Freelancer outsourcing work

alisson44

Hello,

I am a self-employed freelance writer and this is the first year I'm thinking about outsourcing work. In short, I have multiple clients who provide me with lots of work and I find myself needing help to complete it on time. I have a couple of other writers to outsource to and I was wondering how do I write off the money I pay them for their work? One of the main persons to whom I'd like to outsource is my husband, who's also a freelance writer. I need to mention that most transactions in my business are via PayPal. Is it enough to write off the PayPal transactions as expenses? Or do I need to do anything else?

Thanks,

Allison

PlutoinCapricorn

Are you a sole trader? If so, it is an allowable business expense.

alisson44

Yes, I'm a sole trader. Do I need to get invoices from the writers?

PlutoinCapricorn

Yes, as supporting evidence in case HMRC ever decide to enquire. You are using sub-contractors. Will your clients be happy about this?

alisson44

Thank you for your reply. My clients are fine with it, and I'll be supervising/correcting the texts anyway. Wouldn't it look suspicious to get invoices from my husband, though? He has his own clients, but sometimes his work is slow, and I could use his help.

MDMD

alisson44 wrote: »

Wouldn't it look suspicious to get invoices from my husband, though? He has his own clients, but sometimes his work is slow, and I could use his help.

No, as he (like the others) will declare the income on his tax return and the records would match if they did query it.

Paaarp

Sorry to but in. I'm about to start doing this too.

I'm not a sole trader (yet). Would I have to be one to be able to factor in the costs paid out to sub-contractors?

Thanks!

PlutoinCapricorn

Assuming that you are not going to create a limited company and you are not in the construction industry, you need to register with HMRC as self-employed once you have some definite work/sales. Legitimate business expenses can be offset against income to reduce your profit, which is what you pay tax on.

Paaarp

Thanks. I am looking into creating a limited company to pay less tax.

Although not sure if I earn enough to make it worthwhile - still doing the research.

Thanks.

PlutoinCapricorn

The same principle applies: legitimate business expenses can be offset against tax.

It is worth spending time exploring possibilities: if extra work will take you into a higher tax band, then a company might be best. However, you need proper accounting procedures.

Paaarp

Thanks, I will get in touch with some accountants.