
Ask HN: How do you hire international remote employees? - stewartma
Hey HN,<p>What should I know about hiring internationally before I make an offer to someone? I&#x27;m specifically looking for answers regarding compliance, international payroll, legal, etc.
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jerriep
A few years ago I worked for Auth0 and they made use of a Professional
Employer Organization that took care of the logistics and compliance around
hiring remote employees in various countries. If I remember correctly, they
made use of a company called Globalization Partners [1], but there are plenty
of these organizations around.

Auth0's CEO also did a talk [2] a few years back about building a remote
workforce and he discussed some of these compliance issues from around the 16
min mark onwards.

[1] [https://www.globalization-partners.com/](https://www.globalization-
partners.com/) [2]
[https://www.youtube.com/watch?v=sfEM0TipgtU](https://www.youtube.com/watch?v=sfEM0TipgtU)

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stewartma
this is awesome, thanks for sharing! those PEOs seem expensive...

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wprapido
Mostly by hiring them as independent contractors or by their company invoicing
services to yours. Healthcare, taxes, etc. are what is taken care of on their
side. If your operations get bigger, things get more complex. You were given
nice answers on that.

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terpimost
Remote workers outside US usually have legal entity like “self employed” or
“LLC”. If a remote worker outside of US doesn’t have the entity I wouldn’t
think that they are ready for the serious remote work. If you are not a
startup feel free to open forms of your entity on each employee place and get
local tax id and care about all local fees and taxes yourself. In US it is
somehow standardized and not so scary.

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wrboyce
Or, alternatively, the US is not the centre of the universe — tech or
otherwise.

I’ve been remote working for nearly 15 years now and am currently a simple
PAYE employee on the company’s (multinational startup, oxymoron as that
sounds) books.

EDIT: over 15 years, I’m old :(

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davismwfl
Partially my answer depends on how much money you are working with and I
assuming you are US based. If you are venture backed then the cost factor can
be a little easier since you'd have the money to set it up properly, but you
have to seriously consider if spending money on this is the best use of funds
(and it may be given the time/cost/skill tradeoff).

If you are bootstrapped and still small just don't hire internationally, hell
try not to hire FTE's outside your own state until you have the revenue to
really support it. In the US if you employ a person that is in another state
you are on the hook for paying not just federal but also that states income
taxes (and potentially multi-state taxes), plus registering in the employee's
state so you can report workers comp, insurance etc etc. This is not horrible
but it is administratively more time, but at least inside the US any
accountant can do it pretty cheap and plenty of payroll services can do it
automatically for you so it is more or less just writing a check (after you
have all the documents taken care of).

My 2 cents, having done this quite a bit, and currently with a team in 3
timezones and 2 Countries (so not that bad right now). While I will hire
basically anyone that is qualified regardless of location, I am careful when
just starting out to keep people in timezones close to mine (+/-3-5 hrs) and I
do not "hire" them as employees if they are international at all. I will
employ them using contract based means which still has some reporting and
extra record keeping but is much more simple than "employing" them (also stock
becomes an issue if you are trying to use it as incentive etc).

If you employ someone across international lines you may actually owe US taxes
for that person, you may under the laws of that persons Country be obligated
to pay taxes or fees in their home Country and may also be required to
register as a foreign corporation and prove you have the resources to operate
there (even if you are just employing someone) etc. It all depends on the
Country, of course. There are a lot of startups that do not get legal & tax
advice and just add people without registering and reporting things properly.
If you never get too big the chances of being caught are probably pretty low,
but it is a real risk. The IRS (& homeland security) has reporting
requirements if you are sending money overseas regardless of employment
status, especially once it crosses a certain threshold. So you have to be
careful to properly report it and keep records etc.

I don't have any issues hiring someone in another Country, currently my team
is split between the US and India (employees not contractors), and we have
everything setup properly in both Countries. It wasn't inexpensive and it
takes a small bit of extra administrative tasks every month or so to make sure
things stay compliant. It isn't that hard once it is setup, just takes some
money & time to do up front and can take some calendar time depending on the
other Country (2-3 months isn't unheard of in many Countries).

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stewartma
wow, this is such a detailed response, thanks so much!! curious what were the
extra record keeping you mentioned when hiring international contractors?

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davismwfl
If you are venture backed just pay a PEO as someone else mentioned and be
done, it is so much easier. These organizations are pretty expensive but they
take care of it all and you just sign documents and approve transactions.
Works even within the US for health insurance, workers comp etc, very simple
for you and lets you focus on what is important and not admin tasks.

But to answer your question, at least partially and of course IANAL or
accountant or tax expert. Second caveat of course, it will somewhat depend on
your state, your company, the receiver & what Country they are in -- and your
advisors knowledge/experience doing this.

Some basics:

Corporate Registration (as an employer not like a new corporation typically)
in the Country and/or states you employ someone. Some Countries will require
you to meet specific requirements, but most are pretty easy they just want to
know the basics. In the Country (or US state) are likely additional filings
you must do as well. For example in the US you will have to generally file (at
least) quarterly reports with every state in which you employ someone, plus
deal with workers comp, state taxes etc.

You may be required to meet government mandated pension requirements, paid
time off, sick time, health insurance payments etc as well in the home Country
if you are employing someone there. So it is always important to consider that
as well.

