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Just ask the person to form a company and hire that company? I've never heard of anyone having any difficulty with this. And even if you're paying an individual

Just ask the person to form a company and hire that company? I've never heard of anyone having any difficulty with this. And even if you're paying an individual you just need to get their W8-BEN or withhold 30%; it's not that difficult. Or, what are you referring to?

jedberg 10y ago
Forming a company isn't all that easy. Also, now that person has to pay their own SS and Medicare tax, or if they form a C corp, they have to file incorporation papers and tax returns and filing fees and... Also, if I pay a person through their company like a contractor for too long, the IRS comes down on me because they assume I'm trying to skirt tax laws (and rightly so, because that's basically what you're suggesting).
- itchyouch 10y ago
  LLCs and S-Corps are useful for their flow-through taxation. It's not a big deal if you're 1099'ing a contractor running their own business, no? When I did sidework, the side gigs all 1099'd me.
  - jedberg 10y ago
    It's fine if you do side gig's 1099. But if I have someone doing full time work for me where I set the wage, that's not a contractor anymore according to the IRS and they get really suspicious when your "contractor" has worked for you and only you for many years.
    - mooreds 10y ago
      The levels I've heard from bigger companies I have worked for is 30%--they didn't want to provide more than 30% of my income via 1099 contracts because more than that would raise "he's not a contractor" warning signs. On the other hand, I worked for a smaller company as a 1099 contractor and was billing up to 67% of my yearly income to them. In both cases I set the rate and determined my time off.
- MichaelGG 10y ago
  Sorry I was thinking remote as in outside the US. I suppose handling benefits and payroll across state boundaries can get tricky.
  - jedberg 10y ago
    Outside the US is actually easier in some respects if the person is willing to set up a company in their own country, but I suspect in many countries it is as complicated as setting one up here in the states, and I wouldn't have the expertise to help them. I suspect a job listing that says "remote anywhere in the world as long as you set up your own corporate entity with a foreign registration in the United States" wouldn't work very well. :)
    - MichaelGG 10y ago
      Well my point is that paying an individual outside of the US is fairly straightforward. They fill out a form guaranteeing the company they don't owe withholding (W8-BEN), or the company keeps 30%. At least that's what the lawyers/accountants I've dealt with have said. Probably harder if you're extending benefits and whatnot.
    - timv 10y ago
      > if the person is willing to set up a company in their own country I can't speak for other countries, but in Australia this is far simpler than most people realise. There's a range of companies that will do all that for you. They set up and operate the company, they do payroll & taxes, they handle insurance. When I worked remotely for a US company, I was technically a contract employee of an Australian company that existed purely to handle the contact work. I paid them something like $1-$2 per hour (that I worked) to handle all of that, including indemnity insurance, etc. The only hard part was that the people that handled it weren't set up to easily handle foreign currency, and I was being paid in (and invoicing in) USD. Other than that it was easy - in fact it was even better than when I contracted to Australian companies because I didn't need to charge sales tax, so more money went in to my pocket.

jedberg 10y ago

Forming a company isn't all that easy. Also, now that person has to pay their own SS and Medicare tax, or if they form a C corp, they have to file incorporation papers and tax returns and filing fees and... Also, if I pay a person through their company like a contractor for too long, the IRS comes down on me because they assume I'm trying to skirt tax laws (and rightly so, because that's basically what you're suggesting).

itchyouch 10y ago
LLCs and S-Corps are useful for their flow-through taxation. It's not a big deal if you're 1099'ing a contractor running their own business, no? When I did sidework, the side gigs all 1099'd me.
- jedberg 10y ago
  It's fine if you do side gig's 1099. But if I have someone doing full time work for me where I set the wage, that's not a contractor anymore according to the IRS and they get really suspicious when your "contractor" has worked for you and only you for many years.
  - mooreds 10y ago
    The levels I've heard from bigger companies I have worked for is 30%--they didn't want to provide more than 30% of my income via 1099 contracts because more than that would raise "he's not a contractor" warning signs. On the other hand, I worked for a smaller company as a 1099 contractor and was billing up to 67% of my yearly income to them. In both cases I set the rate and determined my time off.
MichaelGG 10y ago
Sorry I was thinking remote as in outside the US. I suppose handling benefits and payroll across state boundaries can get tricky.
- jedberg 10y ago
  Outside the US is actually easier in some respects if the person is willing to set up a company in their own country, but I suspect in many countries it is as complicated as setting one up here in the states, and I wouldn't have the expertise to help them. I suspect a job listing that says "remote anywhere in the world as long as you set up your own corporate entity with a foreign registration in the United States" wouldn't work very well. :)
  - MichaelGG 10y ago
    Well my point is that paying an individual outside of the US is fairly straightforward. They fill out a form guaranteeing the company they don't owe withholding (W8-BEN), or the company keeps 30%. At least that's what the lawyers/accountants I've dealt with have said. Probably harder if you're extending benefits and whatnot.
  - timv 10y ago
    > if the person is willing to set up a company in their own country I can't speak for other countries, but in Australia this is far simpler than most people realise. There's a range of companies that will do all that for you. They set up and operate the company, they do payroll & taxes, they handle insurance. When I worked remotely for a US company, I was technically a contract employee of an Australian company that existed purely to handle the contact work. I paid them something like $1-$2 per hour (that I worked) to handle all of that, including indemnity insurance, etc. The only hard part was that the people that handled it weren't set up to easily handle foreign currency, and I was being paid in (and invoicing in) USD. Other than that it was easy - in fact it was even better than when I contracted to Australian companies because I didn't need to charge sales tax, so more money went in to my pocket.