Outsourcing – Global Pool of Talent.
Going remote opens your business to a worldwide pool of talent, which most of the time, you can hire at a significantly lower cost compared to when you’re hiring in-shore.
The 21st century workplace has seen some radical changes from years past—smart devices, BYOD policies, and non-traditional office spaces are prevalent. But one trend stands out from the others in popularity with both employees and employers: remote working.
Remote work opportunities are growing by leaps and bounds; in fact, 38% of companies allow employees to work remotely on a regular basis. But as you jump on this trend and start building out your small business’s remote workforce, you may encounter applicants based outside the U.S. If a foreign-based candidate shows promise as a remote worker, can you still hire them?
Though managing international remote contractors or employees does require a different set of practices and procedures, it’s absolutely possible. Read on for a deeper look at why—and how—to hire foreign-based remote workers.
Benefits of hiring international remote workers
Remote work situations have a lot of benefits for all involved—employees given flexible schedules are usually happier with their positions, and employers can save up to €20,000 per year per remote employee. But for small business owners and entrepreneurs especially, there are a few things that make hiring foreign-based remote workers particularly advantageous.
Fortunately, if you’re not constrained by hiring someone in your company’s city, state, or country, your pool of potential candidates is widely enlarged. When geography is removed from the equation, you’re free to focus on the most qualified and compatible candidates, no matter where they live.
How to hire foreign-based remote workers
Small business owners that truly embrace employing international remote workers may be intimidated by the legal hurdles of hiring and paying employees who live outside the Ireland and the UK. Fortunately, a lot of the red tape around foreign-based hiring exists to regulate Irish and UK companies companies that hire and physically relocate international candidates—not those hiring freelance workers.
There are still things to be aware of as you hire contractors outside the Ireland and the UK, but the process is manageable. Here’s a quick guide to help set you on the path to successful international contracting:
1. Interview carefully. Whether your favorite candidate comes from upstate or another country, the interviewing process for remote workers differs somewhat from a typical in-house position process. Skype or another video conferencing tool can facilitate the actual interview, but you’ll want to ask questions that address the remote work situation—specifically about communication and self-management. Don’t forget to check out past experience and references, too, the same way you would with any other hire.
2. Specify the employment type in the offer. It’s common for remote workers to be hired as independent contractors, and that arrangement is highly recommended for international remote hires. This puts the responsibility of reporting income on the worker you’ve hired, rather than on your business.
Keep in mind that there is a strict set of rules governing independent contractor classifications, so you should verify that your position and expectations don’t violate those parameters. Before signing any offer letters, double-check with the IRS and the foreign applicant’s country of residence to make sure the arrangement meets the definition for an independent contractor.
If you want to hire a foreign-based worker as an employee instead of a contractor, it’s a good idea to reach out to a legal advisor to ensure that all elements of the contract, visa, and tax arrangements comply with local regulation.
3. Understand visa requirements. If you hire a foreign worker who does not have citizenship, you might be worried about obtaining work visas. Luckily, if the worker will not be living in the United States or performing work on local soil for the duration of the contract, you won’t have to deal with visas at all. However, if you want to bring a foreign remote worker to the United States for even a short time, you will need to obtain the proper documentation. The worker would most likely be considered a temporary (nonimmigrant) worker, which would require you to file a nonimmigrant petition on their behalf.
On the other hand, if your foreign-based employee holdscitizenship—as either a dual-citizen or a citizen living abroad—they should be fine to come and go as needed.
4. Brush up on tax laws. There are a few different ways to determine tax withholdings for foreign workers, and it’s crucial that you handle the taxes on wages appropriately. Failure to properly withhold taxes on compensation may result in hefty fines down the road.
If your foreign-based employee is a non citizen and all work will be performed outside the country, your remote worker will need to complete a Form W-8BEN as documentation. Assuming the contractor meets the criteria and properly fills out the form, their wages as nonresident aliens likely won’t be subject to withholding. In the event that their status can’t be verified, you may need to withhold up to 30% of their earnings for taxes. Keep in mind that, as with visas, the location of the performed work matters—if the contractor does work from within the United States, the tax requirements for both parties will change.
For citizens living and working abroad, you’ll need to request a W-9 form. The employee will be responsible for managing taxes on earned wages, though you’ll be responsible for sending out a 1099 form each January for reporting purposes. The only exception is if the contractor is paid via PayPal, as the service itself deploys 1099s.
Though hiring foreign remote workers is definitely different from hiring traditional in-house workers, many employers find that the benefits make up for the required effort. If your dream candidate turns out to live across the pond, use the above tips to make sure you are adequately prepared for the onboarding process.
Note: Because tax and residency status can vary drastically based on specific circumstances, always seek legal assistance when drafting contracts, arranging visas, or setting up payments and withholdings for foreign-based employees.