[thelist] New Design Firm

John D Bloise jbloise1 at nc.rr.com
Mon Feb 4 09:23:05 CST 2002


Thanks again for your help.
----- Original Message -----
From: "Tony Crockford" <tonyc at boldfish.co.uk>
To: <thelist at lists.evolt.org>
Sent: Monday, February 04, 2002 10:11 AM
Subject: RE: [thelist] New Design Firm


>
> >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.....
>
>
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