What should I know about hiring internationally before I make an offer to someone? I'm specifically looking for answers regarding compliance, international payroll, legal, etc.
Auth0's CEO also did a talk  a few years back about building a remote workforce and he discussed some of these compliance issues from around the 16 min mark onwards.
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 :(
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).
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.
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.
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.
It's true that it's not as easy to work with a contractor living in Germany, as in the rest of the world, but it's doable.
There are ways to set-up your contractor business which allows you to do that! It's not even that hard.
For the employer there's an easy way to find out if they can work with someone which is called "Statusfeststellungsverfahren".
...and AFAIU all of the risk is on the side of the contractor, when she's doing business with an international company. It's up to the contractor to take care of everything tax/pension etc. related properly.