As of 2022, World Bank’s data shows that nearly 47% of the global working population is self-employed. There are about 1.57 billion freelancers or contractors worldwide, and this number is only growing.
After 2020, the market for contractors surged, and remote working is one of the main reasons for this. In 2020 alone, freelancer revenue in the Philippines grew by 208% and by 160% in India. Companies have realized that there’s a massive pool of talent across the world, and remote working enables them to reach out and work with contractors who are experts in their fields.
Remote contractors are very popular now; small businesses, mid-level companies, and even enterprise-level organizations work with them.
Who are remote contractors?
Remote contractors are freelancers or independent contractors that work for your organization remotely. This term is commonly used to address overseas or international contractors. Working with remote contractors has many benefits, including access to global talent, various experts, and a global perspective.
Working with remote contractors also brings challenges like international payments and employee misclassification. However, independent contractor payroll softwares can easily sail through complex steps like contractor payroll and contractor onboarding.
Know this before hiring your first remote contractor!
If you are considering working with remote contractors, you should definitely go ahead. But it would be beneficial to consider these things before doing so.
- Employee classification: Remote contractors are different from your full-time employees. Everything from onboarding to the employment contract is different for remote contractors. Therefore, you must classify contractors and full-time employees. Employee misclassification can have dire consequences and lead to hefty fines and penalties by the local government.
- Compliance: This is one of the key things that employers struggle with while hiring remote contractors. The labor codes and tax laws differ for each country, and you must ensure that all your payments and employment contracts comply with these regulations. Moreover, in some countries, benefits like insurance are mandatory for contractors as well. Therefore, you must have extensive knowledge of the employment laws in the countries you hire your remote contractors.
- Income taxes: An independent contractor is just as liable to pay taxes on their income as any other employee. However, the employer can deduct these taxes, or the contractor can pay them on their end. In both cases, you must ensure you have the proper paperwork depending on the country. For example, in the US, Forms W-9 and 1099-NEC are the most important papers that must be filled out and deposited with the IRS.
These were some technical and legal aspects that you should figure out before hiring a remote contractor. There are also some things that you should consider at a business level before you start hiring contractors.
- Business requirements: Do you need a contractor for a specific project? Do you need someone who can handle day-to-day tasks? Do you need someone on a retainer? These are some questions you should ask yourself before looking for a contractor. This will help you with two things. Firstly, it will help you understand whether you really need to hire contractors. Secondly, it will help you clearly communicate your expectations of the contractor.
- Finances: Finances are something you should sort out before looking for contractors. Allocate a specific budget for hiring freelancers and stick to the same. While hiring domestic contractors is relatively easy, it becomes a bit complicated when you seek international contractors. The main reason behind this is the sheer number of currencies and the variable exchange rates. Moreover, making international payments also comes at a cost, so you must include the overhead costs in your budget.
So you’ve decided to go ahead and onboard remote contractors and grow your business, but how do you manage these remotely functioning third-party workers? Well, it is not as difficult as it sounds.
Effectively managing remote contractors
Managing remote contractors may seem daunting; however, it is relatively straightforward. Instead of looking at the distance as a challenge, employers must learn to embrace it and give their workers enough time and freedom to work on their own time. Here are some things to remember that will help you manage remote contractors effectively.
- Maintain clear communication: Communication, rather over-communication, is the key to managing remote contractors successfully. Make sure that the responsibilities and tasks are clearly communicated and understood. Remote contractors are foreign entities to your organization, so you need to ensure they receive the proper training and/or are effectively familiarized with the company and the project.
- Use the right tools: Since remote contractors are not synced up with your internal communication channels, you need to ensure there’s a separate channel where you can communicate with external contractors. Tools like Slack, Google Meet, Zoom, and Microsoft Teams prove to be very efficient over regular calls and text messages. This helps your contractors create a specific space that will solely be dedicated to your project. Without these tools, there are high chances that the contractor may miss out on an important email or a meeting. Tools are not only restricted to communication. Applications like Google Docs and Notion can also help you share files, allocate tasks, and make updates.
