Author Topic: How to invoice foreign company?  (Read 2938 times)

MrSal

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How to invoice foreign company?
« on: August 12, 2016, 11:59:11 AM »
Hi everyone!

I have a question that i dont know how to proceed even though I have searched on Google a lot with no success.

I was employed until June this year ... I left my job and for the past 6 weeks or so I have doing a consultancy project for a foreign company.

This is a one time project so no recurrent payments.

Now that the project is done, I need to receive my payment and invoice them of course.

I live in PA.

How should I invoice them? Can i just invoice them as an individual? Do i need to register as a sole proprietor even though this was a one time thing?

The payment will be about 20k USD, not sure if that influences anything. Thanks

EDIT: my assumption is i dont need anything special to invoice them or any legal entity... i just need to report the payment afterwards on my taxes come next year correct?
« Last Edit: August 12, 2016, 12:02:54 PM by MrSal »

Eric

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Re: How to invoice foreign company?
« Reply #1 on: August 12, 2016, 02:22:57 PM »
They just need an invoice for their processing and records.  Just find a template online somewhere and use that.  It just needs to say how much is owed, for what services, and who to pay the money to.

MrSal

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Re: How to invoice foreign company?
« Reply #2 on: August 12, 2016, 02:40:24 PM »
They just need an invoice for their processing and records.  Just find a template online somewhere and use that.  It just needs to say how much is owed, for what services, and who to pay the money to.

so on my end here in the US, even though i never did anything contractor wise or self employed, i dont need to register myself with any central entity or government entity to be able to issue invoices?

For example in my country, Portugal, where the actual company I serviced for is based at, if I were living there, I would need to register with the IRS in order to be able to invoice someone else and needed to give out my Fiscal number and so forth.

So in this case in the US, I just invoice them normally (with a template or create my own), all the details of services provided and payment options, and then receive the money ... do i need to make special arrangements with the money - like paying medicare tax or social security tax? or is that calculated at year end with my yearly income?
« Last Edit: August 12, 2016, 02:43:49 PM by MrSal »

Axecleaver

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Re: How to invoice foreign company?
« Reply #3 on: August 12, 2016, 02:53:38 PM »
No, you don't. You'll be considered a sole proprietor, and declare the income you earned on Schedule C of your 1040.

You should pay estimated taxes on what you made by September 15, or your filing this year will be a little more complex and you could owe a penalty for failure to pay estimated taxes. Alternately, you could increase your withholding at your day job (I'm assuming you have other employment) to make up for that. As long as you pay at least 110% of the taxes you paid last year, you don't have to worry about this.

Kwill

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Re: How to invoice foreign company?
« Reply #4 on: August 12, 2016, 03:11:51 PM »
What Axecleaver said. Essentially the IRS considers you to be a sole proprietor for things like this. You just need to be sure to report everything and pay estimated taxes. I had a lot of little odd jobs and so forth in graduate school, so I ended up filing a Schedule C or C-EZ for several years in a row but reporting the type of business differently depending on what the work actually was.

You can read more about Schedule C here: https://www.irs.gov/uac/schedule-c-form-1040-profit-or-loss-from-business

The other possibility, if you didn't have employees or inventory, is Schedule C-EZ. This could work for something like writing or translation where it's just you working by yourself and then sending an invoice. The form with the instructions on it: https://www.irs.gov/uac/schedule-c-ez-form-1040-net-profit-from-business

MrSal

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Re: How to invoice foreign company?
« Reply #5 on: August 12, 2016, 06:05:17 PM »
Great. Since I'm married filing jointly can I estimate my taxes altogether with my wife's income included or does schedule c takes this income separately...  And about this income there is no need for Medicare or any other odd income/local tax that I need to pay estimate taxes?

Kwill

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Re: How to invoice foreign company?
« Reply #6 on: August 13, 2016, 04:23:30 AM »
I don't know about marriage, but some of this would be more clear if you tried filling out the form with what you know so far. Looking at Schedule C-EZ again now, I see you also have to do Schedule SE, which is for self-employment tax. That is where the substitute for Medicare and other taxes come out. Local and State depend on where you live, this paperwork is all just for Federal.

ShoulderThingThatGoesUp

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Re: How to invoice foreign company?
« Reply #7 on: August 13, 2016, 05:38:42 AM »
Note that you'll need to figure out how to pay Pennsylvania, your municipality, and your school district their cuts as well. The state does quarterly estimated but I don't think municipalities and school districts do.