Elance - Tax Issues

I'm having an issue working out how I should be paying tax on Elance earnings, as I am considering going into this.

The situation is that I am based in the UK, but as Elance is an American site, often dealing with American companies/individuals, do I have any tax liability in the USA, personal or otherwise.

The second issue is that if I put the payments through someone elses paypal (what would actually be happening due to age requirements would be that my parents would be subcontracting the work to me) do they carry any income tax liability on that income?

I am trying to work out whether the best way to do this would be to incorporate a Ltd company, and put all business affairs through this. Obviously this would solve the taxation issue with regards to my parents, but I'd be paying £15 incorporation fees on top of the £15 a year in filing annual acounts.

Originally Posted by Chit_N_Chat The situation is that I am based in the UK, but as Elance is an American site, often dealing with American companies/individuals, do I have any tax liability in the USA, personal or otherwise.

Easy answer is no. As long as you are doing business in the UK, then you are not liable for any income you make because you are not American. If you were American, temporarily residing in the UK, that would be different.

Originally Posted by Chit_N_Chat The second issue is that if I put the payments through someone elses paypal (what would actually be happening due to age requirements would be that my parents would be subcontracting the work to me) do they carry any income tax liability on that income?

If you do this, I believe your parents will be subject to taxes on that income. I'm not sure how the UK handles underage income from parents, so you should check on that to be sure if you are liable as well.

I am trying to work out whether the best way to do this would be to incorporate a Ltd company, and put all business affairs through this. Obviously this would solve the taxation issue with regards to my parents, but I'd be paying £15 incorporation fees on top of the £15 a year in filing annual acounts.

If I were you, I'd pony up the bucks, er, euros and do it on your own. You only complicate things when you involve your parents. If, for some reason, someone decides to sue you, your parents would be liable for it, not you.