Hello everybody,
It would be nice if you could go through this post in detail and give me professional suggestions.
I have been working as a recruiter for over 2 years now, specializing in hiring in Microsoft Technologies. I have been working in full-time jobs (almost a year in a placement firm, and the rest in the overrated corporate environment). Overrated, because the work doesn't pay off well enough than the handsome fixed salary, which is much less considering the incentives that can be made in vendorship.
Recently, I have started doing freelance recruitment jobs for many struggling recruitment firms at a 50% profit-sharing. Note that this is all based on plain trust and nothing more. After doing this job, I have come to realize that I am not doing justice to the candidates that bear potential deserving more than what the clients of mine have to offer (No jokes, some candidates are absolutely great and deserve working in Microsoft itself).
I have been in a couple of meetings with the HRs of some top-notch product development companies requiring the kind of people I have waiting to be hired. I had an over-the-table discussion of the type, background, abilities, and expertise of candidates that I have, and also had a discussion of what the contract would basically cover (viz, replacements, fees, contract durations, expenses incurred in the process, etc.).
While typing down the contract details on hard copy, I came across a few doubts:
1) What about service taxes?
2) What about my income tax?
I am not a registered company/firm/agency. I pay my IT, all the money that I make is in "other sources of income." The clauses pertaining to service taxes state that any services rendered by a party are liable to service tax, which should be paid to the service provider. So, should I add another 12.24% over the billing percentage? And if so, where do I go about declaring it? Should I declare it as service income or again in "other sources of income"? Would my PAN number do the job in the contract?
It would be really helpful if any of the senior members with degrees in corporate laws could suggest me considering me as a hypothetical freelance service provider to their company(s). And what they would do and suggest to me about contract documents and how they should be formatted, and what should and should not be stated in the same.
Thanks in advance.
From United States, San Diego
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2It would be nice if you could go through this post in detail and give me professional suggestions.
I have been working as a recruiter for over 2 years now, specializing in hiring in Microsoft Technologies. I have been working in full-time jobs (almost a year in a placement firm, and the rest in the overrated corporate environment). Overrated, because the work doesn't pay off well enough than the handsome fixed salary, which is much less considering the incentives that can be made in vendorship.
Recently, I have started doing freelance recruitment jobs for many struggling recruitment firms at a 50% profit-sharing. Note that this is all based on plain trust and nothing more. After doing this job, I have come to realize that I am not doing justice to the candidates that bear potential deserving more than what the clients of mine have to offer (No jokes, some candidates are absolutely great and deserve working in Microsoft itself).
I have been in a couple of meetings with the HRs of some top-notch product development companies requiring the kind of people I have waiting to be hired. I had an over-the-table discussion of the type, background, abilities, and expertise of candidates that I have, and also had a discussion of what the contract would basically cover (viz, replacements, fees, contract durations, expenses incurred in the process, etc.).
While typing down the contract details on hard copy, I came across a few doubts:
1) What about service taxes?
2) What about my income tax?
I am not a registered company/firm/agency. I pay my IT, all the money that I make is in "other sources of income." The clauses pertaining to service taxes state that any services rendered by a party are liable to service tax, which should be paid to the service provider. So, should I add another 12.24% over the billing percentage? And if so, where do I go about declaring it? Should I declare it as service income or again in "other sources of income"? Would my PAN number do the job in the contract?
It would be really helpful if any of the senior members with degrees in corporate laws could suggest me considering me as a hypothetical freelance service provider to their company(s). And what they would do and suggest to me about contract documents and how they should be formatted, and what should and should not be stated in the same.
Thanks in advance.
From United States, San Diego
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As a freelance recruiter, it's crucial to understand the implications of service taxes and income tax on your earnings. Here are some practical steps to address your concerns:
1. Service Taxes:
- Service taxes are typically added as an additional cost to the client on top of your billing percentage.
- The standard service tax rate is 12.24%, but this can vary based on the nature of services provided.
- Ensure that you clearly outline the service tax component in your contract with the client to avoid any misunderstandings.
- You may need to register for service tax with the relevant tax authorities and follow the guidelines for reporting and remitting the tax.
2. Income Tax:
- As a freelancer, your income tax obligations are based on the income earned from your recruitment services.
- Since you are not a registered entity, your income would fall under the category of "other sources of income."
- It's advisable to maintain detailed records of your earnings and expenses for tax purposes.
- You should declare your freelance income while filing your annual tax returns and ensure compliance with the tax laws in your jurisdiction.
3. Contractual Considerations:
- When drafting contracts with clients, clearly specify the terms related to service taxes, including whether they are inclusive or exclusive of the billing amount.
- Include provisions for income tax compliance to avoid any legal issues in the future.
- Consider seeking advice from a tax consultant or legal expert to ensure your contracts are legally sound and protect your interests.
By addressing these tax-related concerns upfront and incorporating them into your contracts, you can operate as a freelance recruiter more effectively and in compliance with the relevant tax regulations.
From India, Gurugram
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1. Service Taxes:
- Service taxes are typically added as an additional cost to the client on top of your billing percentage.
- The standard service tax rate is 12.24%, but this can vary based on the nature of services provided.
- Ensure that you clearly outline the service tax component in your contract with the client to avoid any misunderstandings.
- You may need to register for service tax with the relevant tax authorities and follow the guidelines for reporting and remitting the tax.
2. Income Tax:
- As a freelancer, your income tax obligations are based on the income earned from your recruitment services.
- Since you are not a registered entity, your income would fall under the category of "other sources of income."
- It's advisable to maintain detailed records of your earnings and expenses for tax purposes.
- You should declare your freelance income while filing your annual tax returns and ensure compliance with the tax laws in your jurisdiction.
3. Contractual Considerations:
- When drafting contracts with clients, clearly specify the terms related to service taxes, including whether they are inclusive or exclusive of the billing amount.
- Include provisions for income tax compliance to avoid any legal issues in the future.
- Consider seeking advice from a tax consultant or legal expert to ensure your contracts are legally sound and protect your interests.
By addressing these tax-related concerns upfront and incorporating them into your contracts, you can operate as a freelance recruiter more effectively and in compliance with the relevant tax regulations.
From India, Gurugram
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