Module 1: Getting Started
Freelance, Remote Employee or Contractor: Know the Difference
Before you apply for a single job, you need to know what kind of working relationship you are entering. "Remote work" covers very different arrangements. Some give you a salary, leave and an employer who handles your tax. Others make you a business owner who must find clients, price work, invoice and pay your own taxes. Mixing them up leads to disappointed expectations, unpaid tax and contracts you did not understand when you signed them.
The three main arrangements
A freelancer runs a small business of one. You sell a service, such as writing, design, bookkeeping or software development, to several clients. You agree a price per project or per hour, you choose how and when you work, and you send invoices. Nobody pays you when there is no work, and nobody deducts tax for you.
A remote employee is an employee who happens to work away from the office. You have an employment contract, a fixed salary, set working hours, leave and usually statutory deductions made by the employer. If the employer is in another country, it may hire you through an "employer of record", a company in your country that legally employs you on its behalf and runs payroll.
A contractor sits in between. You sign a contract with one client, often for months, and may work hours similar to an employee, but you are paid on invoices and are responsible for your own tax and benefits. Many international companies engage East African talent this way because it is simpler for them than employment.
How to tell which one you are being offered
Job adverts often use the words loosely, so read the contract and ask questions. Look at these signals:
| Question | Usually employee | Usually freelancer or contractor |
|---|---|---|
| How are you paid? | Monthly salary through payroll | Against invoices you send |
| Who deducts tax? | The employer or employer of record | You declare and pay it yourself |
| Who controls how the work is done? | The employer sets hours and methods | You decide, within the agreed result |
| Leave and benefits? | Paid leave, sometimes medical cover | None unless you build them into your rate |
| Can you work for others? | Often restricted | Generally yes, unless the contract says otherwise |
| Who provides equipment? | Often the employer | You do |
The label in the contract matters, but so does reality. In many countries, including Kenya, how the relationship works in practice can affect whether the law treats someone as an employee. If a "contract" looks exactly like employment, take advice before relying on the label.
Worked example: two offers
Wanjiku, a graphic designer in Nairobi, receives two offers. Offer A is from a UK agency: "Contract designer, 30 hours a week, USD 1,200 per month, paid on invoice, 3 months, renewable." Offer B is from a Kenyan firm: "Remote junior designer, KES 90,000 gross per month, payslip, 21 days annual leave." (Both amounts are hypothetical.)
At first glance Offer A looks better. But Wanjiku works it through. Under Offer A she receives no paid leave, must pay her own tax, must cover her own internet and electricity, may lose a slice to transfer fees, and the work ends after three months unless renewed. Under Offer B the employer deducts PAYE and statutory contributions, but she gets a predictable payslip, leave and some job security. Neither is automatically right. Offer A suits her if she wants to build an international client base and has savings for gaps. Offer B suits her if she needs stability while she learns. The point is that she compares like with like, after tax, costs and risk.
What changes when you become a freelancer
Treat freelancing as running a business from day one. That means:
- Registering for tax and keeping records of income and expenses (in Kenya, you will need a KRA PIN; check with KRA which obligations and tax regime apply to your income).
- Building a cash buffer because income will rise and fall from month to month.
- Pricing to cover time you cannot bill: finding clients, admin, learning and holidays.
- Using written agreements for every job, however small.
Common mistakes to avoid
- Comparing gross amounts only. A contractor rate must cover tax, equipment, leave and quiet months, so it needs to be higher than an equivalent salary.
- Signing without reading the termination clause. Many contracts allow the client to end the engagement with very short notice.
- Assuming someone else handles tax. If no tax is deducted from what you receive, the responsibility is almost certainly yours.
- Accepting an "exclusive" contract at a freelance rate. If you cannot take other clients, you carry employee-style dependence without employee protections. Price for that.
Exercise
Write down the working arrangement you are aiming for in the next six months: freelancer, contractor or remote employee. Then list three reasons it fits your current finances and skills, and two risks it carries. If you already have an offer or contract, go through the comparison table in this lesson and answer each question for that offer.
Key points
- Freelancers, contractors and remote employees carry very different risks and responsibilities.
- Who pays tax, who controls the work and how you are paid tell you which arrangement you are in.
- Compare offers after tax, costs, leave and job security, not on the headline amount.
- As a freelancer you are a business: register, keep records and plan for uneven income.