Is there typically invoice surcharge?
Thread poster: Yue Edwards

Yue Edwards
United States
Local time: 16:16
English to Chinese
Jan 23, 2010

Hi, I am new to this translation freelance business. I just did an project and was asked to send invoice so they can paypal me. From the money I received via paypal for a previous project, I was charged 2.9% transaction fee because the client sent it as business money instead of personal, which i didn't expect. So for this just finished project, I charged the client this transaction fee as surcharge, because I don't think I should pay for it, as if I sell something and pay the sale tax for my customer. However, this client refused to pay for this surcharge.

My question is typically how people handle this kind of problem. Also I would like to know whether it's common to charge tax or any other kinds of fee besides the basic amount.

Thanks to whoever can answer these question. My translation pair is English to Chinese.




[Edited at 2010-01-23 04:23 GMT]

[Subject edited by staff or moderator 2010-01-23 12:20 GMT]


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Neil Coffey  Identity Verified
United Kingdom
Local time: 21:16
French to English
+ ...
Frequent question; different opinions Jan 23, 2010

This has come up in a few threads.

My personal view is that I don't especially care. Banks continually charge me for all sorts of random spurious things, so the extra charge by Paypal doesn't seem to me some special case to fight much about.

If you are going to make a fuss about it, make sure you're comparing like with like and that the alternatives are truly going to be beneficial-- if you do a bank transfer instead, have you checked what commission the bank might take on the exchange rate, for example.


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Lise Leavitt  Identity Verified
United States
Local time: 16:16
Member (2008)
Danish to English
+ ...
Paypal charge Jan 23, 2010

Yue, you would have been charged either way for receiving money on PayPal...services or personal transfers. Within the USA the fee is 2.9% and abroad it's as high as 4.0%.

You should be sure to make arrangements with your clients, as to how to get around this fee. However, from my personal experience, the client expects you to pay that fee, so you should just incorporate it in your price.

You can also ask to be paid via e-check, which only has a fixed $ 5.00 fee, no matter the amount received. However, not all countries can use this option.

All the best =)

L.


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Samuel Murray  Identity Verified
Netherlands
Local time: 22:16
Member (2006)
English to Afrikaans
+ ...
What the client should pay you Jan 23, 2010

Yue Edwards wrote:
From the money I received via paypal for a previous project, I was charged 2.9% transaction fee because the client sent it as business money instead of personal, which i didn't expect.


1. As a translator, you are a business, so is it inconceivable that a client might choose to treat you as one?

2. Did the client charge that fee or did some of the intermediaries charge that fee? The client should pay the full amount of the invoice, but that doesn't mean that you will receive the full amount of the invoice. There are always banking costs and various charges, some of which you don't even know of.

So for this just finished project, I charged the client this transaction fee as surcharge, because I don't think I should pay for it, as if I sell something and pay the sale tax for my customer.


1. Everything that goes onto the invoice should be agreed upon by both parties beforehand. You can't simply add stuff to the invoice and expect the client to pay it, no matter how reasonable you think it is.

2. You call it "sale tax" but it isn't. It's a transaction fee.

3. What would the transaction fee have been if the client had sent the money "as personal" instead of "as business money"? Couldn't you have simply asked the client to send it as personal and not as business money?

Also I would like to know whether it's common to charge tax or any other kinds of fee besides the basic amount.


Are you being serious??? Unless your client lives in a tax-free haven (and possibly you yourself as well), of course there is going to be taxes charged.

The issue is that the fees should not be charged by the client himself, but may be charged (and probably will be charged) by intermediaries such as the foreign bank, the correspondence bank, the escrow service, and the local bank, to name just four of the parties who might handle the money on the way to you.


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jyuan_us  Identity Verified
United States
Local time: 16:16
Member (2005)
English to Chinese
+ ...
I agree with Samuel Jan 23, 2010

Samuel Murray wrote:

Yue Edwards wrote:
From the money I received via paypal for a previous project, I was charged 2.9% transaction fee because the client sent it as business money instead of personal, which i didn't expect.


1. As a translator, you are a business, so is it inconceivable that a client might choose to treat you as one?

2. Did the client charge that fee or did some of the intermediaries charge that fee? The client should pay the full amount of the invoice, but that doesn't mean that you will receive the full amount of the invoice. There are always banking costs and various charges, some of which you don't even know of.

So for this just finished project, I charged the client this transaction fee as surcharge, because I don't think I should pay for it, as if I sell something and pay the sale tax for my customer.


1. Everything that goes onto the invoice should be agreed upon by both parties beforehand. You can't simply add stuff to the invoice and expect the client to pay it, no matter how reasonable you think it is.

2. You call it "sale tax" but it isn't. It's a transaction fee.

3. What would the transaction fee have been if the client had sent the money "as personal" instead of "as business money"? Couldn't you have simply asked the client to send it as personal and not as business money?

Also I would like to know whether it's common to charge tax or any other kinds of fee besides the basic amount.


