Disclaimer: This article is not a substitute for legal nor accounting advice. Look for professional advice before you take action.
There is no doubt that remote work is becoming more sought after, especially among experienced software developers. Along with the benefits of obtaining a better work-life balance is working for innovative companies within the US. Which also opens the door for a greater salary. However, you may be wondering how you handle registering as an independent worker or company, filing taxes, and payment options.
This article will discuss how to organize working remotely for a US company in Ecuador.
One of the great benefits of working remotely is there is no need for a work visa if you reside outside the US. According to the IRS, only persons who reside and work physically in the United States require a work visa. This makes working remotely simpler and allows you to find opportunities suited for your talent and expertise.
Before beginning remote work in Ecuador, you must first register with Servicio de Rentas Internas del Ecuador and obtain a tax identification number. After that, you can register as a sole proprietor, a simple process, or other options if you would like to work as an independent contractor.
The majority of remote workers prefer to register as sole proprietors (unipersonal). This sort of business structure is simple to set up and has a number of advantages, including the ability to include the owner's healthcare costs in the tax payments. They are liable for self-employment taxes. They also don't need an online payroll solution because they're part of a remote workforce.
On the other hand, you will be responsible for withholding business payroll taxes and setting up the legal paperwork that authorizes you to deliver services to others as an independent contractor.
Knowing your tax liability is essential no matter where you work or who you work for. And while you may not be subject to US taxes, you will be responsible for them in Ecuador.
As a remote worker, you must file your own taxes. Therefore, you would file twice a year, with the first payments due sometime in July and the second in September.
There are different requirements for residents and non-residents of Ecuador, as the progressive rate is up to 35% and 22% of the gross salary, respectively. The taxes are calculated in US dollars, with no tax paid until after 11,290 USD is earned.
When considering remote work, you can choose the best work style for you. Many independent or remote workers have a temporary agreement that terminates after the project is completed. Others work for many clients simultaneously. Remote work rarely has formal agreements in place; however, with Nexton, we help you find employment for the longer term with companies that employ remote teams.
Believe it or not, remote work was not common in Ecuador until recently. Because of this, the Ecuadorian government has remote work policy laws in place that help protect the worker in their work environment.
An article by Multitrabajos outlines some of the regulations that employers must adhere to. These include allowing the remote worker to end the workday without being required to respond to any request after the day is over.
Other elements outlined are a worker's right to privacy and the proper equipment needed to perform the job as requested. When working remotely in Ecuador, you have rights that protect you in your work environment. Therefore, it's always in your best interest to review and understand your rights as a worker.
Of course, you are asking, 'how do I get paid online working remotely'? Luckily we live in a time where you can receive money no matter where you are located in the world. There are many payment options and methods available to you, such as:
There is greater potential to have your dream career, with the option to work remotely becoming more available. Because of this, the current job market for software developers is a competitive one. You must bring the skill and expertise to stand out among the many applicants in the US and around the globe.
At Nexton, we are committed to providing the tools necessary to help you secure longer-term employment with a US company. If you want to shift your career to remote work, increase your salary potential and enjoy the benefits in between, contact us, and let's get started!