Successful onboarding shapes how global contractors connect and collaborate with your company. A well-structured process clarifies expectations, provides contractors access to necessary collaboration tools, and helps them feel part of the team — no matter where they work.
A cohesive onboarding experience also helps ensure you’re meeting local labor and tax requirements. It’s the best way to define a contractor’s status from the start and avoid costly misclassification issues down the road.
With companies projecting plans to hire more freelancers over the coming years, now is the time to refine and standardize your contractor onboarding process.
Key takeaways:
- Drafting a clear, compliant, and well-defined contract builds the foundation for a successful working relationship with an independent contractor.
- Ensuring workers are classified correctly as employees or independent contractors enables employers to minimize legal and financial risks.
- Setting communication expectations upfront helps ensure deliverables are completed when expected.
1. Confirm The Contractor’s Credentials
Before you bring a new contractor on board, it’s important to make sure you know who you’ll be working with. While you don’t necessarily need to perform the in-depth background check that you would for a full-time employee, taking time to verify a contractor’s credentials helps reduce risk.
Think of this step as a way to confirm both credibility and capability. A few ways to do this include:
- Checking references: A quick conversation with past clients or colleagues can give you insight into the contractor’s professionalism, reliability, and ability to deliver on deadlines.
- Running a “Know Your Customer” (KYC) check: A KYC check helps verify an international contractor’s identity and assess potential financial or legal risks.
- Reviewing examples of past work: Portfolios, case studies, or project samples show whether their skills match what you’re looking for.
- Verifying qualifications or certifications: This can be essential in specialized fields requiring specific credentials and specialized skills.
Confirming identity, experience, and qualifications helps you avoid compliance issues and gives you peace of mind that you’re working with someone trustworthy.
2. Ensure Your Contractors Are Properly Classified
Worker classification entails more than just stating that someone is a contractor or an employee. It's about defining the nature of how they fit into and engage with your business.
For example, full-time employees typically work under the direct supervision of a company, have a set schedule, and use company-provided equipment. The company also handles the administration of payroll taxes, social security, and other benefits.
Independent contractors, on the other hand, are self-employed. This affords them control over how, when, and where they perform their work. As a general rule, contractors use their own equipment and are responsible for their own expenses and income taxes.
Don’t make the mistake of assuming the rules for contractor classification in your home country apply everywhere. Different countries rely on different laws to determine a worker's status.
For example, a worker viewed as a contractor in the United States might be determined to be an employee in Germany or the United Kingdom, depending on the nature of the working arrangement and the worker’s opportunity for profit or loss.
Misclassifying a worker as a contractor if they are later determined to be an employee can expose a company to significant risk. Even if misclassification is unintentional, consequences can include paying fines and back taxes and even facing legal action.
Research local labor laws in each country where you hire foreign contractors to ensure compliance — or work with an employment expert who can guide you through each country’s regulatory landscape.
3. Draft a Clear, Compliant Contract
Well-written contracts are the bedrock of any professional relationship. A solid contract should clearly outline the terms of employment, including the scope of the work and payment terms (more on that below), to prevent misunderstandings and legal issues down the line.
The contract should also specify any information the contractor must keep confidential, and stipulate that your company maintains ownership of any intellectual property the contractor produces for your business.
Last but not least, the contract should include contract termination terms. Include the conditions under which either party can end the agreement if needed, and define a clear exit strategy that provides security for both you and the contractor.
4. Clearly Define the Scope of Work and Expectations
A clearly defined scope of work (SOW) helps ensure everyone is on the same page from the start, setting expectations and helping to prevent potential disputes.
Each SOW should outline project goals, the specific tasks to be completed, and key milestones and deadlines. These details help the contractor understand exactly what's expected of them and allows them to plan their work accordingly.
For example, don’t just write that the contractor should "build a website." Instead, specify that they are expected to "Build a five-page website with a contact form and a product gallery, with the design mockups to be submitted by May 1."