Are you being serious??? Unless your client lives in a tax-free haven (and possibly you yourself as well), of course there is going to be taxes charged.

The issue is that the fees should not be charged by the client himself, but may be charged (and probably will be charged) by intermediaries such as the foreign bank, the correspondence bank, the escrow service, and the local bank, to name just four of the parties who might handle the money on the way to you.


Sorry for having to quote the whole post 'cause' I don't want to lose the context.

I think the phrases of "personal money " VS "as business money" used by the topic starter must refer to the type of paypal account". A business account does require a transaction fee.

Some other colleagues pointed out the fees might have been charged by the recipient's bank, etc. I must say that this is not th case, because the topic starter is located in the USA and it seems she does jobs for agencies in the same country.


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xxxAguas de Mar
Some options... Jan 23, 2010

I usually get paid by check or bank transfer. But then again, most of my clients are in the US or Canada, which is where I have bank accounts. My banks do not charge me a fee for any of these methods. They do charge a fee to the sender of the transfer.

I do not accept PayPal as a paying option because I do not want to pay their commission, and I make sure to clearly state this on my terms when I first send a quote to potential clients.

I have encountered both clients who have no problem to pay the transfer fee, and clients who absolutely refuse to pay for it. I do not like to argue much, so I usually ask them to send the money less the transfer fee, but the next time they ask for my services, they will find out that my rate has gone up one cent. That will be my way to cover the cost of the transfer (and probably more). Surprisingly enough, most of the clients have had no problem to pay the additional cent (I think only a couple refused), which kind of tells me everything is psychological; they probably find it more difficult to argue against the rate that one has established than against a fee they believe they should not be paying.

Ah, there was also an instance where the fee was split in half between my client and me.
So there are a few options, but those are business fees, and someone will have to pay them.

[Edited at 2010-01-23 12:05 GMT]


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Stanislaw Czech, MCIL  Identity Verified
United Kingdom
Local time: 21:16
Member (2006)
English to Polish
+ ...
my 2 cebts Jan 23, 2010

Yue Edwards wrote:

My question is typically how people handle this kind of problem. Also I would like to know whether it's common to charge tax or any other kinds of fee besides the basic amount.

Thanks to whoever can answer these question. My translation pair is English to Chinese.




[Edited at 2010-01-23 04:23 GMT]


Hi,

I am alo not too fond of Paypal charges however as Paypal deliver a service it is understandable that they also need to make living.

If you are not happy with present situation I would suggest:

- increase your rate so that it would accommodate Paypal fee
- agree upfront with your clients that in case of payment through Paypal they need to cover the cost and include this fee on the invoice

Most of all don't confuse turnover with profit.

Best Regards
Stanislaw


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Krzysztof Kajetanowicz  Identity Verified
Poland
Local time: 22:16
English to Polish
+ ...
I'm in Samuel's camp Jan 23, 2010

It couldnt've been said better. Your liason with Paypal is your liason with Paypal. It's like charging the client a part of your phone bill becase you've made phone calls to him/her.

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Christina Courtright  Identity Verified
United States
Local time: 16:16
Spanish to English
+ ...
it is a cost of doing business Jan 23, 2010

And you should deduct the PayPal commission from your taxes - Schedule C, the line called "Commissions".

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Yue Edwards
United States
Local time: 16:16
English to Chinese
TOPIC STARTER
thanks and detail about paypal personal transfer Jan 23, 2010

Lise Leavitt wrote:

Yue, you would have been charged either way for receiving money on PayPal...services or personal transfers. Within the USA the fee is 2.9% and abroad it's as high as 4.0%.

You should be sure to make arrangements with your clients, as to how to get around this fee. However, from my personal experience, the client expects you to pay that fee, so you should just incorporate it in your price.

You can also ask to be paid via e-check, which only has a fixed $ 5.00 fee, no matter the amount received. However, not all countries can use this option.

All the best =)

L.


Thank you Lise!!
on Paypal website, it says

if it is personal transfers to friends and family, AND

* Fully funded by:
* PayPal balance
* Bank account
then the transfer is free.

but if it is

* Fully or partially funded with:
* Credit card
* Debit card
* PayPal credit

it comes with 2.9% + $0.30 per transaction
Fee is paid by the sender or recipient-sender decides.
Making a purchase, i.e. goods, services, or eBay items

so we are partially right. Also thank you for your suggestions!!!

Yue


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Yue Edwards
United States
Local time: 16:16
English to Chinese
TOPIC STARTER
really? so you mean in the invoice, some percentage of tax should be charged to outsourcers? Jan 24, 2010



Are you being serious??? Unless your client lives in a tax-free haven (and possibly you yourself as well), of course there is going to be taxes charged.



Hi, Samuel

Thanks very much for your detailed opinion. Here is a confusion. by saying so did you mean we should charge the client some percentage of tax over the translation charge? how do we report this tax to IRS?


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