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Ask HN: How to get invoices from un-registered freelancers?

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Ask HN: How to get invoices from un-registered freelancers?

#1

Post by MarkVenison »

Most freelancers I know are not registered in their country for various reasons (example they come from countries where the figure of "freelancer" isn't even a legal thing yet). But our company needs legal invoices, which they cannot provide.

We're currently using a freelancing platform simply for this problem, which means he's losing 10% and I am paying an extra 5% just for this.

Any better solution?

Note: Paypal invoices don't count. They can send a paypal invoice but that has zero legal value if he's not a registered business entity (according to my accountant).

Re: Ask HN: How to get invoices from un-registered freelancers?

#2

Post by h2odragon »

"your invoice has zero legal value" sounds like a great way to avoid paying people.. It probably works up until someone brings you to court.

If you're required to business only with entities registered with some 3rd party (who? some government? your government?) then you should be able to refer to them for whatever documentation rules there are.

Maybe your accountant has not sufficiently explained the details you you, or is just outright mistaken themselves?

Re: Ask HN: How to get invoices from un-registered freelancers?

#3

Post by codegeek »

Never pay anyone without an invoice. Never. If these freelancers don't know how to setup an invoice, it is honestly their problem. Having said that, I always tell them to go use a free tool like invoiceninja.com or you can send them a template they can use.

Even if they are not registered in their country as a business, you can ask them to invoice you as an individual and then pay them.

Re: Ask HN: How to get invoices from un-registered freelancers?

#6

Post by nivertech »

In my country there is something called "self-invoicing", basically the company issues the invoice on-behalf of a freelancer, withholds the maximum tax at source (eg 50%) and then pays the rest to the freelancer. Not much different from a payroll.

It is then the responsibility of the unregistered freelancer to go and reclaim their share of taxes from the tax authority (since they usually don't have to pay taxes, not even VAT, until they reach a certain annual income limit). IMO, it is much less of a hassle to simply register as a sole proprietor correctly than to go through this process.

Also, working with such people (who didn't even bothered to register as self-employed) can create accounting and legal/HR headaches for a properly run company.

The first time I encountered this was when the startup company, I worked for, hired an 18 y.o. freelancer for a one-time job.

Nex time at another company, we wanted to purchase a software, and turned out it was just a single guy without any business license or a company, so our CFO had to spend days to draw a purchase contract, so he could've been paid.

Re: Ask HN: How to get invoices from un-registered freelancers?

#7

Post by nivertech »

codingdave wrote: post #5

I'm confused - an invoice is just a statement of what is owed. It isn't a formal legal document. So I'm not sure what their setup has to do with it, or what you mean by "has zero legal value"?

It depends on the jurisdiction.

In some of them a "tax invoice" is indeed an official legal document.

In some countries the format of the invoices is highly standardized and regulated, and even an invoicing software has to be certified by the tax authority.

Re: Ask HN: How to get invoices from un-registered freelancers?

#8

Post by nivertech »

h2odragon wrote: post #2

"your invoice has zero legal value" sounds like a great way to avoid paying people.. It probably works up until someone brings you to court. If you're required to business only with entities registered with some 3rd party (who? some government? your government?) then you should be able to refer to them for whatever documentation rules there are. Maybe your accountant has not sufficiently explained the details you you…

> it probably works up until someone brings you to court.

If someone didn't even bothered to pay for business license, and hire an accountant, I highly doubt they will hire a lawyer.

Note, I'm endorsing not paying people for the services rendered,but this should be explained upfront, that proper invoice is needed in order to get paid.

Re: Ask HN: How to get invoices from un-registered freelancers?

#9

Post by amerkhalid »

nivertech wrote: post #8
h2odragon wrote: post #2

"your invoice has zero legal value" sounds like a great way to avoid paying people.. It probably works up until someone brings you to court. If you're required to business only with entities registered with some 3rd party (who? some government? your government?) then you should be able to refer to them for whatever documentation rules there are. Maybe your accountant has not sufficiently explained the details you you…

> it probably works up until someone brings you to court. If someone didn't even bothered to pay for business license, and hire an accountant, I highly doubt they will hire a lawyer. Note, I'm endorsing not paying people for the services rendered,but this should be explained upfront, that proper invoice is needed in order to get paid.

Not sure where you are but in the US, you don’t need any business license for many types of businesses especially when freelancing. And you can invoice using any method including handwritten.

It is probably smarter to do something better than handwritten invoice but I am glad there are not so many hurdles to starting a business here. I have dealt with a lot of contractors here who don’t even issue a paper invoice for small jobs, they just tell me how much I owe and I just pay.

Small jobs probably are not worth suing for. But I’m sure if I don’t pay for a big enough job, they would sue me.

Re: Ask HN: How to get invoices from un-registered freelancers?

#10

Post by nivertech »

amerkhalid wrote: post #9
nivertech wrote: post #8

Earlier quoted context omitted.

> it probably works up until someone brings you to court. If someone didn't even bothered to pay for business license, and hire an accountant, I highly doubt they will hire a lawyer. Note, I'm endorsing not paying people for the services rendered,but this should be explained upfront, that proper invoice is needed in order to get paid.

Not sure where you are but in the US, you don’t need any business license for many types of businesses especially when freelancing. And you can invoice using any method including handwritten. It is probably smarter to do something better than handwritten invoice but I am glad there are not so many hurdles to starting a business here. I have dealt with a lot of contractors here who don’t even issue a paper invoice for…

the context was tech companies and startups

you need to save a paper or electronic trail, every email or instant message should be treated as a future evidence in court

while technically US citizens don't need a business license to be self-employed, federal or local state agencies may still charge you, as some people were forced to pay for a business license just b/c they were running blogs with ads, and received some pennies in ads revenue

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