I am currently developing an online software for people to work online, when these people get paid it will obviously be taken in consideration as a reduction for tax purposes. if we take UpWork for example they dont require invoices from people who do the work, how do you keep a record of this to prove to the tax officer if required. are database records enough, or should you autogenerate invoices which the workers tick a box to ageee to before receiving payment?
As indicated by Casu your initial question shows a lack of understanding of the minefield that you are wandering into seemingly blindfold.
I fear Aaron that you are starting this venture from the wrong point. I have no idea of your development skillset but for the analysis of this you need a certain set of skills. Without that skillset you are attempting to build a bridge without any blueprints.
If you are developing business systms you need to properly understand financial and tax systems for which I would suggest taking a big three to five year step back and gaining a serious financial qualification (minimum AAT). Once complete you would be in a better position to either move forwards with this sort of venture... Or see the reasons that you should not.
kindest regards,
Shaun.
p.s. answered because you are not a business owner as such but attempting to create a financial business system. As such I would expect you to be an accountant (which you are obviously not). So take it from an experienced accountant, business analyst and financial systems developer that this cutthroat minefield is not one that you want to wander into under prepared.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Is that not what forums are for? Its a simple question that needs a simple answer....
Oh no, no, no, no, no...
Other forums may be for that sort of thing but this one is aimed at financial professionals attempting to help each other. There is an expectation that to be here one is an SME level accountant, a bookkeeper, someone currently working towards becoming such or someone pondering whether the professional body that they have chosen is the right one for them.
For business owners we would advise paying for the services of a qualified local financial professional. For people such as yourself attempting to develop business tools but from a position of apparent (#1) limited financial systems knowledge we may offer some snippets of advice (such as run now and don't look back) but ultimately this platform is not the platform that you are looking for.
Try UK business forums. Its full of people who don't know what they are talking about giving dubious advice... Or try Aweb... They would really like you on Accountingweb (#2)
Shaun.
#1 Its not a simple question. You are asking how to create tax system compliant software and have realised that you need for there to be a verifiable audit trail for every transaction... The stumbling block that so many before you have fallen at.
#2 Tee hee. John, Joanne, Casu, not a word!
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
So simply put your answer is to seek help and pay for a professional as its more complex than it seems. Why not say that rather than being patronising and rude?
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Well clearly that is the answer. Why not just just say that rather than making personal insults hiding behind your screen. Hardly very professional!
creating a website without having the first clue about the subject matter. Hardly very professional!
I want to create a website that helps planes fly around the sky but I do not understand how the US aviation system works. Please tell me. Its a simple question. Needs a simple answer.
Scope out your question better and answer the questions people raise and you might get some help.
Well clearly that is the answer. Why not just just say that rather than making personal insults hiding behind your screen. Hardly very professional!
creating a website without having the first clue about the subject matter. Hardly very professional!
I want to create a website that helps planes fly around the sky but I do not understand how the US aviation system works. Please tell me. Its a simple question. Needs a simple answer.
Scope out your question better and answer the questions people raise and you might get some help.
Im not creating an accounting website, and thats where I have a lack of knowledge. I am an expert in the problem that my website provides the solution for. I also have experience in creating software, just not billing. I wish you all the best.
I think you've both misunderstood the question. The website in question sounds like it's for engaging freelancers (any field) similar to People per hour. His question was about tax invoices after the work had been carried out.
In my one and only foray with PPH I received an invoice direct from the person concerned (on request) and it is up to the business owner to do that. In UK tax law you need sufficient evidence that a transaction is a business one so, without an invoice, the business owner will need sufficient evidence to confirm it was a business transaction.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
How could we misunderstand the question when the OP didnt actually articulate it properly.
why would we give free advice to someone when they clearly need professional advice. Its not just about an invoice but ensuring that invoice meets the law of the land plus meets the tax regs of that land.
The OP has not answered one single question and the questions were not exactly difficult ones.
But now wishes one of us 'all the best' after making an attack on our professionalism.
I go back to my original point about the fee for such help.
I think you've both misunderstood the question. The website in question sounds like it's for engaging freelancers (any field) similar to People per hour. His question was about tax invoices after the work had been carried out.
In my one and only foray with PPH I received an invoice direct from the person concerned (on request) and it is up to the business owner to do that. In UK tax law you need sufficient evidence that a transaction is a business one so, without an invoice, the business owner will need sufficient evidence to confirm it was a business transaction.
