Salaried employee vs. self-employed worker - what’s the difference?
Read on to learn the pros and cons of both kinds of roles.
4 min read
The terms “salaried employee” or “self-employed” are probably not brand new to you. But even though we’ve heard these labels before, we’re often not entirely aware of the legal implications they entail. So let’s look closer at the differences between employees and self-employed individuals, so you can better understand the expectations that come with your chosen role.
What is a salaried employee?
A salaried employee is a person who voluntarily offers professional services to a company or an organization and works for the employer. A salaried employee receives a fixed salary in exchange for his or her work. The salaried employee must be hired for at least one hour per week and sign a contract that includes his or her employment conditions—working hours (part-time or full-time), remuneration, vacation time, and so on. These jobs tend to be less flexible, since the worker is contractually bound to perform a set number of hours and must generally work from a given office or location—although this requirement has become more flexible with the rise of the COVID-19 pandemic and the advancement of technology. The salaried employee may offer his or her professional services to a freelance individual, a commercial company, a joint ownership enterprise, or a temporary employment agency.
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A self-employed person is also generally considered a freelancer—that is, a person who offers professional services on his or her own behalf without being contractually bound to a company. Self-employed people usually hold unlimited liability (although some may have limited liability), which means that there is no difference or separation between their personal assets and those of their business. Accordingly, in case the self-employed person does not fulfill his or her obligations at any time during professional practice, he or she must provide their own personal belongings—such as private assets or property—as collateral.Self-employed individuals assume many risks and responsibilities that might be more difficult for certain kinds of people to accept. They usually have an entrepreneurial spirit and a decisive personality, which leads them to bank on their own ideas and talent, and develop their professional career without bosses or mandatory instructions. Self-employed workers need to be well-organized with their business accounts and invoices, since need to keep track of professional expenses as well as personal ones.
Salaried employee vs. self-employed worker—what’s the difference?
The main difference between these two kinds of roles is that the salaried employee receives a fixed monthly salary regardless of how much the company has earned. This translates into greater financial stability for that individual, given that they can depend on that income even if the company itself has endured a loss. By contrast, the income generated by the self-employed depends on the amount that he or she has invoiced and what payments they’ve actually received. This can be highly variable, and might result in months of greater earning and months of little to no earning at all.Another main difference is that the self-employed person is in a better position to organize their own schedule. While a freelancer is free to structure his or her life around their own resources, a salaried employee is dependent on the company’s resources and therefore has to work within the company’s schedule.
Can I work as a salaried employee and a self-employed person at the same time?
Yes, you can work as a salaried employee and a self-employed person at the same time, but you need to inform both the Social Security and the Tax Agency of both activities. As long as you’re fulfilling these legal requirements, you should be able to work in both capacities.
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Whether you are a salaried employee or a freelancer, N26 offers you a 100% mobile experience, designed to fit your lifestyle. N26 is a collaborating entity with the Social Security, which means that you can pay your self-employed cuota (cuota de autónomo) directly from your account, as well as pay the Social Security contribution if you have anyone hired.All of our bank accounts are available in two versions. We offer private accounts, perfect for salaried employees to manage their personal finances. Or, if you’re self-employed, choose from our range of business account options to earn cashback on every purchase and manage your professional expenses easily, straight from your smartphone. Whatever account you choose, enjoy innovative features savings and budgeting tools, handpicked special offers from partner brands, extensive insurance options, and much more. Visit our compare page and find the account that’s right for you.
Itching to start your own business in Spain? Here, you’ll learn what paperwork you have to complete, where to do so, and what you need to bear in mind on your journey into freelancing.
Itching to start your own business in Spain? Here, you’ll learn what paperwork you have to complete, where to do so, and what you need to bear in mind on your journey into freelancing.
