Hiring foreign workers

[Vixen]

Unfortunately, D&B reports are not much good alot of the time. They had one supposedly for us and it wasn't even our company. The information was ALL wrong but they swore it was us.

[jmbeach]

It is also a good idea to check your states rules regarding the "definition" of an employee. I was hired once, told I was an independent contractor, then when I was injured on the job later found that I should have been considered an employee. The employer did all he could to keep me from collecting workers comp, so only when I did my own research did I find that I was lied to.

That said, one of the main definitions of being an independent contractor is that all methods of completing a job (ie: an independent contractor is not provided any machinery to complete the work, sets his/her own schedule, etc.)

Here is a brief quote from the California EDD -
http://www.edd.ca.gov
http://www.edd.ca.gov/taxrep/de44.pdf

When Does an Employer-Employee Relationship Exist?
An employer-employee relationship exists when a person who hires an individual to perform services has the right to exercise control over the manner and means by which the individual performs his/her services. The “right of control,” whether or not exercised, is the most important factor in determining the relationship. Tax decisions by the California Unemployment Insurance Appeals Board (CUIAB) are based on the right of control factor along with the examination of secondary factors, when necessary.

[mresell]

Originally Posted by Vixen

Unfortunately, D&B reports are not much good alot of the time. They had one supposedly for us and it wasn't even our company. The information was ALL wrong but they swore it was us.

I think that is true of most of those kind of records/reports. The mind boggling tasks of verifying that info...just doesn't happen.

[mresell]

Originally Posted by vonbrocklin

We retain an accountant but he could not readily answer an important question today so I figured I would check here.

The Scenario:

- We are a small U.S. based company legally incorporated as an LLC

- We have hired a sub-contractor based in the Netherlands to render a one-time service

- The total fee for the project is $3,000, and we may hire him again for projects in the future

The Question:

How do we legally pay him and cover our butts for taxes?

My accountant's initial understanding is that we pay 33% of his fee to the U.S. government, and that he then files a 1040NR form to collect less U.S. income taxes. This does NOT sound right to me, especially if he then gets double taxed in his own country.

Any accounting geeks out there? Or non U.S. residents who have worked for companies in the U.S.?

My 2c. I am not an accountant or attorney. I would check w/ another accountant too because I have seen accountants outright misinform people.
The specifics because he is out of country may be diff and length of time etc, but it definetly sounds like a independent or business contracted. Not sure why you are paying taxes on his fee. You should have a contract clarifying this. The grey area is whether you are contracting w/ a "business entity" or a 1040 self-employed independant contractor situation. In general, the person you are paying for a job, unless they are an employee takes care of their own taxes and deductions.

[Light Speed]

Originally Posted by johnk

No offense but, "The Answer" should be to hire an unemployed US worker.

That's the attitude that has ruined america.

The correct answer is hire the best person for the job. If that person is not in america then america had better stay up late, do some homework and learn how to be better qualified.

As for the main question- Your accountant is an idiot. "We have hired a sub-contractor" should be very obvious that this is not an employee and you don't have to deduct for this persons taxes or healthcare or babycare or eyecare or dentalcare or welfare.

[mresell]

Originally Posted by Light Speed

That's the attitude that has ruined america.

The correct answer is hire the best person for the job. If that person is not in america then america had better stay up late, do some homework and learn how to be better qualified.

I don't think america is "ruined" I do think hiring in US is important, but I also think that if you have a job to do and a deadline and you cannot find what you need here then you do have to run your business...I don't feel it is a black-&-white one way deal. However, the "bottom line" is NOT always the only thing that matters. I think governmental policies of imbalanced trade and messed up tax laws are largely to blame for our mess. Overseas deals are alot trickier to litigate.