How do I pay freelancers for translations - translation agency/sole trader

[laurieeee]

Hi!

I have a few questions and I will be really thankful if someone could answer them. Thank you so much in advance!

I have a lot of friends/friends of friends who need their documents translated into different languages (mainly into English) and i thought this will be my next business idea. Basically I would have clients who need their documents translated and I would find translators who I would pay for translating those documents. I would charge the clients a bit more than what the translator would charge me. My profit would be the difference between the two. I would be responsible for finding clients and for the marketing, website etc.. I would be dealing with clients directly, translators would be dealing only with me directly, not with clients.

Here are my questions:
- How do I go about paying the translators? Do they need to be registered as sole traders/self-employed/have an ltd and just send me a typical invoice and then I just pay these invoices? How do i classify this as an expense? I don't want to employ any translator! I may have a lot of translators (different languages etc) and I just want to pay them for the job done. Some of them may only get a couple of jobs from me while some of them may get more.. Do they just send me an invoice, I pay and treat it as an expense? If yes, what category?

- In order to do this, can I be registered as a sole trader or do I need an ltd?

- I am already registered as a sole trader because i was selling some goods online. However, now i stopped with this first online business. That business was selling goods online so it was an entirely different kind of business. Do I need to call HMRC or anywhere else to explain that the type of business I will be doing now is different than the previous one?

- I was a sole trader trading under my name plus another name.. as i said i was selling goods online so the name was related to the goods. Now it will be translation services so I would prefer a different name. As a sole trader, can I just change the name? If so, who do I need to inform? Is it going to complicate things when doing the tax return?

- Last one: Do I have to include the entire name on the invoices I produce for my clients (my name + trading name) or is it enough to only provide my name? This way i could avoid changing the name into a new one..

Thanks so much in advance!

 

[paulears]

Laurie Smith T/A whatever you want. Your translators are providing you a service. Ask them for an invoice and pay it. Be careful with the term 'expenses' - this is different. Your petrol, stationary and all the costs of doing business are expenses, which simply reduce your profit, and therefore tax liability. You receive invoices from your suppliers, and pay them, and then generate invoices to your clients. The invoices need to give the details for the payment - so whatever your bank account name is in needs to go on the invoice.

As for informing people HMRC will need to have your details because their database links your name to the business name, with Trading As one of the fields. If you ever register for VAT, then as a sole trader, your VAT number also has the link to the trading name. My business bank account happily accepts payments to me personally in my name, or the business name. It gets a little messy with two trading titles, but if you have the bank account, and the old name is not used, just inform HMRC to change it.

If you've been trading before, how come you don't know any of this?

 

[laurieeee]

Laurie Smith T/A whatever you want. Your translators are providing you a service. Ask them for an invoice and pay it. Be careful with the term 'expenses' - this is different. Your petrol, stationary and all the costs of doing business are expenses, which simply reduce your profit, and therefore tax liability. You receive invoices from your suppliers, and pay them, and then generate invoices to your clients. The invoices need to give the details for the payment - so whatever your bank account name is in needs to go on the invoice.

Paul, thanks a lot for your response. Could you explain this one please - If i pay my translators let's say £100 and I charge the client £120, then my profit is £20. Clearly what I paid to the translator IS my expense, isn't it? Can I not include it in my expenses? If I can't then I have to pay tax on the entire £120 instead of £20.. That would make no sense and I would be paying too high tax for profits i didn't make. Does that make sense?

As for informing people HMRC will need to have your details because their database links your name to the business name, with Trading As one of the fields. If you ever register for VAT, then as a sole trader, your VAT number also has the link to the trading name. My business bank account happily accepts payments to me personally in my name, or the business name. It gets a little messy with two trading titles, but if you have the bank account, and the old name is not used, just inform HMRC to change it.

If you've been trading before, how come you don't know any of this?

I am using my personal bank account because i don't have many transactions.
My question is whether I can just put my name and surname on my invoices or do I have to add the trading name too? (i have the trading name but I would prefer not to put it on my invoice because it's a name related to my old business and has nothing to do with translations services).

If I have to keep the trading name on all the invoices, i would rather change it. In that case, do I have to contact HMRC to change it? Then, if I do change it, is it going to complicate things because my previous expenses/transactions included the old name?

 

[paulears]

No it is not an expense. Let's use your example. Your translator invoices you for £100, you have to post a hard copy to your client that you are charging £120. The cost of the recorded delivery is £4, the envelope 50p and the ink you used in your printer had run out so you had to put in a new cartridge costing £5.50. Your expenses in this transaction were £10, so your initial profit was £20, but you had expenses - so your profit was only a tenner. Try to remember it is income and expenditure, in money and out money. Your tax liability would be only on the ten quid, not the 20.

If you told HMRC your trading name, then you really should tell them the new one. They probably won't be bothered as your business is small, but if it is a serious business, then you should keep your personal and business money separate. Otherwise, if you ever get inspected by HMRC, they'll start to delve about in your personal bank account and have to perhaps itemise the last six years worth of transactions. Happened to me a long time ago, and they'll perhaps just give you a date and an amount and ask what it was for. If it's mixed in with visits to tesco, and new inner tubes for your bike, it gets complicated. Why not open a business account - even an online one, and have your name and trading as. You could easily call yourself Jane Smith Translations - doesn't have to be complicated. My son was self-employed for a couple of years and was just Michael Johnson Stage Services - it covered pretty well what he did. Can you just do the same. There's no issue putting the money in your personal account, apart from the difficulty in knowing how much money you have!

 

[Newchodge]

The translator's charge goes down as your cost.

PS If you set up I can translate from French and from Spanish into English.

 

[Scalloway]

I am using my personal bank account because i don't have many transactions.
My question is whether I can just put my name and surname on my invoices or do I have to add the trading name too? (i have the trading name but I would prefer not to put it on my invoice because it's a name related to my old business and has nothing to do with translations services).

There is nothing to stop you using your own name if the trading name does not suit you for this business.

 

[laurieeee]

Paulears: Yes I want to open a business bank account, but maybe just an online one for now. Would Paypal be sufficient? It would be connected to my personal bank account but all the transactions on paypal would be business transactions.

Also, I am a sole trader. I do want to call my business something like Laurie Smith Translations, but the problem is that my business so far was called Laurie Smith Flowers and Cookies... How do I go about changing that? Like I said a bank account is not an issue because I still have to open one so I can open it under a new name, but what about my previous documents (such as invoices, letters etc) which state "Laurie Smith Flowers and Cookies" instead of "Laurie Smith Translations"? Do I inform HMRC about that? If yes, how? and also who else do I need to inform? Do i need to do anything else about this name change?

Newchodge: If the translator's charge is my cost, then I obviously deduct it from my revenues and pay tax only on my profits, right? (seems a silly question but I got confused..). And good to know, I will reach out to you once I set up!

Scalloway: ok, but can I change the name of the business? who do I inform?

 

[paulears]

Just phone up HMRC and ask - in most cases it's just a case of telling them you have changed your trading title. They really won't be that worried, so just let them know. They will need your UTR number, that's all.

PayPal business account would be simple yet handy - sounds good to me.

 

[Scalloway]

Scalloway: ok, but can I change the name of the business? who do I inform?

The only people who are interested are HMRC and Paulears has covered that.