Ask HN: How do you hire international remote employees?

Hey HN,

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.

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).

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

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.

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.