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Old 06.05.2013, 23:26
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Becoming a contractor; letter of intent from 3+ companies?

Dear EF,

Been a while. More children. Same Job but time for a change there.

I understand that 3+ companies need to provide a letter of intent to hire me for contract work. This letter, does it have a specific format? Or is there a form?

Thanks,
CheesyKiwi
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Old 06.05.2013, 23:54
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Re: Becoming a contractor; letter of intent from 3+ companies?

Three companies have to say they will hire you before you can become a contractor?
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Old 07.05.2013, 00:02
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Re: Becoming a contractor; letter of intent from 3+ companies?

Just curious, do you have a source for this... 3+?

Do the 3+ have to have a minimum turn-over per year or other stipulation to be listed?
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Old 07.05.2013, 00:06
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Re: Becoming a contractor; letter of intent from 3+ companies?

It's quite possible the OP will be an employee of 3 companies , I worked for 7 last year.

To be self employed you need to take risk, quite possibly have ZERO clients. If the OP is working on the employers premises, he is almost certainly an employee.
If he works from home & can get someone else to do the work whilst he goes on holiday for 3 months, then he would be self employed. The OP decides how & when to do the work, if you have ever waited in for a plumber you will know what this means.
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Old 07.05.2013, 08:25
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Re: Becoming a contractor; letter of intent from 3+ companies?

Dear All,

Sorry if I have muddled up the post.

I thought, because of other forum posts, that to become a contractor you have to prove to the canton that you are going to be a 'real' contractor and not just work for one employee using the contractor employment path as a tax dodge when you are basically being a fulltime employee.

I will hunt down those forum posts later today.

CK
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Old 07.05.2013, 09:46
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Re: Becoming a contractor; letter of intent from 3+ companies?

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Dear All,

Sorry if I have muddled up the post.

I thought, because of other forum posts, that to become a contractor you have to prove to the canton that you are going to be a 'real' contractor and not just work for one employee using the contractor employment path as a tax dodge when you are basically being a fulltime employee.

I will hunt down those forum posts later today.

CK
To be self employed, you need to make investment & take risk.
Working for multiple employers as an employee is just that, so to pretend otherwise is just a tax dodge.
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Old 07.05.2013, 10:43
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Re: Becoming a contractor; letter of intent from 3+ companies?

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To be self employed, you need to make investment & take risk.
Working for multiple employers as an employee is just that, so to pretend otherwise is just a tax dodge.
Conversely if you are a contractor just working for one company/client, then you will be considered an employee. As said earlier a new company has zero clients so a letter of intent is nice but as long as you get billable work from a few clients in the first year you should be okay. The important thing is to "look" like a company (in any form from selfemployed to AG), ie registered business name, website, business cards, office address and phone listing and most importantly insurances and pension funds ect. All can be done (apart from insurances) for a cupple of hundred chuffs and hey presto your a contractor.
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Old 07.05.2013, 13:35
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Re: Becoming a contractor; letter of intent from 3+ companies?

It's nothing to do with the no of companies you work for, it's your relationship with them.
If the contract is for the services of a named person, that person is paid ny the day , week , month they are taking zero risk and are an employee.
If a project is for a fixed price, with no input from the client of how , when & by whom the work is done by , then its self employment .
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Old 11.05.2013, 11:01
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Re: Becoming a contractor; letter of intent from 3+ companies?

Interesting thread. From what I've read and heard it's not that straightforward to get accepted by the AVS as an independent freelancer. I've sent my application out a few weeks ago but they got back asking for the offers I've sent to clients and orders I've received from them. Since I haven't even really started yet I had to try to weasel my way out by presenting emails I've got from headhunters for freelance jobs.

The problem it seems is that the AVS generally doesn't consider contractors who are paid by a recruitment agency and not directly by their clients as independent freelancer. Sub-contracting is apparently a total no-no.

I think it's less relevant for how many clients you personally work than the question if you can delegate the work.

It would be great to get first hand to-dos and not-to-dos from independents who had to struggle their way to get approved.
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Old 11.05.2013, 11:37
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Re: Becoming a contractor; letter of intent from 3+ companies?

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Interesting thread. From what I've read and heard it's not that straightforward to get accepted by the AVS as an independent freelancer. I've sent my application out a few weeks ago but they got back asking for the offers I've sent to clients and orders I've received from them. Since I haven't even really started yet I had to try to weasel my way out by presenting emails I've got from headhunters for freelance jobs.

The problem it seems is that the AVS generally doesn't consider contractors who are paid by a recruitment agency and not directly by their clients as independent freelancer. Sub-contracting is apparently a total no-no.

I think it's less relevant for how many clients you personally work than the question if you can delegate the work.

It would be great to get first hand to-dos and not-to-dos from independents who had to struggle their way to get approved.
If your not actually self employed, you won't get approved! How difficult is that to understand.

Working at a 'clients' place of work, using your 'clients' PC's is what employees do, you need to be in business taking RISK.

What you need to do is rent an office, employ a secretary & advertise your business to the world, explaining what you offer. Your taking risk with zero clients, the AVS will accept you.
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Old 11.05.2013, 12:36
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Re: Becoming a contractor; letter of intent from 3+ companies?

Self-employed is not a very specific term. I work through my own GmbH and am considered by some to be self-employed.

