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How a US company can pay remote employees around the world
Angelica Krauss
September 8, 2022

How a US company can pay remote employees around the world

Considering that most countries have strict and varying employment laws, it can be a difficult task for a US company to hire someone in another country. To pay their remote workers, companies need to follow and comply with procedures like classifying employees correctly, complying with local tax regulations, ensuring timely payments, etc. There are several ways you can go about doing this, which are outlined below.

Benefits of Hiring Remote Global Employee

According to Owl Labs, companies that allow remote work have 25% lower employee turnover than those that don’t. When you hire a remote employee, you not only save money but also gain access to a pool of talent that would otherwise be difficult to find. Here's a quick look at the top reasons you should hire global remote workers:

  • You Save Money. When you hire remote employees, your company doesn't need to spend extra money on office space, equipment, utilities, etc. That means you can cut costs and offer better compensation packages to attract the best talent.
  • Your Team Is More Productive. 77% of remote employees report that they're more productive working from home. Your pool of talent won't be bogged down by office politics, so they can focus on delivering quality results.
  • They Are Flexible. With remote employees, you can choose to assign tasks based on availability rather than location. You can also set up flexible hours so your team members can take care of personal obligations without compromising productivity.
  • You get to Choose the Best Person for the Job. While you may think that you're making the right choice by choosing someone who lives close to your office, you might end up regretting it later. If you want to hire the best person for the job, regardless of location, then your best person might be located far away.

Challenges of Hiring a Remote Global Employee

While there are many advantages to hiring global workers, there are also a few challenges you should consider before hiring. Some of these include:

  • Work Culture Differences. It's important to account for what kind of culture your candidate has, based on their location. Most countries have variations of what is considered normal or accepted in a working environment, so you should keep that in mind when assembling a global team.
  • Security Issues. Security is another concern that comes into play when you decide to hire a remote employee. You'll need to make sure you're comfortable with the security measures that your candidate takes — VPNs, etc.
  • Compensating Remote Employees. Compensating your remote employees is different from office employees, as you must ensure you compensate them appropriately for the work they do in full compliance with the local labor laws.

How to Pay Your Remote Employees

Finding and managing great talent is hard enough, but how do you pay remote employees in a country where you do not have a legal entity? Fortunately, there are several ways you can make sure they get paid correctly, on time, in their local currency.

1. Work with an EOR Services Provider

An Employer on Record (EOR) provider will handle payroll, benefits, taxes, and more, on your behalf for any employees who are located outside of your home country. They handle the paperwork required to comply with local labor laws, so you don’t need to establish an entity in every country you want to hire in. In this scenario, the employer is still in charge of the employee's day-to-day operations, while the EOR handles the administrative burden of managing a foreign workforce.

2. Register Your Own Legal Entity

If you don't mind taking the long and expensive route, you can register your own legal entity in each country you want to hire in. In this case you'll be responsible for keeping your business compliant with local labor laws, managing payments in multiple currencies, and keeping multiple legal entities active and paid for. Setting up and operating a legal entity is time-consuming and costly, so if you don't have the capital to invest and only plan to hire a small team of remote workers, it’s much better to take a less expensive approach like partnering with a global Employer of Record (EOR) like Remofirst.

3. Hire a Remote Contractor

A contractor works independently and does not report directly to any HR provider — they are usually self-employed. This is a viable option if your employee is not working for you full time and does not need benefits (such as health insurance). However, there is risk involved if you treat your contractors like full-time employees when they are not classified that way.

Partnering with an EOR is your best bet at managing global talent

Partnering with an EOR provider is your best option for scaling your remote team around the world without large capital investments. Not only does this allow you to focus on growing your business rather than global HR laws and regulations, but it also ensures that you’re compliant with local labor laws in each country.

Remofirst is a leading Employer of Record with a global presence in 150+ countries. We hire your full-time employees and/or contractors on your behalf so you don’t need to spend time and money setting up entities and studying local labor laws — let us do the paperwork so you can focus on managing your team. Schedule a demo with our team today, start hiring tomorrow.