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Paying someone for building software is tedious as they have to employ you as a contractor(many companies have policies that empolyees cannot work to any other employer), so I would suggest giving some swag - any tech gadget or amazon gift card or something on those lines.

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Tediousness of hiring a contractor is exaggerated. I've had clients from many places, including USA. Signing the contract was as simple as putting my signature PNG file into PDF and sending back. Payment was done with invoices, through regular bank wire transfers.

Now that person has to file taxes for this money, he needs 1099 from the company to show that he earned this money. I am not a tax expert but this is how I interpret filing taxes for this kind of money

I believe it is needed for US contractors. Anyway, when the company asks you to spend substantial amount of time, they shouldn't hesitate to issue 1099 form as well.

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