The success of any business depends majorly on the idea, leadership, and a skilled workforce. Businesses, therefore, are constantly looking to hire the best talent that they can get their hands on, be it full-time or part-time. Today, nearly half of the world’s workforce consists of freelancers and independent contractors. Hiring contractors enables businesses to be more flexible, it brings in a lot more diversity from experts around the globe. Even though contractors are part-time workers, they can be immensely helpful for specific projects and contribute a lot to short-term and long-term business goals.
Since such a high volume of the workforce works independently across the globe, tasks like hiring, payroll, and employee tracking become difficult for businesses. This especially happens while hiring independent contractors abroad. Multiple labor codes, a range of tax deductions, varying benefits, etc., make cross-border hiring difficult. However, these hurdles should not stand in the way of working with the best talent across countries.
That is why hiring independent contractors abroad, even through its challenges, makes a lot of sense because of its benefits.
Benefits of Hiring Independent Contractors Abroad
Independent contractors bring a lot to the table. Here are some key benefits of hiring independent contractors abroad:
Get access to global talent
Once a business decides that hiring independent contractors abroad is the best step, there are no limits to its search pool. Businesses can choose to hire the best, most experienced, and highly skilled contractors in any country they choose. Having access to global talent is one of the major advantages of hiring independent contractors abroad. There are no boundaries or restrictions in terms of location.
Have the business running 24/7
Working across countries and time zones means that a business can virtually keep running all day, every day. This significantly increases overall efficiency and decreases turnaround times. Today, with the magnitude of communication tools at our disposal, there are very few reasons for us to consider working across time zones as a challenge anymore.
Keep the costs down
One of the major benefits of hiring independent contractors abroad is that businesses can choose to hire in specific countries where the local currency is not as strong as the US dollar. This helps in cutting down costs significantly and saves a lot of money for the company.
Yes, hiring independent contractors abroad can prove to be quite beneficial to an organization. However, there are some cons to working with contractors as well. This page clearly explains the pros and cons of hiring independent contractors.
Ensuring Compliance While Hiring Independent Contractors Abroad
Compliance is by far one of the biggest challenges of hiring employees internationally. Every country has a different labor code, social security deductions, and mandatory benefits. It gets very challenging for a business to keep track of and comply with each of these rules across countries. Below are some of the key things an employer must keep in mind while hiring independent contractors abroad:
Employee classification
Employee classification refers to the differentiation between full-time employees and part-time employees/freelancers/independent contractors. In the US, Form W-11 by the IRS is used to declare income statements and taxes for full-time employees. On the other hand, Forms W-9 and 1099 are used for freelancers/independent contractors. For companies hiring independent contractors abroad, Form W-8 becomes essential as the workers would need to be declared as non-US residents. Employee misclassification can have grave consequences and can land a business in trouble with the IRS. Here is all the information one may need on Forms W-9 and W-9.
Managing benefits
For the most part, independent contractors are not eligible for any kind of benefits as they make their own social security payments. However, in some countries, it is mandatory for an employer to provide some benefits like insurance, even to independent contractors.
In these cases, services like Multiplier come in use as you can choose the benefits for your freelancers right at the time of onboarding.
Managing taxes while hiring independent contractors abroad
Taxes are a massive pain point while working with employees across borders. Keeping track of income tax rates across countries is extremely difficult for an in-house HR team as these rates are constantly changing. Independent contractor taxes can either be deducted by the employer, or the contractors can pay it at their end. In any case, the employer must ensure that they have all the required paperwork they need. For example, Form W-9 is used in the US to get ahold of a contractor’s Tax Identification Number (TIN). This page has everything need to know about independent contractor taxes as an employer in the US.
Yes, it is challenging to get all the compliance checks in place across borders, but it is the most essential thing a business hiring independent contractors abroad needs to do.
Running a Smooth Payroll While Hiring Independent Contractors Abroad
Payments for independent contractors are nowhere near the standard payroll you would run for your full-time employees. Payment cycles for each contractor may be different. Some might get paid on a monthly basis, some hourly, while others may choose to get paid weekly, bi-weekly, or even daily. Here’s what an employer must keep in mind while paying contractors abroad.
Make timely payments
3 out of 4 freelancers say that their payments are never on time. Late payments make it very difficult for a business to develop a trusting relationship with its contractors, and it affects retention and also reflects on the efficiency with which contractors work. Employers must ensure that their contractors are paid on time, irrespective of their location.
Manage currencies
When hiring independent contractors abroad, currency management is one of the key aspects of ensuring timely payments. Most countries demand that their citizens are paid in the local currency, and it is the employer’s responsibility that this happens on time and accurately.
Use reliable modes of payment
Today, you no longer need to rely on checks to pay your international contractors. Payment modes like wire transfers, credit cards, and direct bank payments are much faster and more reliable as well. Employers should evaluate every mode of payment and choose the one which is fast, reliable, and has the lowest transfer fee for international payments.
Above mentioned were some of the core points employers must keep an eye on while paying international contractors. Here is a complete guide on paying international freelancers, this is a must-read for someone considering hiring independent contractors abroad.
How Multiplier Can Amplify Your Efforts Towards Hiring Independent Contractors Abroad
Multiplier’s freelancer platform enables you to onboard and pay freelancers and independent contractors in over 150 countries. You only need to enter the employee’s details, and the platform will generate a locally compliant employment contract in a few simple clicks.
You can choose the payroll frequency as per your discussions with the independent contractor and also ass in benefits like insurance, right from the platform!
Once the contractor is onboarded, your personalized dashboard allows you to track the number of hours worked, leaves taken, and the payment status of every independent contractor working for you.
Speaking of payments, it couldn’t be easier with Multiplier. All you need to do is pay Multiplier in one currency, and the platform will disburse payments according to every contractor’s payment schedule, in their local currencies! No need to deal with transfer charges and delayed-payment complaints.
Multiplier’s platform eliminates every challenge you may face while hiring independent contractors abroad and enables you to work with the best talent across the globe. Sounds interesting? Book a demo now!
