International Taxes for Translation Company?
Thread poster: multifarious
Jun 21, 2010

I am starting a translation company registered as an LLC in the United States. We will hire free-lancers from the United States and abroad to do the translations. Clients may also originate in the United States or abroad. Two questions:

- When using an overseas translator, are we obligated to file tax forms or any other legals forms in the foreign country?
- When translating for an overseas client, are we obligated to file tax forms or any other legals forms in the foreign country?

Perhaps each country is unique or there are general guidelines or trends. I'm having a bit of trouble finding this information, so thank you VERY much for your help!


Multifarious


 

Nicole Schnell  Identity Verified
United States
Local time: 12:47
English to German
+ ...
There must have been a reason Jun 21, 2010

... why you chose this particular form of business enterprise. You will pay a ton of taxes. How come that your advisor didn't go into tax details as well? Anyway, you will need a CPA (a Certified Public Accountant) as we are not supposed to give legal advice in this forum. Do not hire any lower tier accountant as a consultant. Best of luck with founding the umpteenth agency in the US - is there any particular reason why you can't simply run it from Japan?

 

multifarious
TOPIC STARTER
Yes Jun 21, 2010

Nicole Schnell wrote:
is there any particular reason why you can't simply run it from Japan?




Yes: filing costs, 42% tax rate, visa issues, Japanese forms etc.


 

Samuel Murray  Identity Verified
Netherlands
Local time: 21:47
Member (2006)
English to Afrikaans
+ ...
IANAL, @multifarious Jun 22, 2010

multifarious wrote:
- When using an overseas translator, are we obligated to file tax forms or any other legals forms in the foreign country?
- When translating for an overseas client, are we obligated to file tax forms or any other legals forms in the foreign country?


I think so, yes. Some countries may have forms for you to fill in on behalf of clients, if you want them to pay you. Ditto translators, if they want to receive money from you.

I know that I need to file a W8 form for some of my American clients. If I refuse or fail to do so, I don't get my money.

It is a greater loss to you (in a purely business sense) if your clients (buyers) don't pay than if your translators (sellers) are unable to accept payment, so my attitude would be that if a translator needs you to fill in a form, the onus is on him to send you the form, but if a client wants you to fill in a form, you should preferably know in advance what those forms are, or else you should demand upfront payment from clients in other countries.

Of course, if a translator asks you to fill in a form, so that he can get his money, you should fill in the form, or else find another way to pay him.


 

Nicole Schnell  Identity Verified
United States
Local time: 12:47
English to German
+ ...
Ahem... @Samuel Jun 23, 2010

Samuel Murray wrote:
I think so, yes. Some countries may have forms for you to fill in on behalf of clients, if you want them to pay you. Ditto translators, if they want to receive money from you.

I know that I need to file a W8 form for some of my American clients. If I refuse or fail to do so, I don't get my money.

It is a greater loss to you (in a purely business sense) if your clients (buyers) don't pay than if your translators (sellers) are unable to accept payment, so my attitude would be that if a translator needs you to fill in a form, the onus is on him to send you the form, but if a client wants you to fill in a form, you should preferably know in advance what those forms are, or else you should demand upfront payment from clients in other countries.

Of course, if a translator asks you to fill in a form, so that he can get his money, you should fill in the form, or else find another way to pay him.



Samuel, we never require any translator from abroad to sign any of such forms. Why? Because we have their verified address anyway when we enter a contract. That the failure of filling in any tax forms will hinder a translator from receiving money sounds pretty much like a myth, don't you think?icon_smile.gif


 

Nicole Schnell  Identity Verified
United States
Local time: 12:47
English to German
+ ...
Well, if you consider the US a tax haven... Jun 23, 2010

multifarious wrote:Yes: filing costs, 42% tax rate, visa issues, Japanese forms etc.


Your tax bracket depends on your revenue. There is no set percentage. The buck doesn't stop there. Example: We are located in a very large city in the Pacific Northwest. Not only do we pay income tax - federal and state, we also pay County tax, Public Transportation tax, employment tax, social security and health insurance.

Are you sure you are not mixing up the US with Belize and such?

icon_smile.gif


 

Samuel Murray  Identity Verified
Netherlands
Local time: 21:47
Member (2006)
English to Afrikaans
+ ...
On W8 forms Jun 23, 2010

Nicole Schnell wrote:
Samuel, we never require any translator from abroad to sign any of such forms. Why? Because we have their verified address anyway when we enter a contract. That the failure of filling in any tax forms will hinder a translator from receiving money sounds pretty much like a myth, don't you think?icon_smile.gif


No, I don't think it is a myth. Ultimately, the accounts department decides whether a translator gets paid, and if the accountant thinks that the tax man wants him to have W8 forms larking about, then he won't authorise the payment until said signed form is in his possession.

However, if you believe that the W8 form thing is a scam or a sham, please share your ideas with us. It would be interesting to speculate about why so many US clients require this form.

The W8 form does contain space for the person's address, but I get the impression that the purpose of the form is not to get the person's address but to get a declaration from them that they're an independent contractor who is responsible for his own taxes.

Only about half (I'm guessing) of the overseas clients I have have ever asked me to provide my street address before they send me work. Most of them do require that my address (usually street) be on my invoices, but not even that is always required. This may be because it is not necessary legally for the invoice to contain the address (unlikely) or it may be because the accountant is laid-back and doesn't really check if invoices are legally valid before authorising payment (more likely).


 

Nicole Schnell  Identity Verified
United States
Local time: 12:47
English to German
+ ...
@ Samuel Jun 23, 2010

Samuel Murray wrote:

No, I don't think it is a myth. Ultimately, the accounts department decides whether a translator gets paid, and if the accountant thinks that the tax man wants him to have W8 forms larking about, then he won't authorise the payment until said signed form is in his possession.

However, if you believe that the W8 form thing is a scam or a sham, please share your ideas with us. It would be interesting to speculate about why so many US clients require this form.

The W8 form does contain space for the person's address, but I get the impression that the purpose of the form is not to get the person's address but to get a declaration from them that they're an independent contractor who is responsible for his own taxes.

Only about half (I'm guessing) of the overseas clients I have have ever asked me to provide my street address before they send me work. Most of them do require that my address (usually street) be on my invoices, but not even that is always required. This may be because it is not necessary legally for the invoice to contain the address (unlikely) or it may be because the accountant is laid-back and doesn't really check if invoices are legally valid before authorising payment (more likely).



Samuel, there might be a slight difference between the know-how of hired PMs who often have to deal with translators' emails ending in .gmail, .yahoo, .com or whatever and the founder and owner of a US company who writes and handles the contracts. And does the background check.

All physical addresses of our translators are forwarded to our CPA who will verify them as well. Tax forms to US translators will be sent as soon as the translator's income paid by our company will exceed a certain level.


 


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