Outsourcing

[jitsking]

Hello,

I'm a web designer and let's say I want to use fiverr.com in order to outsource some work for my business in order to offer my client something I don't normally do. How do I account for these services that I obtain from this site? Do I treat each person as a contractor?

Thanks,

[vangogh]

If you always go through Fiverr, I'd probably consider it a cost of doing business. If you work with some of the people again and again outside of Fiverr, then I would think of them more as contractors. If the people are contractors and what you pay them exceeds a certain amount in a year ($600 I think) then you need to send them 1099s. I don't think that's the case with the site as a whole. Do you get to choose who you work with on Fiverr? Or is it more you submit a project and select a winner? How does it work?

By the way I'm moving this thread to the Accounting and Taxes section since it seems more appropriate there.

[jitsking]

Hi there and thanks for the response. Fiverr is basically a site where people post services that they will do for five dollars (there's a lot of crazy things people will do for $5). Example - You want a logo for your business. You can search for people who design logos on fiverr, look at the past work they've done, see what their rating is, etc.. and hire the one you want. The money you pay goes to Fiverr and Fiverr probably takes their fee from the sale and then passes on the rest of the money to the person that's doing your gig.

[vangogh]

If you're paying Fiverr I would think it's more a cost of doing business than hiring contractors. I would think of it the same way I think of paying for hosting each month, domains each year, and things like that.

I'm not an accountant though, so don't just trust me on this. Cost of doing business is how I would do it though. I'm not sure what forms you fill out for taxes, but if you file as a sole proprietor, this would end up on the 1040 Schedule C. Line 10 asks for commissions and fees and I'd consider this a fee.

[jamesray50]

Good morning - no, you wouldn't post it to contract labor. You would post it to whatever expense (or cogs) account that would be appropriate. I have a client that uses them and I post the transactions to marketing.

I had never heard of Fiverr until I saw where my client uses them so I Googled them. There were some complaints where projects weren't done to customer satisfaction, or not done at all, or late getting done and there was no recourse. It seemed like once you paid it was a gamble on whether you would get what you paid for. And would you really get quality work for $5? I have no idea what my client uses them for, but I'm thinking she probably has someone liking her FB pages or something simple like that.

[FastPrintingCo]

I have used Fiverr a few times and no complaints. They have a good policy on making sure you get what you want or your money will be refunded. In fact you don't agree to pay until it meets your standards. If you use it right for blog posts on high PR pages, you can't beat $5 especially if the post stays there forever.