3 Steps to Hire Foreign IT Talent Legally
Disclaimer: IRS procedures can be subject to change, so before you submit the forms, please check for the newest updates on www.irs.gov
We have devised a step-by-step plan for those, who want to hire the best, but are forced to optimize expenses to pay these specialists, and understand that it is worth looking outside the US (brofist to such daredevils!).
We have devised a step-by-step plan for those, who want to hire the best, but are forced to optimize expenses to pay these specialists, and understand that it is worth looking outside the US (brofist to such daredevils!).
Step 1
Find a professional who is equal to, if not better than, one from the Valley (we know it may be hard for many Americans to believe). The world is huge, and there are a lot of IT giants in America, yet only 5% of the population lives there: talent is distributed equally around the world, opportunities are not. Also, a non-American remote worker's pay will not include the "Valley markup" (about $60k-110k a year; more about that here).
"Why is it that there are so many startups, so many important technical products in San-Francisco, in Silicon Valley, when compared to other places? It can't be that people are simply smarter or more talented here — there are just as many engineers, designers, and product-people in Mexico, even more in Moscow."
Phil Libin
CEO Evernote
The fact that there are so many services that help with remote hiring means that it's not just another marginal whim, but a clear IT tendency.
Step 2
Since, in this case, we're talking about an employee who is not a US citizen, then it's better to treat them as a Contractor. This way, you won't be faced with barriers like them moving to another country, bureaucratic delays, visa unpredictability, etc.
In order to officiate a Contractor (they're also called Consultants) you'll need to sign:
In order to officiate a Contractor (they're also called Consultants) you'll need to sign:
Description of consulting services aka Scope of work and payment terms.
Confidential Information and Invention Assignment Agreement to protect intellectual property. This should get rid of any misconceptions that the company is defenseless against theft by remote, foreign workers. That is, of course, false. No one in the IT industry would even consider working if there were a risk of losing everything at any moment.
You could spend $19 on Clerky, service that would help you sign agreements and be confident in the fact that they will protect your needs and interests.
Step 3
Submit form W-8BEN for an individual or W8BEN-E for an entity to establish that the Сontractor is foreign and that the work is not being performed from within the US.
Without filling out this form, or if the Сontractor's country does not have a tax treaty with the US, Сontractor will have to pay a 30% tax.
You can follow these steps or use a service such as Deel, which will fill out and submit all of the documents for you automatically when starting a new contract.
Without filling out this form, or if the Сontractor's country does not have a tax treaty with the US, Сontractor will have to pay a 30% tax.
You can follow these steps or use a service such as Deel, which will fill out and submit all of the documents for you automatically when starting a new contract.
Step 4
Enjoy the benefits!
These include:
These include:
no boundaries — hire worldwide;
real diversity of your employees instead of nominal;
no need to compete with American IT giants for the best employees;
no need to pay triple the price for the same quality of work;
no Social Security or Medicare Deductions;
the responsibility of reporting income lays on the worker you've hired, rather than on your business;
you won't have to deal with visas at all
the most loyal workers, who value the project itself and working where they're comfortable, instead of corner offices in glass skyscrapers
minimal turnover.
"It should be understood that the shortage of programmers in the US alone is a few million — crazy indicators. To look for employees, being limited to one territory, becomes a little silly. Yes, you need to adopt new rules of communication and company growth, but it's worth it."
Andrey Rebrov
CTO of Scentbird
Even great things come with risks, however:
Not all investors understand what remote is. Many prefer offices, window dressing, and conservatism. There is a certain way you need to look for some investors.
If someone buys you out, your consultants will not be able to get visas immediately. But, there's a workaround for these cases. The buyer gives time to eliminate the deficiencies identified by the auditors. If necessary, contractors can be made employees in the short term by opening subsidiary offices in the countries where the specialists live. This can be done at the expense of the buyer.
It's harder, but the benefits are worth the effort.
Hire the world's best talent, instead of hiring the most average. Hiring worldwide is even simpler than hiring USwide:
"Every employee loves receiving their paycheck. It just so happens, though, that paying employees can be a royal pain, what with incredibly diverse labor laws across all 50 U.S. states."
techcrunch.com
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17 July / 2019
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