Outsourcing - Do you ask for an invoice?

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dowork

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Apr 12, 2011
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When outsourcing design, seo, etc and you pay via paypal do you ask your outsourcer's for invoices?

I know the record is in paypal but that just shows you sent $ to someone. Not much proof that it was a business expense. Any of your accountants recommend anything to do to? Most foreign outsourcers don't want to be writing up invoices.

Anyone ever have issues of getting audited and the IRS asking you to explain all the paypal payments to foreign countries? Prob not an issue if you only spend a little bit but I know some people spends tons.
 


basically if you get audited, all your expenses on paypal wont be expenses anymore. You'll have to add that amount to your income.

This is from my accountant...in Canada though.
 
If the paypal account I'm paying is a business account, then I'll ask them to invoice me via Paypal, which itemizes the transaction. Otherwise, I'll ask for some form of written/emailed receipt.

Usually if it's a service you're outsourcing too, they should send you a receipt (like DFB or something in the BST section here). If it's just a person who's doing work for you, you should be writing it off as contract labor in your Quickbooks/GNUCash bookeeping software and 10-99 them depending on the amount of work they bill you for.

And yes, you need some boobs.
 
canucksfan19 said:
basically if you get audited, all your expenses on paypal wont be expenses anymore. You'll have to add that amount to your income.

This is from my accountant...in Canada though.
Click to expand...

How does money coming from your bank account that you've already claimed as earned income and deducted when you paid someone, suddenly turn into extra income?

This is standard T (debit/credit) stuff. Both sides have to be equal.
 
Rexibit said:
How does money coming from your bank account that you've already claimed as earned income and deducted when you paid someone, suddenly turn into extra income?

This is standard T (debit/credit) stuff. Both sides have to be equal.
Click to expand...

I meant this:

Revenues: $100
Exp. with receipts / proof: $30
Exp. through paypal w/ no invoices: $20
Total Expenses: $50
Taxable profit: $50

If you get audited that $20 from paypal with o receipt will not count, they ignore it.

So Taxable profit would then be $70 not $50.

Make sense?
 
yes, ask for invoice if its not autogenerated. Like many online services often generate automated invoices. You can always print them later, if not ask them to prepare one for you. if anyone needs a free invoicing check out zoho invoice. I use it for a few of my clients, its free and quick
 
every outsourcer will give a PayPal invoice - it takes one minute to generiate and since 99.99% of them won't pay their taxes anyway, it doesn't make any difference to them; just my 2c
 
Rexibit said:
If the paypal account I'm paying is a business account, then I'll ask them to invoice me via Paypal, which itemizes the transaction. Otherwise, I'll ask for some form of written/emailed receipt.

Usually if it's a service you're outsourcing too, they should send you a receipt (like DFB or something in the BST section here). If it's just a person who's doing work for you, you should be writing it off as contract labor in your Quickbooks/GNUCash bookeeping software and 10-99 them depending on the amount of work they bill you for.

And yes, you need some boobs.
Click to expand...

Sorry at work, so can't do boob pics.

Thanks for the info. What do you do if you sign up for a recurring service like PPV playbook, etc. Do you ask them for an invoice every month, or just print out the payment that was auto sent via Paypal?

I heard you don't have to worry about receipts/invoices when the charge shows up on your CC or bank statement with the companies name. Do you print out your hosting, ppc, ppv, etc charges every time you see a charge from them. Or do you not worry since it shows up on your CC statement?

Would be a lot of work to go into every hosting, traffic source and print out receipts.


tt9999 said:
every outsourcer will give a PayPal invoice - it takes one minute to generiate and since 99.99% of them won't pay their taxes anyway, it doesn't make any difference to them; just my 2c
Click to expand...

Thanks, good to know there is an easy way to do it.
 
There are easy ways to do invoices, and normally a client will ask me for a more formal one if it's for bookkeeping purposes. Of course, clients in different parts of the country do it differently.

PayPal lets you create an invoice easily with itemized lists. Even the payment requests let you do an itemized accounting and terms in the Notes section. I also use Freshbooks to invoice certain clients who prefer to use checks or have the option to use checks. You can use Freshbooks for up to three clients free per month, although I'm not sure how that applies to those on the receiving end.

As far as contractors go, you should get some sort of receipt, but you only need to send out a 1099 if you pay a contractor more than $600 during the year I believe, so getting EINs and such from any domestic contractors would be wise from the get-go if you're planning to use them often.

On a personal note, if a contractor won't create even a basic invoice in Word or Excel, much less one through an easy system, he isn't taking himself seriously enough in a business to work with unless you're ready to pay cash under the table and not be able to deduct the expense.
 
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