What should I do when I pay a foreign or overseas contractor?
In general, a startup will only need to collect a W8BEN form from a developer or professional in order to collect their info. No tax withholding necessary. I highly recommend using Track1099 to collect these forms (+ W9s) and keep you in check. Filing form 1042 for startups is rare, but I have seen a few cases.
On occasion (for startups that is), you may need to withhold taxes. This usually applies to royalties, athletes, artists, etc. Consult your CPA, but here’s a quick snapshot of what types of they’re looking for:
Vanessa Kruze, a seasoned CPA, has an impressive track record prior to establishing Kruze Consulting. Her experience includes pivotal roles at Deloitte Tax and as a controller for a substantial startup with over 120 employees and $20 million in revenue. Under her leadership, Kruze Consulting has emerged as a distinguished CPA firm, recognized on the Inc 5000 list for five consecutive years, illustrating rapid growth and success in the competitive accounting landscape. Vanessa's unique approach, combining deep industry knowledge with advanced automation and software solutions, has positioned her firm as a leader in providing comprehensive accounting services to startups across the United States.
