by Hope
As you know I am laser focused on building my virtual assistant consulting business. Today I am here with a question for the BAD community about the service fees I incur.
Little Background
When I began twelve years ago, I was able to build my business using to primary methods.
First, I advertised in local business focused magazines and newspapers. My first client found me through a newspaper that came to his wife’s law office. He ended up hiring me as customer service for one company and tech support for another.
Second, I applied for project based jobs on Guru.com. This is how my longest running client found me. I started as a part time marketing assistant and moved up to customer service and product manager over 10 years with them.
Now Today
I thought as I began to focus on rebuilding my consulting business that I could go about things in a similar manner. But time has changed things a bit. Virtual Assistant is now a common term. And I am competing with a worldwide workforce.
Tim Ferris’ book Four Hour Work Week brought using an international workforce to the forefront. Highlighting the opportunity to hire a quality, low cost support staff. It made competition in the virtual assistant world fierce.
My Question: Service Fees
As a result of all of this, I am changing direction. Or at least the platform and proposals I am using.
I am now focusing on Upwork.com and taking advantage of their detailed filter options for finding work. I specifically like the option to limit your search results to projects seeking US Based Workers only. This is huge for my particular industry.
Here’s my question: each of these platforms charges a service fee to the contractor.
The service fee comes out of the contractors pay depending on what level of membership the contractor has. I am charged 8.95% of any pay on Guru and 20% for the first $500 earned per client and 10% up to $10,000 with a client on Upwork.
How do you account for the service fee when it comes to tax time?
Hope is a creative, solutions-focused business manager helping clients grow their business and work more efficiently by leveraging expertise in project management, digital marketing, & tech solutions. She’s recently become an empty nester as her 5 foster/adoptive kids have spread their wings. She lives with her 5 dogs in a small town in NE Georgia and prefers the mountains to the beaches any day. She struggles with the travel bug and is doing her best to help each of her kids as their finish schooling and become independent (but it’s hard!) She has run her own consulting company for almost twenty years! Hope began sharing her journey with the BAD community in the Spring of 2015 and feels like she has finally in a place to really focus on making wise financial decisions.
Interesting. I would think they would just 1099 you on the net amount. Then just claim that amount as income. If they 1099 you on the gross then deduct as a business expense.
I agree. They will either pay you less off the bat on the 1099 or deduct it. Are you adding this 10-20% into the rate you are charging? The 15$-20$ an hour you proposed a few posts ago is quickly dwindling….