One way for companies to grow is by hiring international contractors. Global hiring can help your business expand while gaining access to a broad pool of talented freelance remote workers worldwide.
However, paying self-employed contractors in different countries can be complex, involving various regulations, payment methods, and other potential issues.
To effectively pay international contractors, you must first understand the basics, including payment method options such as bank transfers, online payment platforms, and cryptocurrencies. Ensuring compliance with local tax laws and managing currency fluctuations is also essential to avoid fines and payment delays.
An Employer of Record (EOR) can help support and simplify your global expansion efforts by taking on tasks like tax withholding and tax reporting on your company’s behalf. In addition to ensuring compliance with tax obligations, an EOR can make sure that you follow all local employment laws.
In this guide, we’ll cover what to consider before hiring international talent, best practices when choosing payment services, and how working with an EOR like Remofirst can help simplify the process and reduce risk when managing a global payroll.
Here are the top three best practices for hiring and paying global contractors and how partnering with an Employer of Record (EOR) can help.
Draft a comprehensive independent contractor agreement that outlines the scope of the work, deadlines, responsibilities, payment terms, currency, payment schedule, and payment method upfront. Well-written contracts reduce misunderstandings and set clear expectations for both parties.
EORs are experts in drafting and executing contracts with international contractors, making sure that all necessary language is included.
This also includes ensuring that your company, not the contractor, retains the rights to any IP created for your business by the contractor. Remofirst allows customers to create, send, and digitally sign contracts in minutes.
‍
Before hiring contractors in another country, you must get up-to-speed on local employment and tax and payment regulations in every country where you’ll be hiring. Mistakes can be costly and could result in legal and financial penalties.
EORs are experts in global compliance with legal and tax requirements, such as income tax, and can handle these responsibilities on behalf of a company.
Remofirst ensures your international contractors are working compliantly wherever they are located. We can also make sure you don’t accidentally misclassify international employees as contractors.
Performing Know Your Customer (KYC) checks for your international contractors verifies their identity and ensures they are not engaged in fraud or criminal activities.
KYC standards protect businesses and financial institutions against fraud, money laundering, corruption, and other threats. By implementing a robust KYC process for compliance, you can protect your organization against fraud while mitigating legal and financial threats.
Remofirst’s platform automates KYC checks in seconds to ensure compliance and mitigate risks for your business. We can also provide background checks on potential new contractor hires.
‍
‍
Once the contract is signed, your company needs to determine a convenient payment method for both you and your contractor. Here are some common payment options companies can use to pay foreign contractors.
Bank transfers, including international wire transfers using SWIFT, are a common method to pay international contractors. Wire transfers are fast and secure, allowing companies to pay international workers almost anywhere in the world.
The funds will be directly transferred from your bank account to the contractor’s.
However, be mindful of the high wire transfer transaction charges, as some banks charge [as much as $50+] for an international money transfer.
Other downsides to bank transfers include potential delays for international transfers and unfavorable exchange rates that could reduce the amount received by the contractor.
Digital platforms and digital wallets — such as PayPal, Payoneer, and Wise — are popular payment methods for international contractors. They are easy-to-use, offer lower fees than bank transfers, have faster processing times, and offer currency conversion at competitive rates.
One thing to keep in mind when making digital payments is that there are often costs associated with using those services. For example, PayPal charges fees to send money internationally based on the cross-border expenses associated with individual countries.
Some providers also have transaction limits, and some digital services may only be available in certain countries.
Companies can use cryptocurrencies like Bitcoin and Ethereum to pay international contractors, especially in regions with limited banking infrastructure.
They offer fast and secure transfers, have lower transaction fees than bank transfers, and bypass the issue of fluctuating currency exchange rates.
On the other hand, cryptocurrency values can become volatile, there are regulatory uncertainties in some countries, and both the employer and the contractor need to be comfortable with this payment method.
Remofirst is an expert when it comes to hiring and paying international contractors. Our services include:
Our platform allows you to manage your global talent on our platform and pay them using just one invoice.
Book a demo to learn how we can help your business hire and pay international contractors.