Most business owners know that they could save 70% on salaries by hiring overseas talent.
But there is one key issue: how do you actually employ these overseas workers?
Most imagine a nightmare of bureaucracy, issues with benefits and tax questions that lead to many sleepless nights.
This could not be further from the truth. We’re here to help you through the process - in as much detail as possible.
With this guide, you will have the knowledge to confidently employ a remote workforce. And hire great talent at very, very affordable rates.
First of all, let’s remember why we actually want to hire workers from overseas.
Here are a few key benefits:
Save on salaries. 70% is not unrealistic. For better quality!
Looking for a virtual assistant? Estimate USD 12,000 per year. Compare that to a USD 74,800 average Western salary.
What about an experienced front end developer? They make on average USD 25,000 per year in the Philippines. In the United States, their average salary is USD 113,400.
Cast your net beyond geographical limitations and find the best person for the job, regardless of location.
Especially if your business is not located in a metropolitan area, finding the right person at the right time can be extremely difficult.
If you hire remotely, the whole world is your oyster.
Studies show remote workers can be more productive due to factors like flexible work schedules and reduced commute times.
In-office workers often spend much of their time on things that don’t actually help you meet your business goals. For example commuting to work. Moving them to a remote position removes all of these time-wasters.
Build a team that reflects a wider range of backgrounds and experiences. It doesn’t get much more diverse than a truly global workforce.
Let’s get into the nitty gritty stuff.
While exciting, employing a remote workforce comes with its own set of considerations.
Payroll for remote employees can be more complex than traditional setups. Here's what you need to understand:
Understanding withholding taxes
Taxes withheld from an employee's paycheck can vary depending on location.
You'll need to factor in federal, state, and sometimes local income taxes, along with social security and Medicare contributions (or their equivalents in other countries).
Navigating cross-border payments
When hiring internationally, research the tax implications in both your location and the employee's.
You might need to register for payroll taxes in the employee's country, or work with a payroll service provider experienced in international payments.
Many companies use Wise for cross-border payroll.
Benefits and deductions
Similar to taxes, benefits offered and deductions made from paychecks can differ by location.
Be sure you're compliant with local regulations regarding health insurance, paid time off, and other benefits you might offer.
You probably have not heard of this one, but it is important to know.
Permanent Establishment (PE) is a tax concept that can have significant implications for businesses employing remote workers.
In simple terms, a PE is a fixed place of business in a country through which you conduct your business activities.
If your remote employee's work creates a PE in their location, your business may be liable for corporate income tax in that country.
The exact definition of PE can vary by country, so it's crucial to research the specific regulations. Here are some factors that might trigger a PE:
Physical presence
Does your remote employee have a dedicated office or workspace provided by your company? This could be considered a PE.
Level of activity
The extent of the employee's work and their decision-making authority can influence PE risk. Employees with significant control over business activities in their location could establish a PE.
Local representation
If your company has a local sales representative or agent who supports your remote employee, it might increase PE risk.
By understanding permanent establishment and its triggers, you can make informed decisions about where to hire remote workers and potentially minimize your corporate tax burden.
Misclassifying an employee as an independent contractor can lead to hefty fines and back taxes.
Here's how to distinguish between the two:
Control
Employees are subject to your company's control over their work schedule, tasks, and how they perform their duties. Independent contractors have more autonomy and flexibility in how they complete the work.
Benefits
Employees typically receive benefits like health insurance, paid time off, and unemployment compensation. Independent contractors generally don't receive these benefits.
Equipment and supplies
Employees usually use company-provided equipment and supplies, while contractors are responsible for their own tools and materials.
If you're unsure about an employee's classification, it's best to consult with an employment lawyer to avoid potential legal and financial repercussions.
The last section probably sounded like a whole bunch of problems. Fortunately, there are organizations that help you solve them.
If managing all the legalities of employing a remote workforce seems daunting, consider partnering with an Employer of Record (EOR) or Professional Employer Organization (PEO).
Both can handle payroll, tax compliance, and other HR functions.
However, there are subtle differences.
Focuses primarily on payroll and tax compliance for remote employees.
Let’s work with an analogy?
An EOR is like a travel agent for your global workforce.
Offers a wider range of HR services, including benefits administration and risk management, in addition to payroll and tax.
As opposed to a travel agent, a PEO is more like a co-pilot for your company's HR journey.
The best choice depends on your specific needs and level of HR support required.
Now that you know what the potential pitfalls, issues and workflows are for employing remote workers - it’s time to find some!
Here, you have two options. Find someone yourself or get some help.
Let’s start with getting some help.
Shameless plug: use airteams.
We're a headhunter platform for finding top employees abroad for your business.
How can you work with us?
Step 1: Share the position
Tell us what you're looking for. We will discuss the role on a call and nail down the job description.
Step 2: We search and vet
We will go on a quest for the perfect match, screen candidates, and pre-vet them to ensure a good fit for your company.
Step 3: Get interviews scheduled
Once we have found at least 3 great profiles, we will present them to you and schedule interviews for you.
Found the ideal hire? Great! We charge a one-time placement fee. Not happy? We will refund you.
You can learn more about how we work by reading how we helped pathway solutions hire a full stack developer.
While there's a core similarity between hiring remote international employees and traditional on-site workers, there's an added layer to consider… how the job will function in a remote setting?
Here's how to navigate the key stages:
Crafting the perfect job post
Develop a clear job description that outlines the responsibilities and desired skills.
But take it a step further: explain how the work will be done remotely. What tools and technologies are essential? What communication style is preferred?
Where to post? Use Linkedin, Indeed or job posts specific to the country you are trying to hire in.
Know your audience
Consider where your job posting will be advertised. Tailor it to resonate with the talent pool you're targeting. Research average salary ranges and benefits expectations in that region.
Conducting interviews
You’ve done this before. The only difference is that you won’t be conducting in-person interviews but via Zoom or Google Meets.
Employing remote employees offers a wealth of benefits.
By carefully considering the legalities, utilizing the right tools, and fostering a strong remote work culture, your business can thrive with a geographically dispersed workforce.
Remember, this guide serves as a starting point. Always consult with legal and tax professionals for specific guidance on employing remote workers in your region.
If you need help finding the right people, consider using airteams.
Effortlessly find top remote talent from around the globe. If you're finding it tough to secure quality candidates, we can help. Start your airteams search today and hire with ease.
