How does one get paid for an online deal?

I was recently contacted by someone online who wants me to make them a music video. If we agree on a price, how would I get paid for this? Paypal? Something else? Also, do taxes apply to Paypal (the internets are pretty vague on this one)?

Has anyone else done an exclusively online transaction? I'm interested in hearing how that might have went, as I'm really new to all this.

Thanks!
 
I don't know anything about taxes in your country, but I don't think your government cares about how you got paid, but what you got paid.
If PayPal was taxfree, everyone would use it to get paid. ;)
 
For something that's exclusively being handled online Paypal is probably the surest way to get paid, although you could also just have them send you a check. Paypal does take a cut if they use a credit card as the source of funding though, so you'll end up clearing about 3-5% less that way.

Walter's right though - it doesn't matter how you get paid, the government wants a cut! Basically, the way it works is that for amounts under $600 it's up to you to declare the income on your tax return under the 'additional income' section. For amounts over $600 the person paying you is supposed to send you a '1099' - a form for misc non-employee income which basically lists how much they paid you that year. Then you would file that with your return.

In either case you're likely to owe something, although if the amount is low and you have a regular (W2) job as well it'll likely just offset your return slightly.

If the amount is large enough that you'll actually owe much in the way of taxes you'll probably want to file a schedule C as a sole-proprietorship (meaning you're a business, but it's just you). This lets you claim any business expenses (cameras, computers, software, paper & ink, mileage, etc) against the income you made from the video, which will reduce the amount you owe taxes on.

Welcome to the downside of independent contracting, where you get to learn all about exciting topics like accounting, bookkeeping and tax preparation!
 
For your tax question, you should speak to an accountant, preferably a CPA. In regards to how you would get paid, you may want to consider having the guy put the money in escrow, so both of you will be protected.
 
Paypal takes a cut no matter how you pay. Something like $3 + 2%.
That being said, it is reliable and can be given as proof if proof is ever needed.


That's not 100% true. It depends on the type of transaction the buyer specifies. If the transaction is labeled "Goods" or "Ebay Items" then a fee will incur. If the transaction is labeled "Services" then nope. This may be switched around but that's what I've noticed and I do a lot of transactions via Paypal.
 
If the person sends it via PayPal, have it sent specifically as a gift.
Be very wary of PayPal for "services" (rather than goods), as the odds are stacked exponentially against you if the "buyer" decides they want to chargeback your payment.

A wire transfer would be your best bet as.. once it's in, it's in!
However, depending on where you are, there could be a $10-$30 charge to send one.
 
So to be clear it's a voluntary report of the income from a paypal transaction on my taxes?

Again, it depends on the amount. Technically if it's over $600 the person hiring you is supposed to report it and send you a 1099, in which case you'll definitely want to report it on your taxes as well.
 
I was recently contacted by someone online who wants me to make them a music video.

How did that conversation go down? What kind of money we talking about, too.

Are you familiar with courrent internet money scams? Not saying that it is one, but you should always have an eye out for suspicious indications.

You can protect yourself by placing a watermark on all the rough cuts & edits. Once the final cut is approved, and money is in your account, send the non-watermarked version.

Try to avoid using PayPal, if you can.
 
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