When attorney Juan Manzano Trujillo opted to forgo the traditional law firm structure seven years ago to establish a solo legal practice, he knew he was trading business support for autonomy.
Law firms typically provide attorneys with paralegals, administrative staff and research assistance. As a solo practitioner, Manzano writes his own motions, conducts depositions and interviews, prepares witnesses, and manages every facet of client service. His only added support is a virtual secretary.
For Manzano, the trade-off is one he values: he chooses his cases, sets his own hours, and markets his services through Facebook, Instagram and his own website.
“If you are organized, you can do it,” he said.
In today’s economic climate, Manzano is far from alone. He is one of thousands of Puerto Ricans who have entered the world of self‑employment, a sector that has expanded sharply in recent years. As of late 2025, there were an estimated 215,000 self‑employed workers in Puerto Rico, according to government figures, reflecting a significant structural shift in the labor market.
Self-employment is considered high in Puerto Rico due to a combination of tax-driven incentives for entrepreneurs, the rise of the gig economy, and a structurally precarious labor market that pushes people toward informal or independent work.
Pandemic‑Era Surge and a New Entrepreneurial Mindset
According to Margaret Ramírez Báez, president of the Puerto Rico Chamber of Commerce, the sharp rise in self‑employment began during the worldwide COVID pandemic that began in 2020, when thousands of workers on the Island lost their jobs or had their hours reduced. During that time, business bankruptcies surged by 29%, she noted, forcing many to seek alternative sources of income.
“People were looking for solutions to the lack of work—an additional income stream, and more freedom,” Ramírez Báez said. “For every 10 employees, two became self‑employed out of necessity.” Pandemic unemployment assistance (PUA) from the federal government, combined with rapid digital adoption, eased the transition for many. As the virtual work model grew, it became more widely accepted as a valid option to the traditional work model of being in an office. “In 2022, [many] entrepreneurs were born,” she said.
Financial adviser Nelson Barragán, founder of Intuitivo PR, has witnessed the change firsthand among his growing client base of freelancers and solo business owners. Many, he explained, pursue self‑employment because “they want control over their schedules” and the potential to earn more on their own terms.
Like Ramirez Báez, he believes the COVID pandemic fundamentally reshaped attitudes toward work.
“There was a kind of mental reset,” he said. “People wanted more time. Many had seen loss all around them, and that changed their priorities.”
Barragán notes that working solo can often be more efficient than operating within a larger organization. Lower overhead costs, streamlined processes, and more flexibility can translate into higher productivity and, ultimately, a more efficient economy. His clients range from doctors to food truck owners and second‑generation merchants. Their incomes fluctuate—“ups and downs,” as he puts it—but many see pathways to growth, including hiring their own employees one day.
While a large share of the self‑employed are professionals—doctors, lawyers and other licensed specialists—Ramírez Báez emphasized that new independent workers also include freelance marketers, home‑based bakers, chefs, plumbers and other tradespeople. Many benefited from federal pandemic-recovery funds and digital platforms that enable them to reach customers directly.
Tax Incentives for Solo Workers
Puerto Rico offers specific tax mechanisms for solo workers, including the Form M withholding system, which requires a 10% tax retention per payment received but allows for expense deductions. However, lack of organization remains a top challenge.
“A self‑employed person needs strong financial discipline,” Ramírez Báez said. “Business and personal expenses must remain separate.” Home‑based entrepreneurs can deduct up to 20% of their mortgage if part of the property is used for business, but only if they maintain proper records.
Barragán increasingly advises self‑employed workers on retirement planning and Puerto Rico’s Act 60 incentives, including benefits for export services, research and development, and capital investment funds. Yet many eligible entrepreneurs, he says, are still not taking full advantage of these opportunities.
Act 60, the Puerto Rico Incentives Code, offers self-employed individuals significant tax advantages, including a 4% fixed income-tax rate, a 100% tax exemption on dividends and capital gains, and a 75% property tax exemption. Eligible persons—particularly those in service exports—must become bona fide residents of Puerto Rico and meet other annual requirements.
Young entrepreneurs under 35 may receive a 100% tax exemption on the first $500,000 of their net income for the first three years of operation.
Government guidance exists through programs such as those offered by the Small Business Administration (SBA), and Barragán acknowledges that platforms like YouTube and AI assistants also help aspiring entrepreneurs learn the ropes. Still, the most common frustrations remain: delays in permits and business registrations, and confusion around municipal taxes and compliance.
Risks and Realities of Solo Workers
As with all business endeavors, self-employment comes with some vulnerabilities. Many self-employed people lack health insurance, a financial cushion, and/or the administrative know‑how to manage taxes and accounting responsibilities. Income can be seasonal—for instance, tourism-related workers earn significantly more during the holidays and high season than during slower months—and planning becomes essential, Ramírez Báez said.
Permit requirements also vary widely. A home-based consultant may need only a few permits, but someone producing food from home must comply with stricter licensing and health regulations. A comprehensive, holistic permit reform is being considered, Ramírez Báez said, to simplify and modernize the process across industries.
Many self-employed individuals also lack access to retirement benefits and must provide their own. While there are firms, like Intuitivo PR, that can help, Senate President Thomas Rivera Schatz recently introduced Senate Bill 1125 to create the Puerto Rico Individual Savings Account Program, known as “Puerto Rico Ahorra,” aimed at workers who currently do not have an employer‑sponsored retirement plan.
The measure seeks to establish a system modeled after the U.S. “Auto‑IRA” auto‑enrollment programs used in several states, allowing employees, self‑employed individuals, and independent contractors to contribute to individual retirement accounts.
“The reality is that thousands of workers in Puerto Rico—especially employees of small businesses, the self‑employed, and independent contractors—do not have access to formal mechanisms to save for retirement. This bill creates a modern, voluntary and responsible tool that allows our people to prepare for the future without creating new fiscal burdens or liabilities for the Government,” Rivera Schatz said.
According to the bill, the funds contributed by workers would be deposited into individual retirement accounts in each participant’s name, to be held and invested by regulated private financial institutions. The proposal specifies that the government would not manage or hold these funds.
The legislation also calls for the creation of a fiduciary board responsible for setting up investment policy, overseeing private providers, and ensuring transparency and participant protections. In addition, the bill would create a separate administrative fund with spending limits and a plan for long‑term financial self‑sufficiency.
The Chamber of Commerce supports solo workers through its committees on small and medium-sized businesses, taxation and labor affairs. Ramírez Báez argues that new legislation is not necessarily the answer; instead, entrepreneurs must become well‑versed in existing rules and protections.
A Changing Labor Landscape
Self-employment played a role in Puerto Rico’s 2022 minimum wage increase, as policymakers sought to improve employee retention, stimulate labor-force participation, and boost consumption amid a shrinking workforce.
Puerto Rico’s self‑employed class is reshaping the Island’s economic dynamics—not only out of necessity but also increasingly by choice. With digital tools reducing barriers to entry and incentives rewarding entrepreneurship, workers like Manzano Trujillo represent a broader movement toward greater autonomy, flexibility and self‑determined economic opportunities.