If you wish to be an Einzelsomething = Sole Trader, you need to show that you have number of clients and behave like a company. My wife managed this showing invoices to three different clients to whom she taught English and some business cards. That was it. My son has managed it similarly as he teaches a few kids piano. There's a minimum payment of 500 CHF AHV per year, btw.

If you want to work through a GmbH or AG - which gives you the additional security of limited liability - then it's even easier. Less tax benefit though.
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Old 11.05.2013, 12:46
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Re: Becoming a contractor; letter of intent from 3+ companies?

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Self-employed is not a very specific term. I work through my own GmbH and am considered by some to be self-employed.

If you wish to be an Einzelsomething = Sole Trader, you need to show that you have number of clients and behave like a company. My wife managed this showing invoices to three different clients to whom she taught English and some business cards. That was it. My son has managed it similarly as he teaches a few kids piano. There's a minimum payment of 500 CHF AHV per year, btw.

If you want to work through a GmbH or AG - which gives you the additional security of limited liability - then it's even easier. Less tax benefit though.
Self Employed is a specific term, it's incorrect to refer to a director or an employee of company as self employed.

If your wife invoiced the same amount each month to to those 3 clients each month on a regular basis & the AHV knew that was happening, they would not accept the situation. If it's 3 separate invoices for 1 hour of classes over a year, or even JUST 1 hour in the year it would indeed be accepted.

If you work through a company there are the companies social costs, insurance pension expenses & accountants fees to take into account.
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Old 11.05.2013, 13:13
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Re: Becoming a contractor; letter of intent from 3+ companies?

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If your not actually self employed, you won't get approved! How difficult is that to understand.

Working at a 'clients' place of work, using your 'clients' PC's is what employees do, you need to be in business taking RISK.

What you need to do is rent an office, employ a secretary & advertise your business to the world, explaining what you offer. Your taking risk with zero clients, the AVS will accept you.
Well, yes and no. You can define yourself and even work like you are self-employed but that won't guarantee you an AVS number as independent.

I always worked on an hourly or daily basis. Work=income, no work= zero income. As an IT consultant you are usually expected to be at the client's site at least for the analysis and the blueprint since it's more efficient to discuss with the internals face to face. I come with my own laptop. For the realisation phase I can hire developers who will do the work I can't do myself. Most clients also allow or even encourage working remotely via VPN.

The point is that I'm recruited by headhunters who place me. If the headhunters don't find any mission I am left high and dry. So my risk is right there.

The point is though that the AVS state that you have to be paid directly by the client, not as a contractor through an agency. The problem in my business is that it's targeted to larger companies, usually multinationals. They are reluctant getting into direct business with freelancers and usually purchase their IT services through agencies or large integrators.

My application is pending. I'll keep you posted.
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Old 11.05.2013, 13:24
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Re: Becoming a contractor; letter of intent from 3+ companies?

On a side note, it is true that Switzerland makes it more difficult for certain professions to get approved as independent than many other countries. In Germany for instance, if you are not employed but write invoices for your work you are automatically considered self-employed by fiscal law.
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Old 11.05.2013, 13:27
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Re: Becoming a contractor; letter of intent from 3+ companies?

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The point is that I'm recruited by headhunters who place me. If the headhunters don't find any mission I am left high and dry. So my risk is right there.
Without doubt your an employee then, as you say your 'headhunted' by a recruiter looking for someone to do a job.
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Old 11.05.2013, 13:29
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Re: Becoming a contractor; letter of intent from 3+ companies?

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On a side note, it is true that Switzerland makes it more difficult for certain professions to get approved as independent than many other countries. In Germany for instance, if you are not employed but write invoices for your work you are automatically considered self-employed by fiscal law.
Yes it's true, you have to be self employed, not doing a job & pretending to be self employed
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Old 11.05.2013, 13:35
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Re: Becoming a contractor; letter of intent from 3+ companies?

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Yes it's true, you have to be self employed, not doing a job & pretending to be self employed
I'm not sure what you mean by pretending.

In Germany it makes no difference if you write invoices to a headhunter or directly to your client. You don't get a salary and you are not employed, thus self-employed. In CH it does make a difference.
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Old 11.05.2013, 13:40
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Re: Becoming a contractor; letter of intent from 3+ companies?

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Without doubt your an employee then, as you say your 'headhunted' by a recruiter looking for someone to do a job.
No, I'm not employed by anybody. I don't get a salary. The headhunters just place me at a client's and get a commission from my hourly rate. The contract is not an employment contract, it's a service contract.
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Old 11.05.2013, 14:02
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Re: Becoming a contractor; letter of intent from 3+ companies?

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No, I'm not employed by anybody. I don't get a salary. The headhunters just place me at a client's and get a commission from my hourly rate. The contract is not an employment contract, it's a service contract.
It may be worded as a service contract, however it won't cut the mustard, your an employee in Switzerland. It does not make any difference that your paid hourly.
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Old 11.05.2013, 14:02
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Re: Becoming a contractor; letter of intent from 3+ companies?

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No, I'm not employed by anybody. I don't get a salary. The headhunters just place me at a client's and get a commission from my hourly rate. The contract is not an employment contract, it's a service contract.
It is not that easy CP.

If placed in a temporary position (by chance or by a headhunter) and if you earn over an amount (somewhere between two and three thousand Franks), then the employer is required to pay your social costs. The only way around this is to be registered as self employed and send them invoices. But then you are responsible for your own social costs.

There is no option in Switzerland to work, earn money and not pay social costs... let alone claim the income and pay taxes on it.
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