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Upwork invoice

chris_bannu
Community Guru
Cristian B Member Since: Aug 23, 2017
1 of 12

Hi,

I have noticed that the invoices generated automatically by Upwork contain the total amount that the client pays, including the Upwork fees. Do I have to use these invoices, or can I use my own invoices? I am asking because since I never receive the money that represents the Upwork fees, I wouldn't like to pay income taxes on that amount, so I would like to create my own invoices where only the amount that I actually receive is stated. I am a micro-company, and I pay 3% out of the gross earnings, so that means I have to pay 3% of the Upwork fees as well, even thought it's not really my money 🙂 It's not a big amount right now, but it could get bigger 🙂

 

Thank you,

Chris

petra_r
Community Guru
Petra R Member Since: Aug 3, 2011
2 of 12

Use the issued invoices, download the invoives for the fees and claim them as business expenses.

chris_bannu
Community Guru
Cristian B Member Since: Aug 23, 2017
3 of 12

Yeah, that was my initial thought, but my taxes don't depend on business expenses, it depends only on the gross earnings, so while I can have huge business expenses, I will pay the same tax.

christopherbudde
Community Guru
Christopher B Member Since: Jul 11, 2015
4 of 12

To file with business deductions you would need to pay the standard 16% tax then figure the deductions in. it seems to me that paying 3% on upwork fees is a much better deal.

petra_r
Community Guru
Petra R Member Since: Aug 3, 2011
5 of 12

@Christopher B wrote:

To file with business deductions you would need to pay the standard 16% tax then figure the deductions in.


 He is in Romania. That system is completely different.

chris_bannu
Community Guru
Cristian B Member Since: Aug 23, 2017
6 of 12

Yeah, in Romania there are two options:

 

1. 3% out of the gross earnings

2. 16% out of the net earnings

 

My company is registered as a micro-company, so I pay 3% out of the gross earnings, which basicaly includes the Upwork fees, even though those are not really MY earnings 🙂 That's why I'm asking, do I have to go with the Upwork invoices, which include the Upwork fees, or can I issue my own invoices to my clients?

tlsanders
Community Guru
Tiffany S Member Since: Jan 15, 2016
7 of 12

Chris, they ARE your earnings. The client doesn't pay a fee to Upwork. You pay Upwork a fee for working through the platform, and that fee is based on a percentage of your earnings here. The fact that the fee is deducted before funds are released to you versus Upwork sending you an invoice at the end of the month and you paying it makes no difference--the full amount the client pays represents your gross earnings, and you pay Upwork fees based on those earnings.

chris_bannu
Community Guru
Cristian B Member Since: Aug 23, 2017
8 of 12

@Tiffany: Yeah, that makes sense, thanks for the clarification 🙂

christopherbudde
Community Guru
Christopher B Member Since: Jul 11, 2015
9 of 12

16% is the basic business tax rate in Romania. You declare your income and apply deductions just like in the USA. How exactly is the "totally different" ?

gilbert-phyllis
Community Guru
Phyllis G Member Since: Sep 8, 2016
10 of 12

I would very much like to pay 3% tax on my gross earnings. What is it like to live in Romania?

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