Are you planning to start out as an independent consultant? Along the way, you may come across various challenges especially legal ones. It is a wise idea to develop an understanding of these legal matters so that you can minimize the chances of falling into trouble. These issues may, of course, vary from one country to another. If you are working in an independent capacity, then you have entered into a contractual relationship with the clients. In lieu of an agreed fee, you are ready to provide services according to the contract.
Discussion of legal issues
The contracts may be either written or oral. These agreements may also be partly verbal and partly written. Some of the legal issues about which you should have a clear concept are outlined below.
- Legal relationship
It is always a good idea to have a written contract to avoid disputes in future. A written contract has the capability of eliminating any difficulty which may have arisen due to communication gap. Before entering into this type of contractual relationship make efforts to understand the legal Consultants obligations. You should be aware that in certain countries if you enter into the long-term contractual relationship, then your legal status may be that of an employee rather than being awarded the status of a consultant.
- Tax implications
When you are an employee of an organization, it is the employer who takes care of all your calculations relating to salaries and withholding of amounts for taxes payable to the government on your behalf.
- Handle independently¬† Now as a consultant you are required to take care of these aspects by yourself. You are the one who is responsible for doing all the required calculations, and you also have to calculate the taxes according to the tax system prevailing in the country.
- Know about the deductions¬† In many countries, most of the taxes are paid to the government on a monthly basis. Instead of landing up with a substantial tax bill at the end of the year it is always advisable to make monthly payments. Sometimes expenses related to a business may be allowed as deductions. This can reduce your tax bills to a significant extent.
- Value-added tax
In some countries, there are value-added taxes associated with the fees charged by the consultants. It is essential to run a check with all these provisions so that you do not face any conflicting situation later. If these kinds of fees are subject to these taxes and if you have failed to charge them to your clients then you may end up being personally responsible.
- Protection against lawsuits
You may be required to go in for professional insurance in certain instances. If you are working in an independent capacity, then it might so happen that your work has adversely impacted the client or you may have failed to meet the contractual obligations on your end due to some reasons. In those cases, professional insurance will offer you protection.
- Copyright ownership
During your consulting work, you may have created intellectual property. In such cases, you may claim property rights. You should have a prior understanding with the client about the ownership of such copyrights. All these aspects should be stated in the contract so that the client does not assume they have ownership as it is work made for hire.
Seek professional assistance
It is a prudent idea to take the help of a professional attorney while entering into contractual obligations. Before you choose any such legal services by professional, make sure that he is a reliable specialist who has a firm standing in the industry.