[thelist] New Design Firm

[Tony Crockford]

>If an individual gets paid and then pays his/her freelance
>coworkers, how do
>that work? Thanks so much


In much the same way as if I had to go and buy stationery for the project.
An invoice is raised between the two parties, so that there is evidence of a
financial  transaction and the two individuals account for the income and
expense.

Warning: I am not a tax lawyer.

As we see it:

I get paid by a client amount A.

I do work to the value of amount B

Colleagues do work to amounts C and D

I pay them amounts C and D and my profit is A-(C+D) (which may or not equal
B!)



Our reasoning is this:

If as a design agency I use the same freelance photographer and have my
printing done by the same printer, I do not employ them as employees, but
contract work to them.  The cost of their work is "cost of sales" and
deductable from sales income to determine profit.

It all sounds so simple, that I'm sure there must be something wrong with it
;o)  So far the advice we have taken suggests it is okay to work in this
manner.

YMMV, please check your local tax situation before proceeding with
caution.....