Hi everyone,

First of all, let me explain our situation to you: we are a small graphic design studio in Los Angeles, we have recently received an offer from our ex-employee who just moved back to Indonesia (his home country). He made an offer for us to outsource some of the design work to him on a reduce rate. We are very happy to hear the offer because he was one of our leading designers and the best on what he does. He worked for us for 3+ years with an H-1B visa. We have considerred, in the past, to outsource some web design and programming projects to cut costs but never get around to it.

We have heard that big IT companies like IBM, Miscrosoft and Apple have done offshore outsourcing for quite a while now, and we would like to start doing so with the person mentioned above.

We want to obey all laws involving IRS and INS, so here are the questions to you guys:
1. Does he need any permit to do business with us?
2. How does taxation works on his income? Does he need to pay Federal tax?
3. We need to pay him somehow, so is sending western union or wire transfer illegal in this purpose? What is the proper way?
4. Any referrals to websites or persons that specializes on this matter?

We want to make sure we are not doing anything illegal with this type of working relationship, so any help from you is highly appreciated. Thanks.

well if he does not live in the united states he doesn't have to pay taxes. You are essentially employing him from the united states in his country. He will have to report his earnings according to his countries tax laws.

try alibaba.com

open a bank account here in the states and send him a bank card. I have never been to Indonesia, but im sure they take debt cards.. That way you dont have to go through all the trouble of wire transfers everytime he gets paid. I am not sure about the tax questions.