Remember, most contractors expect autonomy over how and when they complete the work you assign them. This means you should refrain from:
- Setting specific working hours
- Micromanaging their work
- Requiring them to work on-site
The focus should be on the results and deliverables, not the process. This approach helps maintain the contractor's independent status and reduces misclassification risk.
5. Establish Payment Terms and Currency
Payment terms are another key component of a contract. Rates, the total project fee, the payment schedule, and details about the process for invoicing the contractor’s work should all be included.
Paying your contractors requires deciding on a payment schedule (weekly, monthly, etc.) and choosing a convenient payment method for both parties.
Businesses can pay contractors in either the company’s home currency or the contractor’s local currency. While contractors often prefer being paid in their native currency, fluctuating exchange rates can create challenges. To avoid surprises, it’s best to set a fixed rate or payment amount in the contract and specify that it won’t change with currency fluctuations.
Companies are generally not responsible for withholding taxes from independent contractor payments. However, you should still confirm the contractor's tax status.
Be sure you also know your own country's tax reporting requirements for international contractors.
For example, U.S. companies that employ international freelancers will need the contractor to complete Form W-8BEN to confirm they are A. Not a U.S. resident and B. Not subject to U.S. tax withholdings.
For the actual payment method, you have several options:
- International bank transfers (SWIFT): This method is secure and widely accepted. It can be slow, though, with transfers taking several days and requiring higher fees for both the sender and the recipient.
- Online payment platforms: Services like Wise or Payoneer are popular because they are generally faster and have more transparent fee structures than traditional banks. They may also offer better exchange rates.
- Digital wallets: Platforms like PayPal or others are convenient for smaller payments but may have higher fees and less favorable exchange rates.
6. Ensure Legal and Tax Compliance
It's important to remember that contractor agreements must meet local labor and tax laws in the contractor's country of residence. What works in one country may not be legal in another, and tax obligations can vary.
Navigating these regulations can be complex, especially when working with contractors in multiple countries.
To simplify this process, many companies use specialized tools or services. For example, a global payment platform can automate the collection of necessary tax forms and manage payments in local currencies, helping to reduce the administrative burdens.
Many companies opt to partner with an Employer of Record (EOR). EORs can manage hiring contractors on your behalf, creating a locally compliant contract, running payroll, and managing local tax filings (if necessary).
7. Provide Access to Tools and Set Communication Expectations
To ensure your new contractor is ready to hit the ground running, it’s crucial to provide them with any needed resources to get the job done.
On day one, provide the contractor access to all the necessary software, logins, and project-related apps they'll need, such as:
- Project management software like Asana or Trello
- Communication platforms, such as Slack or Teams
- Company email and file-sharing systems like Google Drive or Dropbox
- Any other specific software or platforms relevant to their role
Introduce them to their main point of contact — the person they should go to with questions or updates — as well as any team members they'll be collaborating with closely.
Finally, establish a regular check-in cadence. Will you have a weekly video call, or will check-ins happen only when a milestone is reached?
Setting a specific schedule helps everyone stay aligned and keeps the project moving forward without the need for unscheduled interruptions in the broader workflow.
Onboard Your Contractors Compliantly With RemoFirst
RemoFirst simplifies hiring, onboarding, and managing contractors in over 150 countries. We know hiring international contractors can be complex. That’s why we work hard to make it easy for you to hire independent contractors to add to your global team.
We handle essential tasks like Know Your Customer (KYC) checks and create legally compliant contracts that follow local employment laws.
RemoFirst also makes it easier to pay your contractors, for only $25 per contractor, per month. Contractors can log their hours or submit fixed-price invoices directly in our system. Then, with your single-click approval, payments are processed automatically and sent to the contractor — in their local currency.
We also offer a free contractor management tier that allows you to create contracts at no cost.
Ready to learn more? Sign up for our free contractor tier or schedule a demo to learn how we can help you hire and manage full-time and freelance talent worldwide. We can also help you hire and pay full-time employees in over 185 countries.
