Hello,

I have a full time job, but I also have some ideas in mind -- and I want to outsource some code development and design to Russia. I have friends there who help me to do that -- they'll do the development, provide me invoice (which is just description of our terms, because we decided on flat rate monthly fee), and I need to wire them money.

So, I do not have business entity. If I'll pay them, am I am required to pay taxes? Or do I deduct my business expenses (say $30K/year) from my earnings (say $50K/year), and pay taxes only on what's left ($20K to be precise)? Any rules on that? Am I limited with something here?

Thanks!