Q: Is paying overseas freelancers via Ria Money Transfer without contracts or tax consultation risky for an LLC registered in California?
I plan to pay my overseas freelancers approximately $30,000 annually through Ria Money Transfer using my business debit card, without formal contracts or agreements in place. My LLC is registered in California, and the payments will be made monthly. The freelancers are working on building my real estate listings website. I intend to send the funds through only one of the freelancers to minimize fees. I haven't consulted a tax professional yet. While I'm not using any specific platforms to ensure work delivery, I am able to see what has been accomplished daily. Could this approach cause any legal or tax issues?
Lawyers, want to be a Justia Connect Pro too? Learn more ›
- California
- (916) 704-3009
- View Profile
- Answered
A:
Paying overseas freelancers through Ria Money Transfer without formal contracts or tax advice can expose your LLC to certain risks. From a legal perspective, not having written agreements leaves you vulnerable, as it becomes challenging to enforce terms, deadlines, or resolve disputes if the work does not meet your expectations. Without clear documentation, disagreements could escalate, and your rights to the developed website content might become uncertain.
Tax-wise, failing to properly document these transactions could create complications when filing your taxes or facing an audit by state or federal authorities. Even though payments are made overseas, the IRS requires that you maintain clear records, report payments exceeding specific thresholds, and potentially file forms like the 1099 or 1042-S. Regular monthly transactions totaling $30,000 annually may trigger closer scrutiny by financial institutions and regulatory bodies, potentially leading to investigations or audits.
It would be wise to formalize agreements outlining the scope of work, payment details, and intellectual property ownership. Additionally, consulting a tax professional can help ensure you're compliant with reporting obligations and avoid unforeseen penalties. Taking these precautionary steps can save your LLC from considerable legal and financial stress later on.
Justia Ask A Lawyer is a forum for consumers to get free answers to basic legal questions. Any information sent through Justia Ask A Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between Justia and you, or between any attorney who receives your information or responds to your questions and you, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask A Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises, or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.