That is exactly it. The difference to PPH is that the billing comes from the client. With my solution the freelancer will be invoicing my business. It is effectively an automated agency that connects freelancers and clients in a particular niche.
Thank you for taking a different view to others in this feed.
I think you've both misunderstood the question. The website in question sounds like it's for engaging freelancers (any field) similar to People per hour. His question was about tax invoices after the work had been carried out.
In my one and only foray with PPH I received an invoice direct from the person concerned (on request) and it is up to the business owner to do that. In UK tax law you need sufficient evidence that a transaction is a business one so, without an invoice, the business owner will need sufficient evidence to confirm it was a business transaction.
That is exactly it. The difference to PPH is that the billing comes from the client. With my solution the freelancer will be invoicing my business. It is effectively an automated agency that connects freelancers and clients in a particular niche.
Thank you for taking a different view to others in this feed.
Why would the freelancer be invoicing your business?
What about the work freelancers do for clients?
That website you mentioned is garbage. Doesnt even allow UK users to quote in pounds sterling!
Still, despite the queries raised you are giving half baked answers. How the hell do you expect someone to assist if you dont give the facts. I agree with Casu - put your hand in your pocket. Surely thats an expense of creating your software!
Look at the newly issued EU directive on e-invoicing.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
One who hasnt got the common sense to ask questions relevant to the forum eg what would professional bookkeepers and Accountants like to see in such a billing process to aid their clients get their tax and business matters right and to ensure they do not break the law.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Didn't you just answer your own question. Contractor has a contract of services with you. They invoice you, you pay them. You have the contract with those needing work done. You invoice them, they pay you.
Sounds as though you are developing a website to do what any peice of acccounting software does. The variance being that you are attempting to automate the whole process but is your issue then not a business one in that you may need to pay the contractor before you have been paid yourself?
Before going any further create a process swim lane diagram and look for similar disconnects at lane boundaries.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
The site doesn't seeem to have any relevance to the actual contractor beyond getting paid by them. Every freelancer will still need to have their own accountant as will every business serviced by them. It just seems to be a standard payment portal so the nightmare for them is going to be security and data protection. (Release the Vince).
On the why would the freelancer be invoicing the business thats standard practice. The agencies charge a 35 to 70 percent mark up to compensate themselves for the fact that they generally need to pay the contractor before they get paid themselves... At that price to business no wonder contracting in the service sector all seems to be moving to management consultancies with their workers out in India/Mexico/Phillipines (delete as appropriate).
There is lots of this payment portal type software already existing in the market so the poster may be better looking to an off the shelf sollution rather than reinventing the wheel... Then again... If they're not willing to pay for an accountant then they are unlikely to want to pay for software... Which surely undervalues their time in performing the task of actually making money by running the agency... which would also bring into question the ability to pay contractors before they have been paid themselves. (#1)
Ooh, change of theme... Whats this month. Is that seaside or something to do with the star?
#1 if you're a businesss and ask questions on here then you have to be prepared to have your business model disected.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
In my one and only foray with PPH I received an invoice direct from the person concerned (on request) and it is up to the business owner to do that. In UK tax law you need sufficient evidence that a transaction is a business one so, without an invoice, the business owner will need sufficient evidence to confirm it was a business transaction.
That is exactly it. The difference to PPH is that the billing comes from the client. With my solution the freelancer will be invoicing my business. It is effectively an automated agency that connects freelancers and clients in a particular niche.
In which case, sorry, my view is the same as the others. This will be a question for your accountant and your solicitor, as to how to correctly bill and the type of contract you need, as we are straying into the realm of contract and commission.
Apologies if I ruffled your feathers Casu and Shaun.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Apologies if I ruffled your feathers Casu and Shaun.
You've never ruffled my feather ya lil munchkin
We're all of a like mind (despite some of the technical debates ) but sometimes because of the medium that we use to communicate here on occassion all of us misinterpret threads. I think that your response here was a sound one which illicited more information from the poster that Casu and myself had to a certain extent failed to... Knew that you would reach the same epiphany in the end though.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
) but sometimes because of the medium that we use to communicate here on occassion all of us misinterpret threads. I think that your response here was a sound one which illicited more information from the poster that Casu and myself had to a certain extent failed to... Knew that you would reach the same epiphany in the end though.
