November 17, 2022

How to legally hire independent contractors anywhere in the world

independent contractors, hiring abroad, legal
This guide will help you figure out how to hire independent contractors for your business. Learn the difference between employees and independent contractors. Hiring contractors can transform your company, no matter your industry, by tapping into an international talent pool.
Linda Saleri
Recruitment Specialist

How to legally hire independent contractors anywhere in the world

Is it hard to hire contractors, especially if they live in a different country? Here's everything you need to know.

Today, companies have more opportunities than ever to hire the best people in the world. Companies can hire contractors and manage them from anywhere in the world thanks to remote technology and the normalization of remote work. For example, a company in the US can work with contract workers in Argentina, Colombia, South Africa, or Brazil. And tapping into an international talent pool can transform your company, no matter your industry.

Job boards like Upwork and LinkedIn make it easier to find contractors. But a lot of business owners don't know the legal problems and risks that come with hiring contractors, especially those who work across borders.

This is a guide for any business in the world that wants to hire people from other countries. This guide will help you figure out how to hire independent contractors, whether you own a small business or are hiring for a startup or large company.

Learn the difference between employees and independent contractors.
Sometimes it's hard to tell the difference between employees and contractors, but the difference is important legally and financially. Governments all over the world keep an eye out for misclassification of jobs.

But before you learn how to hire an independent contractor, you should take a moment to see if they really qualify as one. If you need a web designer to make a new landing page for your company's website, you should hire a freelancer. That's easy to understand. But what if you want that person to keep giving you updates over a long period of time? And what if they only work for your company? Things start to get less clear.

Who is a self-employed worker?

Independent contractors are people who work for clients as a non-employee, usually for a specific project or a set amount of time. They work for themselves, which means they have freedom over how and when they work. They also have to pay self-employment taxes and don't get any benefits from the companies they work for that are required by law. Most of the time, but not always, they work on short-term contracts for a number of different companies.

Outside of the US, the rules for working with contractors might be a little different. But in the US, the IRS says that independent contractors "have the right to control or direct only the result of the work, not what will be done and how it will be done."

Employees are workers who get benefits from the government and have to do their jobs the way the company wants. When we say that someone "must do their work the way the company wants," we mean that they have to go to mandatory training, meetings, and performance reviews.

In exchange, the company pays for necessary expenses, gives employees tools, invests in their learning and growth, and gives them paid vacation and other benefits.

Find out if the freelancer's income comes from the US

Another gray area is whether or not a worker's income comes from the United States. Do you look at the worker's citizenship? The place where the worker is? Where does the company do business? The IRS says that the place where the service is done determines the source of the income paid to independent contractors. In other words, the location of the independent contractor, not the location of the company, is what determines where their income comes from.So, even if a foreign independent contractor works for a US company, the money they make is not from the US as long as the whole job is done outside the US. If that's the case, a US company shouldn't hold back taxes or report them.

Self-employed or full-time employees? Choose what you want. Find the best people for your team, and let Outshore handle the rest.

Want to find out more about how easy it is to hire and pay people in other countries? Book a demo today.