Businesses and Expenses

[glasscow]

I was planning on making a game development studio, a solo proprietorship to be exact. As such I was also planning to hire other people like artists and coders and the like. These people are not physically associated with the business yet I am purchasing their services. Would the pay I give these people be counted as expenses and thus play an impact on my taxes? I'm a beginner when it comes to both businesses and taxes, so unfortunately I don't know the answer.

[Freelancier]

Yes, if they are not employees, they are like paying the local computer store for a computer. They're a vendor. However, if you're in the USA, you may have to collect a W-9 and send them a 1099 at the end of the year, depending on whether you pay them more than $600 in the calendar year.

[glasscow]

Ah. I live in the US and will probably at some point end up paying them that much. I don't suppose you could tell me more?

[Freelancier]

Forms and Associated Taxes for Independent Contractors (http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Forms-and-Associated-Taxes-for-Independent-Contractors)

if you're not going to engage an accountant at this point to help you get things set up, familiarize yourself with the irs.gov web site, which has lots of helpful information.

[vangogh]

I'll offer another vote for getting to know the is.gov site. There's a lot of good info there and you can quickly search and find all the forms you need. I'll also echo that you'll want to send W9s and 1099s to any contractors you work with, provided you spend more than $600 with them over any tax year.

[Alexcook]

If you are outsourcing your work, then the answer would be no.Many Big Multi National COMPANIES are doing the same (outsourcing) so as to reduce their expenses & to save the taxes.