Divine Write Copywriting Forum

Hello to all,

My name is Ciara and this is my first post. I am Irish, living in Barcelona and set up and run website-copy-writer [dot] com.
My hopes and plans for the business are to turn my one-girl copywriting show into a copywriting agency. I plan to outsource my copywriting work to India, where English skills are high but pay demands are low (without trying to screw anyone over, obviously) and take a cut for each article myself. I will then have time free to work on traffic and content building for the website itself instead of spending my time actually writing for clients.

I don't plan on passing any work as my own, unless it is my own, and will be quite honest on my website, i.e. something along the lines of "this business is run by Ciara carrruthers who works with a team of writers", etc...
I.e. I'll make it quite clear that it is not I that is doing the writing.

Legally, I'm a bit lost, as I will be outsourcing to other freelancers, and not employing anyone, I don't really know if I should set up as a sole proprietor or as a LLC. The fact that I'm in Spain makes it harder because all these things are in SPanish, which I speak but of course, it makes it harder.
Is it necessary to set up a business IN the country you are living or can I, living in Spain, set up in the UK for example. I don't plan on living in Spain for more than one further year.

Any help that anyone can give me would be much appreciated.

Ciara.

Hi Ciara,

Thanks for your post. Interesting question, on several fronts!

I'll have a stab at answering your questions. I've done a lot of outsourcing in the past, quite a bit to overseas writers. But none to India or the like. My writers were in the US, NZ and here in Australia. (Note the outsourcing model is INCREDIBLY difficult to succeed with, but that's 'a whole 'nother story...').

I suppose the first thing to note is that I'm no legal expert, and legalities will vary by country, but...

My understanding is that if you're outsourcing to sub-contractors, then you're not technically employing anyone. So I don't think there's any need to set up a company. A sole trader should be fine. That's what I did for a couple of years. In the end, I only incorporated for tax reasons.

However, I'd still get all sub-contractors to sign a work agreement. If you want a copy of mine, please email me at glenn@divinewrite.com and I'll send it to you.

As for the question of whether you need to set up the business in the country you're living in, I think this is something you'd best research (looking at both UK & Spanish law). However, if you look at it from another perspective, it might shed some light on the situation for you... Pretend for a minute that you ALREADY have a sole trader business established in the UK. THEN you decided to holiday in Spain for a year or two. But you knew you didn't have the cash reserves to cover the entire holiday, so you figured that while you were away, you'd work a week in every month, just to cover expenses. As a copywriter, you can work remotely, without any problems. You can also receive electronic payments directly to your bank in the UK. And you can manage your finances online, too. So effectively, it doesn't matter where you're working from. Technically, I can't think of any reason why you'd need a Spanish business entity - unless, of course, it is required by law.

Don't know if that's relevant, or if there are strict rules that apply in the UK and Spain to stop this sort of thing. But it's an idea.

Note that David Wolstencroft may have some further advice for you. I know he's done quite a bit of outsourcing in the past.

Hope this helps.

Hi Ciara
Interesting question. I'm no legal eagle and I suggest you do get a professional legal opinion but basically I agree with Glenn. You're not employing anyone so common sense would seem to say that you can be a sole trader. Online we can work anywhere in the world. I have clients as far away as Germany, South Africa and the USA. The money comes to my bank account here and I pay taxes here.

The interesting question comes if you work from Spain and your bank account is in the UK. Where do you pay taxes?

With regards to using copywriters from India I would add a word of caution. I am married to someone from the sub-continent and have a lot of contact with highly intelligent, English speaking Indians, Pakistanis and Bangladeshis. Their English is very good and they are fluent but they don't use English the way I would - except for those born or brought up here.

I would advise you to contract English speakers who were brought up, or who had their schooling in English-speaking countries. The reason is that the English used in the sub-continent is often frozen in time at the colonial stage and so many archaic terms and phrases are used. What's more English idioms take on their own Indianised life. I'll give you an example. We would say that "it was so quiet you could hear a pin drop". The Indianised version of this is to say "there was pin-drop silence" - which has its own charm but is not the same.

Good luck with your venture. I'm sure we'd all like to hear how it goes.

Hi Ciara

Firstly - on the subject of Limited companies in the UK... the tax laws are HUGELY favourable to proprietors of small limited liability companies.

I'm from the UK and have run several small companies there. If you definitely want to be located in the UK - then without a doubt you should go for a limited company. I can put you in touch with an excellent small biz tax accountant if you need one.

I've already looked at contracting writers in India and Philippines (where English is also widely spoken). Although these countries have some excellent writers, they tend to have styles that are unique to their own cultures. Finding writers who can 'interface' with western tastes is not so easy.

If you've ever read Indian newspapers you'll understand what I mean. Without doubt, they are beautifully written. But the language patterns can be strikingly different to our own. Furthermore, most of the good copywriters tend to be gainfully employed already, as there are lots of outsourcing companies already doing what you plan to do.

Considering the state of the US economy right now and the weakness in the US dollar - you may well find that you'll get the results you're looking for from American writers. It's not such an obvious choice, yet everything in the US is comparatively cheap by European standards right now. Also consider SA and some of the other African countries. I've come across some wonderful African writers.

Good luck with your venture.
Matt Bounds

Wow, you guys are incredibly helpful, thank you very much.

Admin/glen: I would love to take a look at your work agreement, thank you. I will send you an email about it. I'm curious, why do you say that the outsourcing model is very difficult? What barriers do you predict I may come up against?
Your forum is one of the most helpful that I've come across, so thanks for creating and running it.

Munaiba: Interesting that you mentioned my bank account. It is in Spain. I hadn't thought of that. I suppose if I'm bringing money into Spain, I have to pay taxes here? Although I do have an English bank account, and an Irish account, so I could use those also, if needed.
What you say also about English speaking style in India is very valuable to me and not something I had considered. I may focus on the States or SA, as you suggested.

Matt: I am not very familiar with laws in the UK with regards to small limited liability companies. What advantages are there of incorporating in the UK, if you have time to give me a brief run down? I could of course start as a sole proprietor until I'm earning enough to consider incorporating for tax reasons. Again, thanks for what you say about the English spoken in India, I understand what you mean.
I may consider, as you suggested, going with American writers or I will look into African writers.

Thanks to all for your input!
I will let you know how I get on.

The advantages of incorporating are quite simple...

As the owner / operator of a small UK company, you pay a lot less tax than you would as a sole trader, or indeed an employee.

The only reason not to incorporate would be if you just had one solitary customer for a whole year. Otherwise you'd be dumb not to form a limited company

The tax breaks are so good that laws have been put in place to prevent individuals from signing off as employees and becoming self employed 'consultants' working only for one company.

The essence of it is this: if your company's profits are under £300K - corporation tax is only 19%. Having paid corporation tax - you can then pay yourself largely by dividends rather than salary, thereby avoiding income tax. The upshot is that you end up paying the same tax rate as someone on the minimum wage for your first £300K of profit.

You should also be aware that you become eligible for UK income tax if you spend more than 100 days in the country.

I can't speak for Spain or other countries on the continent as far as tax is concerned. I really have no idea which countries are cheaper tax wise. But in my experience it tends to be a case of swings and roundabouts. Australia has astronomical tax rates, but living is comparatively easy here. Everything seems cheap compared to home. The same goes for the States...low taxes, but it can be hard to make ends meet after you've paid for medical insurance and wot-not.

If I were you I wouldn't let the tail wag the dog. Just live where you want to live and concentrate on building your income as best you can. Bear in mind though, that you always have an advantage over the competition if you're able to meet your customers face to face.

Buena suerte, Go n-éirí an t-ádh leat!