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In the last post we discussed some of the stigma and fear attached to becoming an autónomo teacher in Spain. Judging by the comments this post generated, it seems that teachers across the world face similar problems when considering the freelance option. However, today we are going to focus on the positives – why a teacher would want to become autónomo, what advantages there are, how recent legislation has made freelancing more attractive, and how SLB can help with the less appealing aspects of the process.
Some positive reasons for becoming autónomo
1. Paying your way
Yep, you no longer have to feel guilty about shirking your fiscal responsibilities. If you believe in public services, this is not nothing.
2. Attracting bigger and better-paying clients
Only real autónomos can bill, so serious clients who do not also shirk their fiscal responsibilities will, when employing individual teachers, only work with freelancers. This is especially the case when teaching a company or organisation rather than individual private students. Unless working through an academy, which is going to take a large chunk of the money, this type of more lucrative work is usually barred to the non-autónomo.
3. Financial responsibility
When you become freelance, you become responsible for your own contributions and are no longer reliant on the human resources department at your academy to do all the calculations for you. This has certain key advantages. We are not suggesting cooking the books, of course, but most sensible people will take full advantage of the ability to deduct expenses from their tax bill. Freelancers – either themselves or through a financial manager (gestor) – need to be keenly aware of the tax system and how it operates, which should leave them less open to the types of nasty surprise many contracted teachers get when it comes to the tax declaration. When working for a school, many will simply assume that the correct amount of tax is being taken off their salary. When this assumption proves to be wrong it can be very costly.
4. Being your own boss
Although in the ELT world flexibility can be a double-edged sword, as an autónomo you are more in control of the number of hours and the times of the day that you teach. Perhaps more importantly, the buck stops with you and you alone, and this added responsibility can be a spur towards a more professional approach to the work you do.
While we resist strongly the assumption that all autónomos are empire-building entrepreneurs, there is no doubt that autónomos need to embrace at least some aspects of entrepreneurship – building up contacts, identifying potential clients, targeted marketing, creative thinking – all of which the contracted teacher will usually leave to his or her management. Which is fine if you feel your bosses are good at that sort of thing, and that you can benefit directly from it. But how often is that the case? You know your own strengths and areas of expertise better than anyone, so who better to trumpet these to the world and uncover new working opportunities than yourself?
Recent and impending changes to Spanish fiscal policy
We commented in the last post on some of the obstacles the Spanish state puts in your way if you want to become freelance. Thankfully, some of these are being removed or reduced, which will hopefully make the idea of becoming autónomo more viable.
1. Staggered social security payments
There is now a significant delay to the pain of paying the full obligatory social security quota of just over €260 per month. Now, for autónomos who haven’t been registered as such for five years, and who do not contract other workers, the following reductions apply:
- First six months: 80% reduction in the quota: you pay €53.07 per month (2014)
- Second six months: 50% reduction: €131.36 per month
- Third six months: 30% reduction: €183.55 per month
This means that for the first 18 months of your freelance career, you can concentrate on building up enough business to justify paying the full quota – a very valuable period of breathing space.
2. Tax reductions [EDIT: new info added 4/7/14]
The current 21% income tax (IRPF) burden is another off-putter for potential autónomos. But just as with the social security, there is substantial oxygen available for the first three years for new freelancers who need only pay 9%. This is actually less than most teachers pay on a contract with a decent number of hours. The only condition is that you can’t have been autónomo for a year prior to starting the new economic activity.
Once those three years have passed, there is thankfully still some leeway. In the Spanish budget of 2014, a number of key changes have been proposed which will have a significant effect on the tax burden for low-earning autónomos:
- Income tax (IRPF) will fall from 21% to 19% (20% in 2015 and 19% in 2016).
- A new rate for low-earning autónomos will be set at 15% (the cut-off point for this has yet to be fixed)
- Sales tax (IVA) will not go up
3. Improvements in access to social security benefits
Notoriously, despite contributing so much to social security, autónomos have very restricted access to benefits, in particular unemployment benefit – from which they are categorically excluded. However, since 2010 freelancers have been able to apply for a “cessation of activity” benefit. To get this, you need to:
- be registered as an autónomo in the system, and have your contributions fully paid up
- be paying the surplus for work accidents and professional illnesses, and have done so for at least 12 continuous months prior to accessing the benefit
- justify why you cannot work in your freelance activity, and that you are available to be reincorporated into the labour market
- not be of retirement age
While this has been a long-sought-after benefit, the solution has been far from perfect, particularly when it comes to fulfilling the legal requirements for having stopped your freelance work. However, more recently proposed changes look to reduce this difficulty – now you will simply have to demonstrate losses at the end of the financial year.
How SLB can help with the rest
We believe that our cooperative will function best as a cooperative of autónomos, although as mentioned previously, there is no need to be an officially registered autónomo to be a member. However, in terms of the work opportunities created by the cooperative, being freelance gives you the flexibility and legal basis to to take full advantage. And many of our key services are designed to help teachers do just that. So, what are you worried about?
“I hate Spanish paperwork and I don’t even know where to start with becoming freelance!“
At SLB we hate Spanish paperwork too, but we have learned to embrace it. Having already assisted other teachers through the process, we’re well placed to help others out – and it’s really not as bad as it seems.
“I’ve heard you have to do sales tax (IVA) declarations every three months and I don’t know how.”
We do. And we’ll do it for you – along with your tax declarations and other paperwork – cheaper than most financial managers (gestores) would. One of our autónomos is even currently exchanging English lessons for accounting services!
“I will miss the communal atmosphere and support of working in a school environment.”
First of all, being autónomo does not preclude you from working for a school – it’s just that the school would become your client and you would no longer have a contract. However, as a member of SLB you will also have access to professional support, training and materials, as well as the wit and wisdom of your fellow coop members. And as we build towards having our own co-working space, we’ll soon have a place in which to meet up, prepare and seek the advice of colleagues.
“I’m worried about not getting enough work and not being able to get unemployment benefit.”
As mentioned above, there *is* the possibility of claiming unemployment benefit if work runs out, and this will apparently get easier to access. However, we’re closely looking into our own unemployment benefit system, run through a cooperativised work insurance policy. If we can make this safer and cheaper than the official one, it could become another of our key services.
Nevertheless, the best way to avoid this worry is to make sure you have enough work – and our forthcoming website will provide an excellent and professional platform for attracting clients.
That concludes part two of our in-depth guide to freelancing – please let us know if you have any further questions or comments about the above information. In particular, are there any other advantages to freelancing that you can suggest? What do you think of the recent and impending fiscal changes? Do they make becoming freelance more viable for you – or if not, what else needs to happen? And what else could a cooperative do to help out?
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