I would NEVER use these companies. Imagine if I ship 1000 iPhones to my client and after they receive them they wire to this company and the company starts with the AML/KYC/money freezing etc etc BS. 😳
I don't even understand how this can be "legal". What am I missing? 🙄
You need to be very careful with such services. If things go wrong they will go terrible wrong.
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The arrangement as such is probably legal. Usually with these services, you become a contractor of them and they become a contractor of your client. Pretty straight forward. But it's not without problems and risks...
For one, it's not very scalable; neither vertically (more money per client) nor horizontally (more clients). It's fine so long as your client is OK signing an agreement with the middle-layer company and so long as your income doesn't stand out too much.
You also have potential problems around liability, data protection/privacy laws, intellectual property, labor rights (which in some cases do apply for contractors), bonuses/perks, physical access, physical equipment, and so on and so forth.