Setting Up Your Consulting Practice

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Financial

Topic: Setting Up International Wire Transfers

You may need to send money internationally from a client operating in a different currency or pay a subcontractor with a checking account in a different currency. Most business banks can send an international wire transfer; a less expensive option is to use Transferwise.

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Get set up to send money internationally or receive money internationally from a subcontractor or from a client, that’s operating in a different currency. 

So, you can from most bank accounts send an international wire transfer to a bank abroad. If you’re doing that from a typical bank business checking account, you’re gonna suffer a pretty high currency conversion fee. It could be in the neighborhood of 3% of the total — quite high.

There’s a way to get around that if you set up an account with a firm such as OFX or TransferWise. They will create an account for you where then, let’s say that you’re getting paid, let’s say you live in the US and you’re getting paid in Euros. They’ll set up an intermediary account for you such that your European client would pay an account in London in Euros and then OFX or TransferWise would take dollars that they have and put it in your US account and they give you a much more attractive currency conversion fee. Something on the order of 1% or less of the total.

So, if you don’t do this and you’re receiving some sort of meaningful payments from abroad, it could cost you on the order of thousands of dollars of currencyconversion fees that you can avoid.

The other thing of course with international, if you’re dealing with international clients — do talk to your tax accountant just to understand the situation if you’re gonna owe any taxes to that foreign government or if there’s going to be any taxes withheld or if you need to charge GST or VAT or any other kind of taxes for serving foreign clients.