Upwork Agency - I am still confused on how to use

sudhirke · 2025-01-02T14:38:13+00:00

Any good guidance on how to use Upwork agency feature and assign work to agency contractors. This is still one of the very confusing topic and most of the l...

TMCDOS

I agree that it is a stupid way of working but I believe the original idea of Upwork about agencies was that the client will hire the agency and then the agency will hire individual freelancers, so it will be client => agency => freelancer(s). The freelancers will log their hours against their individual contract(s) with the agency, then the agency will log total time to the client, agency will pay to the freelansers, client will then pay to the agency.
I could be wrong because Upwork are not very clear and public about the exact details.

anovikov

No this is not how it works and it never was that way.

TMCDOS

I suppose Upwork treats agencies as regular freelancers - the client hires the agency and pays to the agency and then it is up to the agency to do the work itself or hire subcontractors (and pay them). And probably this is how Upwork differentiates between agencies and freelancers - agencies are allowed to outsource while regular freelancers (even those with VAT number) are not allowed. Correct ?

Petra

TMCDOS

Correct ?

No, literally none of that is correct.

Clients hire specific agency members through the agency, pay the agency, who pays whatever they see fit to the agency members however they like,

As far as outsourcing is concerned, people are allowed to outsource fixed rate contracts with the client's knowledge and consent, but not hourly contracts (even with the client's consent).

And none of it has anything whatsoever to do with a VAT number.

dsmgdesign

Petra - sort of .. depends...if it's a proposal that was sent to the client, the client hires whoever is bidding from the agency on the project.

I'm an agency owner, and if I'm bidding on behalf of another agency member but use my team member name in the dropdown to bid, the hire comes to me. If I use one of my team member's name in the drop down, then the hire goes to that agency member. I've never had a client hire one of my agency members from my agency page, so I can't tell you how that works.

However, you are right, in all circumstances the agency owner is paid by Upwork, then I need to pay my freelancers off the platform.

TMCDOS

But Upwork does not care when, what or IF the agency pays to a freelancer or not - because these transactions happen outside of Upwork, right? Only the "client pays to agency" transaction happens inside Upwork and is subject to Upwork fees, correct? Otherwise, in order for these transactions to happen inside Upwork - then the agency should act as a "client" and "hire" the freelancers on a separate contract, right? And pay another fee/commission to Upwork?
Regarding the VAT number - without it, a natural person is not allowed by law to issue invoices. And once there is a VAT number - it is no longer a physical person but a legal entity (a company) even though not an "agency".

Petra

But Upwork does not care when, what or IF the agency pays to a freelancer or not - because these transactions happen outside of Upwork, right?

Correct. Reason 473 why joining an agency is foolish.

Only the "client pays to agency" transaction happens inside Upwork and is subject to Upwork fees, correct

Correct.

Otherwise, in order for these transactions to happen inside Upwork - then the agency should act as a "client" and "hire" the freelancers on a separate contract, right? And pay another fee/commission to Upwork?

That has nothing to do with an agency.

Regarding the VAT number - without it, a natural person is not allowed by law to issue invoices

Is that the case in your country? I've never heard of that.

TMCDOS

Regarding the VAT number - without it, a natural person is not allowed by law to issue invoices

Is that the case in your country? I've never heard of that.

To be accurate, in my country there are 2 kind of numbers. The required one is called BULSTAT or EIK and it uniquely identifies the company within the country. The other (semi-optional) number is the VAT ID. The VAT ID is optional while your company stays below a certain turnover - which is a rolling total over the previous 12 months, calculated every month. Once your turn over reaches the threshold - you must apply for a VAT ID and once you get it you can not go back until the company is closed. Without a VAT number you are not allowed to charge VAT on your sales. The VAT number is unique inside the whole EU.
But if you are not a company - you are not permitted by law to issue invoices. Because if you want to issue invoices - you are performing trading/market activity and therefore you are obligated to register a company and report your accounting books to the tax agency.
I have never heard of a natural person issuing invoices.

Petra

TMCDOS In most countries of the world including the EU people can issue invoices. Depending on the country you can be registered as a sole trader or self employed person. The world is a large and diverse place.

Petra

dsmgdesign
So the client is hiring the agency member through your agency, which is what I said. Who does the allocation is largely irrelevant.

anovikov

dsmgdesign

I'm an agency owner, and if I'm bidding on behalf of another agency member but use my team member name in the dropdown to bid, the hire comes to me. If I use one of my team member's name in the drop down, then the hire goes to that agency member.

Not sure what does that even mean. Can you supply screenshots for the both cases? To me they sound like the same thing.

dsmgdesign

Petra - No, not always. Sometimes they hire me, in the way that I mentioned.

dsmgdesign

anovikov

They are definitely two very different things. You need to be aware of the nuances.

Screenshots - UW provides this drop-down at the top of the submit proposal area. I must first select the agency, and then I must select the freelancer who is bidding on the project:

If I select Eric Sorensen, one of my team members, the bid comes from him and when the client hires, he will get that hire. It will show up as a job on his profile page, and the success of the job will be calculated into his JSS as well as the agency JSS. I pay Eric off platform.

If I select myself (or don't select anyone at all) then I will get the hire. I can still utilize Eric for the work though. But the job will NOT show up on his profile, and will get calculated for my freelancer JSS as well as my agency JSS, NOT his. I pay Eric off platform.

anovikov

Ah i see, i just misread your original statement. Sure you are right.

dsmgdesign

anovikov no problem. I've never been in a situation where I had a client hire one of my agency team members directly from my agency page or whatever. That's just ridiculous. Why, oh why, oh god why, would anyone ask their client to do more work to hire their agency...it's hard enough to get clients to respond. I believe in providing a white glove service to my clients, which includes doing as much of the "paperwork" as I can. Get the contract and you just give the work to any of your agency members, and pay them off platform. When submitting proposals, that's the only thing you need to be aware of and think about.