a) Do you pay taxes in your country or in the company's country?
b) Do you pay taxes as freelancer, 'LLC' or as dependent worker? In my country (Portugal) being a freelancer means paying an huge amount of taxes (~50%) when making more than 25K/y.
(updated)
b) I have set up a LLC. Of course I have to pay a lot of tax. If I want to have 100 dollars deposited to my account I have to charge my client 250 dollars. Still there are several benefits to having an LLC. It enables me to optimise how much I pay in tax, usually I can go from 60% tax to somewhere around 50%. I buy everything related to my business via the business. Conference trips, computers, headsets, screens, books. That way I can spend money "pre-tax", before I lose the 50% by paying it from the LLC as salary. Essentially I get those items for 50% off compared to if I had bought them with my own money. I can also get the VAT back.
When you have an LLC the contract between you and the client will actually be between the LLC and the client. That means you are not personally liable for any damages, for example if you get sick and can't deliver the client can't go after you personally. Also should you for some reason go bankrupt you are (typically) not personally liable.
Note that this is how it works in Sweden, but some of it might be applicable in Portugal.
Joking aside, I’ve heard several opinions that Sweden is a good country to start a startup in. Since there is a safety net to catch you in case things go sideways you can focus a lot more on the startup without worrying.
And if you have kids, you are paying a lot more stuff that is included as part of the deal in Sweden (and most other European countries).
And when your kids were born, you would have received 12 months paid maternity leave in Sweden (which can be divided among mom and dad).
If we are twenty, have no kids, no medical issues, and on an academic scholarship, the US taxes seem very low. In almost any other situation, they are comparable, even though they look much lower.
And especially at the top bracket, e.g. in NYC you have 39% federal + 13.5% state/local + health care ... which is almost the same 60%, except you get to pay $100K-$200K tuition for yourself or kids, and stuff like that.
I guess if you paid yourself less (by effectively working less) that rate would come down a lot since both the employer's taxes and income taxes are rather progressive.
I don't know a single company owner who pays themselves the entire company potential profit as salary like you seem to be doing, because this would just increase their tax burden.
Edit: from some quick googling, swedish corporate tax is 22% and dividend tax is 30%. So if taxation works the same as here, you'd still be effectively paying ~45% (1 - 0.78*0.7) tax. :/ Better than 60% though...
b) Freelancer because I'm too cheap to set up a company/hire an accountant, and it's really simple to just do my own taxes. Those extra taxes are thinks your employer now doesn't have to pay (healthcare, unemployment insurance, etc) so ask for a raise to match.
b) Depends on your legal risk profile. If you are a contractor, an entity may shield you legally but will incur greater tax and compliance costs.
If you are a dependent worker (i.e., an "employee"), you shouldn't need to ask these questions because your employer will take care of the tax withholding for you as generally most countries require foreign companies to register for payroll withholding once they hire employees locally.
b) Paying as an 'independent' contractor. We have reeeeeally lax rate of 5% (not including VAT) if you earn less than $190k/year (with average salary around the country being around $4k/year).
If you're making £60,000+ you're probably going to want to set up an LTD company, but at that point you're really best off talking to an accountant and discussing your options.