts, you will need a business tariff, which costs 12,000 rubles per year. Also, at the end of the year, a KUDiR - income and expense book is automatically created. All communication with the tax office is also automated. I have not physically visited the tax office for the last 2 years.
I recommend using Elba, besides, the list of payments for the year is quite large, and Elba makes them almost in one click.
Separate points are (re) issuance of electronic signature and submission of reports to Rosstat.
The article turned out to be quite large. The topic is quite extensive. Initially, managing the IP was rather difficult. But after 2 years everything is clear and not so difficult. There is also the option of hiring an accountant, and for a reasonable fee, he will do the bookkeeping for you. But it seems to me that this is still worth figuring out for yourself.
Working through an individual entrepreneur with a foreign company provides several significant advantages:
Of course, there are also certain disadvantages:
That's all for now, Thank you for your attention!