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Setting up a business and employing VS three joint ventures.

Discussion in 'BlackHat Lounge' started by KELLOGGS, Oct 4, 2012.

  1. KELLOGGS

    KELLOGGS Supreme Member

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    I've been approached by three people to do a joint venture, is it easier and in the long run more profitable to make a business of four?
    Also is there an automatic way that changes depending on commission to pay out?
     
  2. kboxer7

    kboxer7 Jr. VIP Jr. VIP Premium Member

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    Not much info to go off of here but let me share my thoughts:

    1. Do NOT blindly go into business with people you don't know. Many reasons for this ranging from potential liability from their actions to finances, etc.
    *Starting your own business and "hiring" them is another option, but make sure you have your 1099s/W2s in place and any other docs needed depending on how you set them up (as contractors or actual employees).

    2. An actual Joint Venture, IS a legal form of partnership in and of itself. Legal forms for this exist if you want to go that route. Most often JVs on BHW are simply a "lets work together on some aspects of a project" and split the revenue. Earnings are reported on each individual or biz tax returns as if it was their own operation to begin with.

    3. Personally...I would incorporate a business with you as the sole owner, and run all your JV operations thru that business for liability protection as well as some advantages with regards to taxes. Set up contracts for each JV with specific "terms and conditions" etc. and approach it that way.

    Regards
     
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  3. KELLOGGS

    KELLOGGS Supreme Member

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    Thank you, do you know if taxes etc get more complicated when employing people from overseas?
     
  4. kboxer7

    kboxer7 Jr. VIP Jr. VIP Premium Member

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    A few things to consider, and a STRONG suggestion of getting some advice from a CPA/Lawyer Prior to making any moves....

    a. When you say "employ" do you mean what would be a W2 employee here in the U.S.? Meaning salary and withholding of payroll taxes. OR, do you mean an "independent contractor" who would be issued a 1099 for wages earned and no withholding taxes taken out?

    Two very different scenarios.

    b. As for the overseas issue. I cannot speak from the experience of having actual employees overseas, BUT I have had plenty of independent contractors work for me (some on an ongoing basis for years).

    To that point, my independent contractor agreements clearly lay out the responsibilities of the contracted party to abide by and tax rules and regulations for their specific region/country, etc. I clearly state a 1099 will be issued as well as payment "receipts" that will be logged and kept on record at my company for a period of 5 years. I expressly include a provision that while our company will maintain it's own records, it is each contractor's responsibility to maintain their own records.

    On your end, paying independent contractors that are overseas is not going to complicate your life any more than making sure you keep good records of who got paid what, their information, invoices, etc etc. and sending them a 1099 or their country equivalent if required.

    Regards,
     
  5. KELLOGGS

    KELLOGGS Supreme Member

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    I live in the UK so I imagine the rules and regulations are different but thank you for your advice, I think I'll go down the route of paying commission like an affiliate network. Then I don't run the risk of scammers.