How Upwork works, the freelance platform

In December, the famous American startup released a report on changing remote work brought in by the global pandemic in 2020. In this guide, we will see what the effects have been and what prospects will arise shortly for freelancers and companies who meet remotely, but also how it is possible to carry out your business through this online tool with the opening of the VAT number. . You will also find videos explaining what to do.

THE UPWORK 2020 REPORT

The latest Upwork report is called “Future Workforce Pulse,” which focuses on the analysis of remote work and the impact of the Covid-19 pandemic on this in 2020. The study examines the American context, in particular, and is based on a sample of 1000 HR managers interviewed about future hiring plans and their views on the remote workforce.

The survey estimated that 43.2% of Americans do not work online, while 56.8% are still working from home, almost a year after the spread of the Coronavirus and the consequent lockdown. And, precisely, 41.8% operate entirely remotely, with a decrease of almost 6% compared to the percentage in April; 15% currently carry out the activity partially at a distance.

According to the survey, the success many companies have seen with this way of working will have an impact on their team structure, both in 2021 and in the future. In the short term, managers expect 26.7% of their team to be fully connected remotely for the current year. And, therefore, although a portion of people will gradually return to work in the office, a significant portion will continue to operate online.

Regarding the prospects for remote work, when asked about the group’s estimates in five years, the managers replied that 22.9% of workers will be connected remotely, i.e. double the percentage of people who worked remotely. full-time, before Coronavirus (12.3%).

In numerical terms, we can say that in February 2020 around 19.5 million people worked completely remotely, but, by 2025, this number will approach 36.2 million. It means that 16.8 million more workers will operate completely remotely. If you combine this figure with those who work partially remotely, it can be deduced that just over a third of people will work remotely in the next five years.

WHAT DOES THE PLATFORM DO?

Born over 20 years ago in Silicon Valley, California, Upwork is one of the first platforms on the internet that put the business world in communication with that of freelancers. The bet won by two friends who have created a new platform for finding a job based on the web, as the startup tells on its website, has brought visibility and confidence in remote work. Success has been possible thanks to the benefit that companies have gained by drawing staff from a large and reliable pool of professionals and the enjoyment that freelancers have gained in terms of freedom and flexibility in finding a job online.

Every year, the platform publishes millions of jobs, enabling independent professionals to make money and giving companies the ability to choose from over 5,000 skills and more than 70 job categories.

Ultimately, Upwork , but also other flexible working platforms such as Fiverr , allows companies to connect with freelancers dealing with thousands of projects: from mobile and web app development to SEO, from social media marketing to content writing. , from graphic design to administrative assistance and so on.

WHAT IS THE FREELANCE SERVICE FEE?

All flexible work platforms, including Upwork, make it quick and easy for companies to find and hire professionals anywhere in the globe, at any time. For their part, freelancers can count on more or less secure remuneration. In fact, for each job offer, the Californian startup inserts a certification on the verification of payments by the company that made previous publications.

However, this connection service between supply and demand has a cost. As for freelancers, a commission is charged that varies according to the invoices issued to each client. This includes all contracts that are concluded with that client.

The cost for the service is the same for hourly or fixed price contracts. In fact, one of the peculiarities of this platform is that it can be paid by the hour or by project, with the possibility of establishing so-called milestones (intermediate milestones in carrying out the project).

Therefore, Upwork sets pay percentages for the service offered depending on the amount earned by freelancers:

· from 0 to 500 dollars, 20%

· from $ 500.01 to $ 10,000, 10%

· from 10,000.01 or more, 5%

Let’s take an example to better understand.

If you agree on a $ 600 project (the currency used by the American platform) with a new client, the cost of the service for a freelancer will be 20% on the first $ 500 and 10% on the remaining 100. His earnings after the application of this “tax” will therefore be $ 490.

Warning: If you work with someone employed by two different companies, different relationships will be considered and, therefore, the invoices with each company will be counted separately. Conversely, working with someone with two different teams within the same company is considered a single relationship and, therefore, the total amount of the invoices will be combined.

THE SERVICE COMMISSION FOR AGENCIES

Agencies working with non-corporate clients are subject to the same pricing. The platform calculates the service fees for an agency based on the total invoices in all contracts with a client. This means that all agency contracts that each professional of the same has stipulated with a single client are counted towards the total earned by the agency with the same.

EXCEPTIONS

There are exceptions as regards freelancers who participate in the Upwork Payroll service, who are paid through a third party company and are therefore excluded from paying the service fees of the online platform.

Additionally, these rates do not apply to contracts with corporate customers. This is because Upwork negotiates individual contracts with those companies on a case-by-case basis. Generally, corporate contracts have a fixed 10% service fee. Corporate customers are designated by a badge on their customer profiles.

WHEN DO I PAY A SERVICE FEE?

Freelancers pay the Upwork service fee on all bills, including hours, milestones and bonuses. It is included in the amounts that clients see on proposals, contracts and professional profiles. Most freelance reports show only the total charges, including fees, the same as the client sees.

The fees are broken down in the Transaction and Earnings Reports. The total invoiced to the customers constitutes the income and the commissions paid can be deductible business expenses.

WHAT HAPPENS IF A COMMISSION THRESHOLD IS EXCEEDED IN A SINGLE PAYMENT?

All contracts that exceed a commission threshold will be subject to the mixed rate. As mentioned, if you start an hourly or fixed-price contract with a new customer for $ 600, you will be charged 20% on the first 500 and 10% on the remaining $ 100. The same goes for a $ 15,000 contract: 20% on the first 500 will be charged, 10% on the next 9,500 and 5% on the last 5,000.

Upwork will automatically apply the lower service fee if the system detects that the total invoices with a customer have exceeded a commission threshold. A verification can be done by checking the breakdown in the invoice of the service charge in the transaction history.

WORKING ON UPWORK AND FIVERR AS A FREELANCE

Do I need a VAT number to work on these platforms? As always, the answer is: it depends and, as always, the obligatory nature of the VAT number arises when the activity we carry out is of a continuous and usual type.

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