If you hire a subcontractor to help you complete a job, you have a couple of options.
If you are charging a mark-up on your subcontractor costs then any profit you make needs to be declared as income.
If you are not wanting your client to see your mark-up on their invoice then we suggest the following approach:
- Invoice the customer for the full amount of your subcontractor fees, plus any mark-up you are making i.e. Charge $100 (to cover $70 for your subcontractor and $30 for you).
- As you will be charged income tax on the full $100, you will need to raise a Business Expense under the 'Subcontracting' category of $70 to recoup the income tax on that portion (i.e. once the expense is processed, the system will automatically adjust to make sure you don't pay income tax on $70 from your next lot of earnings).
You should upload proof of payment (invoice, payment receipt or remittance, or a bank transaction) as the receipt, as a Business Expense under the 'Subcontracting' category.
If work done by the subcontractor is going to be reimbursed in full by your Client, you can raise it as a Client Reimbursement so that the expense will appear on the next invoice you raise for them. When that invoice is paid, the cost of the subcontractor expense will be passed back to you in full with no taxes deducted.
N.B. Hnry does not currently support the payment of staff through PAYE. If you would like to hire permanent or fixed term staff and pay them using PAYE, please let one of our team know as soon as possible.