You will file usually within those Countries and States every time you
hire/fire or pay someone from their jurisdiction. This can be super simple
monthly or quarterly reports much of the time, but there are specific
instances where it is every payroll you must file. And taxes may or may not be
due.

You need to track every dollar and where it came from and went to. This is so
you can pass the foreign transfer audits should you ever be audited. This is
usually pretty easy for corporations since you are tracking the money anyway.
But in the past my accountant had us setup separate methods to track this all,
both in the chart of accounts and then also in a physically separate
account(s) where the money was put and transferred from. Using a separate
account somewhat insulates you from the government seizing/freezing your
primary operational bank account for "suspicious activity". At least if they
seize/freeze that foreign transfer account temporarily it won't affect your
operational account. There is entire strategies around this for corporations.

You will need to file a notice to the IRS on the person you are hiring and
prove their Country of Residence and Nationality (usually using a passport).
This is because even if a US Citizen lives abroad you must pay taxes for that
person within the US during payroll. Also, there are other cases when someone
may meet the criteria of having to pay US taxes. For example, if they travel
to the US on any visa and do work within the US boarder you will owe US taxes
on them.

You also will file notice of transfers with at least one other US agency
(other than the IRS), IIRC homeland is who it is now, but you should check
with an advisor on it specifically. Essentially what I remember having to
setup here was we had to register with the agency, send them notice of any
money being sent overseas when it exceeded a certain dollar threshold, and it
was an odd amount, not something simple like $10k. And there are other rules
on this part too that weren't that hard, but just again something else to
manage and watch.

These are just some of the things, but I think it hits the biggest pain
points. It isn't "hard" once you know what you have to do, it just adds time
to what is usually an already overworked Founder. So it is best to hire it out
where possible. Which is why I say don't do it if you are small or not backed,
since the costs just add up. If you want to use someone overseas just put them
on contract, and while you'll still have to file foreign transfer notices that
is not nearly as much work as everything else, and in some cases your bank
will file these on your behalf if you work with them. But someone I learned
before, banks have their own notices they have to file on foreign transfers
that are in addition to yours, so just confirm with them on it.

I have read and seen posts online from founders or people who say they don't
do any of this and some saying none of it is required. I will just say I am
not willing to risk large fines or worse over not reporting. Import/export
businesses deal with this stuff all the time, it isn't new, but the rules do
change fairly regularly so having good advisors is the best idea.

My objection isn't that the process is so hard or difficult, it is that it
takes quite a bit of valuable time for an early startup to get things setup
correctly. You have to guard your time very closely when you are starting,
which is why I generally would not hire FTE's outside my home jurisdiction.
Even when using contracts you still have some extra reporting requirements but
they are a bit less time sucking.

edit: format

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stewartma
I see, thank you so much for your detailed response again davismfwl. It
definitely seems like going the international contractor route seems most
feasible. I do wonder though at what breaking point it just makes sense to
hire an international worker full-time and when that investment is worth it.
Given your explanation, it definitely seems that PEO is the best route.

~~~
davismwfl
I think there could be multiple different things that could be a trigger, or
just a good milestone to use. But in general I wouldn't consider it until I
had reliable, consistent revenue coming in (or had significant investment
dollars) and had established all my basic business practices and that they are
working pretty much on auto pilot. There is just so much to do in the
beginning that you want to minimize any unnecessary tasks.

There are really talented and qualified people all over the globe, keeping it
closer to your timezone in the early days just reduces cognitive load on
unnecessary struggles. While I only mentioned the costs and extra work in
setting this up, there are other costs which are more hidden. For example,
communication delays on a project that isn't well defined (every startup ever)
which requires above average feedback and iteration (totally normal) means
added delays. Usually I assume with a newer remote team that is 6+ hrs
ahead/behind me it will add one extra week per month of schedule to account
for the delays etc. So if it would take normally 4 weeks, I'd estimate it to
be 5 weeks. Sometimes of course, low coordination or well defined projects
means that is only 1 day, but other times it means it is 3 weeks. This is hard
to predict and is highly dependent on your experience setting up and working
with remote workers, and their experience working remote. I am highly in favor
of remote work, and I both employ people remotely and work remotely myself and
have done so for many years. A team that is setup and has worked remote before
won't consistently have these types of delays, but it is very common with
newer remote teams.

Good luck!

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anotheryou
and don't hire Germans I guess. For Germans it's illegal to contract full time
for just one employer.

~~~
johnm1019
This is terrible advice, and simply wrong. I lived and worked in Germany as a
self employed person with primarily one client for 2.5 years - along the way I
properly maintained my business and taxes in a good and legal standing. I am
not an accountant or a lawyer, and this is not professional advice. What the
commenter here is referring to is a specific situation called
"Scheinselbstständigkeit" which roughly translates to "fake/sham self
employment". If you work as a contractor for just one company for a long time
the tax office can audit and determine you're really an employee. This is not
a simple decision however and many factors go in to it. Also, the decision is
made by your regional tax office and they each have their own standards. In
Hamburg for example, I was told it wouldn't even be a question until 4 years
time. Even then there are a lot of additional circumstances which must be
taken into account. Ideally the self employed would form a German LLC, (GmbH)
and make themselves an employee of the company. The best advice, as always, is
to speak with a locally certified professional! and not strangers on the
internet.

