Laws regarding hiring a freelance programmer from India.

October 24, 2008 2:36 PM

I would like to hire a freelance programmer from India for a programming project. The programmer would remain in India and operate as an independent contractor rather than an employee. What legal hurdles must I overcome or can I just do it?

I have already found someone, and I am not worried about anything but making sure that I don't break any laws.

This is really just a legal question. I will be making payments across international borders for services rendered and I just don't want to break any laws. I am not worried about data security or anything else.

I am pretty sure that the freelancer qualifies as an independent contractor rather than an employee: The programmer would remain in India and would have to supply their own working environment. The freelancer would be responsible for paying his own taxes. Once the project is over the relationship ends. However, I would pay for prgramming services on an hourly basis and any contract we draw would be very rudimentary.

posted by wdwcuwa to law & government (9 comments total)

Have this person sign up to elance and hire them as a subcontractor through there. They will even handle your 1099's with the sub contractor.
posted by wile e at 3:23 PM on October 24, 2008

"This is really just a legal question."

...clue #1 that you should be talking to a lawyer.
posted by toomuchpete at 3:30 PM on October 24, 2008

clue #1 that you should be talking to a lawyer.

Or you can just call the IRS for free to ask what the reporting and form filing requirements are if you hire an overseas contractor.

Some legal questions really are pretty routine and don't universally require consultation with an attorney.
posted by DarlingBri at 3:53 PM on October 24, 2008

Two important things I forgot to mention:
1.) I'm private individual and not working for a company. This is not a business expense; it is a personal, private purchase, like paying for a massage, except its a piece of custom software.
2.) I've called up the IRS and the Customs and Border Patrol help lines. In both cases, the operators told me that I didn't have to worry about it as far as their agency was concerned. It looks like Tariffs are a big deal when you talk about goods, but don't exist for services.

I'm only planning to pay the contractor (most likely, a student) around $500, total. Hiring a laywer with expertise in international trade would probably cost at least that. Because I am an individual and they are a company (specifically, a contractor), this appears to be legally equivalent to me buying a book from Amazon.co.uk. I'd feel kindof stupid for paying a international trade lawyer so much money (as a private individual, that's a lot of money) to ask a question that basically boils down to asking if I can but a service from an Indian company. For example, are there any legal barriers to me using getfriday.com? That is an Indian company as well.

I may get legal advice at some point. If it costs too much, I'll probably ax the project. I'd like to do as much research as I can, first, rather than just throwing money at it via a law firm.

> Have this person sign up to elance and hire them as a subcontractor through there.
Why would I need to do this? I'm not worried about escrow, etc. I'd probably pay at $4 per hour, so if they want to rip me off for that, I'll just find someone else.

I oversimplified in my OP. I'm actually considering hiring a couple of different people. One of them wrote the following: "Incase you need me form a sole proprietorship firm exclusively for this contract(very nominal expense of around INR500/- ($10) one time payment for trade license) please let me know and you can outsource work to that firm."

This would be a much more complex question if I were a business and wanted to write the expenses off on my taxes. Being just an individual and given that this isn't even a business expense, I don't need to. One can argue that it really is just like purchasing from a business, for which no paperwork need be kept or filed.

I don't know. Most of the people I talk to say I'm worrying about it too much and should just do it. The rest say I shouldn't do anything until I talk to a lawyer.

Thanks for the help. I hope you find the post thought provoking. ;-)
posted by wdwcuwa at 4:05 PM on October 24, 2008

BTW, while it's probably clear that I've already thought about this a lot, I'm definitely VERY INTERESTED in any other information that the hive mind might be able to share with me.
posted by wdwcuwa at 5:08 PM on October 24, 2008

Since it's offshored, it's probably not your problem. If they were an American citizen or resident, you'd need to 1099 them if you paid an individual more than $300 (and would probably have to do the paperwork for officially reequesting their SSN). But, if they were American and had a company of some sort (LLC, corporation, or registered sole proprietor), then you wouldn't have to fill out any paperwork either.

Since this is a personal purchase, with nothing you can write off, this doesn't seem any different from mail ordering a toaster from Malaysia. The fact that the toaster is custom-made, and that the producer probably has to pay tax on the revenue, seems immaterial to your end of the transaction.
posted by Netzapper at 5:38 PM on October 24, 2008 [1 favorite]

All you have to do is hire them. People will tell you to use elance or getafreelancer, but I've found that RentACoder is the largest and most reliable marketplace. Sort of an eBay for programmers and other remote workers. Bonus points: Take your pick of Indian, Russian, American or any other nationality of programmer. Escrow service and strong customer support as well as a feedback system make sure you don't pay for work that's not up to spec.
posted by MaxK at 8:34 PM on October 24, 2008

Thanks a lot for everyone's help. I'll check RentACoder, but I was able to find someone who said they'd be happy to work for $3/hour on Craigslist, my inclination would be to go with that route. I suspect that professionals on freelance sites will have high expectations regarding pay, but I'm happy to just go with a college student I meet on Craigslist because I'm a programmer, too (unfortunately with very bad RSI, which is why I want to hire someone).

Can anyone think of any problems with that? I'm not worried about escrow, etc., since the sums of money are small. I'llbe looking over their shoulder a lot (I'll be the software architect and it will almost be team programming), so I'm not as worried about needing a reputation system from a website. I'll be able to figure out who's good and who isn't. Therefore, I think Craigslist might work out well. Feedback?
posted by wdwcuwa at 9:24 AM on October 25, 2008

Because you're a programmer you will know better than most small business owners what to look for in a programmer, so I say go for it! Craigslist is absolutely a great venue for you to find talented workers. Just make sure you follow their guidelines for protecting yourself from fraud and you should be set!
posted by MaxK at 6:05 PM on October 26, 2008