Employer Obligations for Web Based Freelance Business

[BadBoy]

Hi,

My friend and I have an idea for a Web-Based Business. Essentially, we will provide a "connection service" between freelance service providers and paying clients. The business model is one where we take a commission from the fee paid to the freelancers by the clients. Our idea so far (but we can change this if there are any better suggestions) is to charge the clients ourselves, to make the transaction straight forward, and then pay the freelancers (minus our commission) on a monthly/weekly/whatever basis. For example: we charge the clients E20 per hour, we keep say, E5 for ourselves and pay the freelancers E15 for each hour they work. We have some questions when it comes to tax payments, employment regulations etc: (Apologies if these questions all boil down to the same answer

1) This places us as employers, obviously. What are our obligations to the freelancers in terms of tax/health insurance/pension contributions etc?

2) This business would not be restricted to Ireland, ie. clients and freelancers could/will be from different countries. Are we exposed to any pitfalls when it comes to "employing" people who live in other countries?

3) What capacity should we employ the freelancers, if at all? Ie. should they be employees at all or can we just make payments to them minus tax/commission etc and sort out Revenue ourselves?

4) I suppose you could compare our model to Google AdSense in some ways. Freelancers will be earning money through us, do we just request Tax ID's and balance up with Revenue ourselves (how would this work for contractors living in other countries?)

Other Points:
Freelancers will come and go frequently (we think/hope), some of the good ones will probably hang around for a bit since they will be making some easy money.


In the end, we would like to know how to operate this model in the simplest way that leaves us with the least amount of obligation/ overheads etc.


Thanks (and if any of this needs clarification, lemme know)

CK

 

[hhhhhhhhhh]

Very basic answer, the easiest way to do it would be.

Have the freelancers bill you for there work.
So the freelancers do not work for you, they are companies or sole traders that provide you with a service.
This is the reason why the majority of IT contractors have to setup as limited companies before they can get a contracting job.

You bill the clients a figure plus vat if you are going over the thresholds, no need to charge vat if there are an EU company with a vat number.

 

[BadBoy]

Thanks a mil h*!

I had a feeling that something like that would be the best option. I still have some concerns though, and perhaps if I elaborate on the idea a bit, you might see where I am coming from...

The business idea is *something* like Amazon's Mechanical Turk, but not exactly. Suffice to say that the freelancers that we "employ" may not actually make an awful lot of money from their work unless they are quite serious about our business. People like this, one could imagine, would not be in too much of a hurry to go out and jump through whatever hoops need to be jumped through to get set up for declaring their tax or whatever. Can anyone confirm that me and my buddy will not be under any legal obligation to ensure that our freelancers actually pay their tax? We, of course, will be declaring everything as appropriate, and whatever the freelancers do is their own business, but is there any legal instrument that could punish us for paying out on invoices (that the freelancers send us) to freelancers that do not subsequently declare this income? What kind of records would we be required to maintain about who we have "employed" and for how long should such records be maintained?

As I write this, I am almost sure that the above questions are all rhetorical, but I really appreciate any comments that may clear up these issues.

Thanks,
CK.