- Promote a remote culture: Promoting a remote culture is something you need to do while working with remote contractors. It is very easy to turn communication into micro-management in a remote setup, and employers must avoid this under all circumstances. Let your contractors know that they have the freedom to work as per their timings as long as the deadlines are met. The focus here should not be on the number of hours but the overall productivity and quality of work.
Now that you know how to manage remote contractors, let’s move on to the bigger task – payments.
Simplifying remote contractor payments for you
There’s an interesting way of looking at remote contractor payments. “The benefits of working with talented contractors are directly proportional to the challenges faced while paying them!”. This statement is true, especially for international contractors. Yes, hiring remote contractors at a global level is beneficial for your business, but paying them is just as challenging. However, there are four important points that you should keep in mind while paying international contractors, which may make the process a bit smoother.
- Manage currencies effectively: Remote contractors are often based in various countries. The payments you make to these contractors must be in their local currency, irrespective of your local currency. Therefore, you must always keep an eye on the exchange rates and ensure you pay the right amounts. Managing currencies sounds like a small task; however, it can easily become huge once you hire multiple contractors from various countries.
- Make timely payments: Timely payments are the key to maintaining a good relationship with your contractors. For international remote contractors, this is imperative because payments may take a very long time to process. Therefore, you must ensure that the paychecks are processed well in advance so that your contractor gets paid at the right time.
- Use the right payment methods: As of today, there are many platforms for international payments in the market. Some take longer than others, while some are more expensive than others. However, payments must always be fast, so you may need to spend the extra buck for speed. It may be costly, but the payments will be accurate and timely. There’s another alternative, a much better one. You can use a contractor management software that automates these payments. It is faster, more accurate, and cost-effective as well.
- Ensure compliance: The most important thing to keep in mind while paying international remote contractors is compliance. One wrong move here can lead you into trouble with the local governments. Build a strong legal team that will help you ensure that all the tax regulations, social deductions, and labor laws are kept in mind while making international payments.
Paying international remote contractors can be tricky, but the points mentioned above should help you avoid many issues.
How much should I pay for remote contract work?
Once you have sorted out onboarding, management, and payments, the last thing that remains is the actual amount of money you should pay your contractor. The amount largely depends on the duration, nature of the job, and the budget that you have allocated. The exact dollar figure will definitely be discussed and negotiated by the parties; however, here are few ways in which you can disburse the payments.
- Time-based: This is one of the most common ways of deciding the pay for a remote contractor. It can be hourly, daily, weekly, or bi-weekly as well. Depending on the duration of the project, you can go ahead with time-based payments at mutual convenience.
- Project-based: A contractor may choose to be paid a lump sum amount for an entire project instead of being paid hourly or weekly. For example, an editor may have a specific amount in mind for editing ten videos, irrespective of the time it takes them to finish the task.
- Recurrent: Recurrent payments are made in equal parts distributed across a period of time. This is one of the most common modes of payment for long-term contractors or contractors on a retainer. The payments are generally made monthly, which is similar to your regular payroll process.
- Upfront: Depending on the level of trust and understanding, you can choose to pay the contractor the total amount upfront. This may be required for projects where the contractor needs to make specific purchases for your project.
The whole process of onboarding and paying remote contractors can be easily tackled with the help of a contractor management software. This will help you focus solely on the hiring and the projects instead of struggling with taxes, labor laws, and social deductions.
Use Multiplier and hire global contractors
Multiplier’s freelancer platform enables you to pay contractors/freelancers in over 150 countries. All you need to do is pay Multiplier a single amount in one currency, and we will disburse their payments to every contractor in their local currencies.
Multiplier has a strong hold on labor laws across countries and our platform ensures that every single transaction is legally compliant, irrespective of the country.
Apart from simplifying payments, our user-friendly dashboard also helps you manage your remote contractors and track their leaves and performance.
Multiplier also has extensive benefits and insurance feature that helps you stand out. You can allocate joining bonuses and performance bonuses in a few simple clicks. For insurance, we have three different plans, so you can choose one that suits your requirements.
Sounds simple, right?
Go ahead, book a demo and go global now!
