Paying contractors

[bozmillar]

Hey guys. Sorry if this has been answered before. I searched but didn't find anything.

I just started a business, kind of by the seat of my pants, and just started making money. I have a couple people that are working with me and I agreed to pay them a percentage of the sales. I'm in CA, one guy is in MO and the other guy is in Brazil.

I guess my question is, when it comes time for tax season, do I need to treat the money spent on the brazilian contractor any different than the american contractor? How do I report this on my taxes? And do I need to fill out any official forms to send money abroad or can I just do a standard bank transfer?

Feel free to correct me on anything I ask that doesn't make sense. I'm completely brand new to this and expect that I am doing a lot of things wrong.

[Fulcrum]

Get a lawyer and an accountant that understand international law and taxes. This is the only way to get your questions answered properly.

[Freelancier]

I'm no accountant, but I'm thinking they're just vendors and it won't matter where they are, you pay them like they are vendors. Now within the USA, if one of the contractors is paid more than $600 by you, you may need to file a 1099 for them in January. For the person in Brazil, you likely don't need to do anything.

BUT.... you should get an accountant to make sure you have everything organized properly and legal.

[Twhansbury]

You need to check this out by reading IRS publication 515, "Withholding of Tax on Nonresident Aliens and Foreign Entities". www.irs.gov/pub/irs-pdf/p515.pdf

Get you accountant on board now. It will save you and them time and money setting up our accounting rather then later