STEP BY STEP GUIDE ON SELF-EMPLOYMENT
STEP BY STEP GUIDE ON SELF-EMPLOYMENT
Step by Step Guide Content
Who is a Self-employed Person?
A self-employed person is anyone over age 16 and under the NIS standard pensionable age of 67 years old, who is gainfully employed in Barbados, but whose employment is NOT under a contract of service in accordance with Section 12 of the National Insurance and Social Security Act, 1966; e.g. partnership, sole traders, medical practitioners and other professionals in private practice.
Shareholders, LLCs and Self-employment
Majority shareholders in limited liability companies who are involved in the day-to-day operations as officers of the company may be classified as self-employed persons and should seek to have their insurability status determined by the National Insurance Board.
Non-nationals & Self-employment
Generally speaking, nationality makes no difference and contributions must be paid whether or not the self-employed person is Barbadian.
Self-employment by an Employer
Persons who are employed in Barbados by an employer who does not reside in Barbados and has no place of business here will be treated as self-employed. Note that nationals of another territory employed in Barbados by the Government of that territory in a diplomatic or military capacity are not liable to be insured either as self-employed or as employed persons.
Insurance of Persons Temporarily Employed Outside of Barbados
Section 13 within Chapter 47: National Insurance and Social Security Act, 1966 of the Laws of Barbados makes provision for the insurance coverage of self-employed persons who are over 16 years of age and under the pensionable age of 67 years old. All self-employed persons not previously registered must now complete the new registration form in order to obtain a National Insurance number. Be sure to complete the section for Self-Employed Persons. The completed form (which must be signed) should be sent or brought to the National Insurance Office, Frank Walcott Building, “Flodden”, Culloden Road, St. Michael; together with an original birth certificate, Barbados identification card or valid passport, and in the case of a married person, a marriage certificate.
Coverage of Benefits for Self-employed Persons
Self-employed persons are provided with coverage for the following benefits:
- Sickness benefit
- Maternity benefit
- Invalidity pension or grant
- Old Age Contributory pension or grant
- Funeral grant
- Survivors’ pension or grant
Employment Injury & Unemployment Benefits
Self-employed persons are not eligible for employment injury benefit and unemployment benefit and are therefore not required to contribute towards those funds. They are also not eligible for non-contributory old age pension.
In April 2020, Prime Minister, the Hon. Mia Amor Mottley announced that self-employed persons who paid contributions to the NIS would receive $1,500 per month for April and May as part of government’s one time Business Cessation Benefit.
Payment of Contributions and Levies by Self-employed Persons
It is compulsory for self-employed persons to be insured and contributions are payable quarterly.
Payments must be made on the Contributions Schedule and Payment Certificate provided by the National Insurance Office. Contributions should be paid within fifteen (15) days after the end of the calendar quarter for which they are due. Failure to pay at the proper time will result in a penalty for late payment in the form of interest at the rate of one percent per month.
Contributions Schedule
Quarter 1: January, February, March – NIS Contributions due by 15th April of the same year.
Quarter 2: April, May, June – NIS Contributions due by 15th July of the same year.
Quarter 3: July, August, September – NIS Contributions due by 15th October of the same year.
Quarter 4: October, November, December – NIS Contributions due by 15th January of the next year.
Contributions and levies are payable on insurable earnings up to a maximum of $4,880 per month or $1,126 per week and a minimum of $21 a week or $91 a month for persons between ages 16 and pensionable age. For those persons under 16 and over pensionable age, they only pay the training levy of 0.5% and the catastrophe fund of 0.1%. A Health Service Contribution of 1.0% has been added from 1st October 2018.
Contributions and levies are made up as follows:
Contributions and levies are made up as follows:
Self-employed – “S”
| Funds and Levies | % |
|---|---|
| Total: | 17.10 |
| National Insurance | 13.50 |
| Non-contributory | 2.00 |
| Training Levy | 0.50 |
| Catastrophe | 0.10 |
| Health Service Contribution | 1.00 |
Contributions payable by a self-employed person are based on his/her earnings from self-employment, during the period of one year immediately preceding the contribution year in which the contribution is due. However, where the person has been self-employed for less than a year, or where he/she asks the Board to do so or where it so decides, the National Insurance Board will determine the rate of contribution. For these purposes, the Board may require evidence of earnings.
Self-employed Contributions Payable on Insurable Earnings
| Insurable Earnings ($) | NIS Contributions ($) 17.10% | |
|---|---|---|
| Minimum | 21 per week 91 per month | 3.59 15.56 |
| Maximum (as at 1st January 2020) | 1,126 per week 4,880 per month | 192.54 834.48 |
Voluntary Contributions
A self-employed person on ceasing employment, may apply to the National Insurance Board to become a voluntary contributor, when he or she has paid at least 150 contributions as an employed or a self-employed person. (Please note that the contributions may be a mixture of both employment types). Self-employed persons on becoming voluntary contributors continue to contribute for an old-age contributory grant or pension and a survivors’ benefit only.
The Board determines the rate of contributions payable by a voluntary contributor.