Hiring the right people is a non-negotiable for a thriving business. If you’re reading this, you may have already decided to work with independent contractors. But let’s back up slightly, and define these types of workers.
An independent contractor is a self-employed professional who provides specific services to a business or company. These workers (also called domestic or global contractors) pay for professional and personal expenses and pay self-employment tax.
But independent contractors aren’t employees. Depending on their agreement with your business, independent contractors have more freedom on who they can work with and how they work.
Employees work according to set hours, salary, location, and follow guidelines for how and when to complete work. When working with independent contractors, the relationship is different, and gets even more complex once it is an international contractor.
How does the role of independent contractors works?
In the contractor working process, independent contractors choose their own hours, work schedule, payment, and location. Instead of signing a contract with one company with whom they’ll work set hours for an indefinite period of time, independent contractors may provide services and work with several clients.
Independent contractors can typically work from anywhere. The’re not contractually obligated to work in an office so it’s important to consider any complexities that come up if your contractor works in a different country. These can include changing your communication style to adjust to time differences, abiding by different legal systems, budget changes (if they’re working in countries with lower labor costs), and any cultural differences such as professional etiquette or values.
An international contractor can be anything from a writer who produces content for your business or a book keeper. Whatever their services, hiring international contractors may mean you’ll work with them differently than employees—from communication to navigating time differences.
Tips for managing your International contractors
To mange your independent contractor efficiently and get the most out of global outsourcing, there are a few things to keep in mind:
- Establish processes- Independent contractors set their own working parameters, so if you’d prefer a certain process, consider defining the project length, deliverable, check-in times, and any requests.
- Understand the time difference – Foreign contractors can work from anywhere, so know how best to communicate to stay informed of progress and results.
- Be open to their ideas – As experts in the local market, independent contractors will likely provide valuable insights. Listening to, considering, and—when appropriate—implementing their ideas could lead to a successful outcome.
- Get clear on your task requirements – Unless explicitly defined, independent contractors have the freedom to decide how and when to carry out tasks.
- Create a contractor agreement – Legally protect your company and the independent contractor by defining compensation, scope of work, equipment and facilities, termination, and more in a dedicated contractor agreement.
- Be aware of potential fees- Look out for any unnecessary fees in the payment process you or your contractor would need to pay.
- Consider outsourcing your contractor management process- Using a global payroll solution can help you avoid missclassification fees, follow country-specific labor and tax laws, easily send cross-boarder payments, and a lot more.
Knowing how to best utilize a contractor’s talents is one thing, but making sure the process is legal is another.
How do you ensure compliance
One of the safest and most reliable ways you can ensure compliance for independent contractors is by working with a team of legal experts. They’ll provide knowledge and expertise worker classification, taxes. IP transfers, immigration, and everything else you need to ensure compliance.
To stay compliant and correctly classify an independent contractor from an employee legal experts will consider various criteria such as how involved the contractor is in the work, how much control they have over the process, and whether they decide factors such as location, pay, and hours.
While legal experts eliminate risk and exposure, you can focus on winning over the market. When governments change legislation, legal experts will immediately take necessary action and keep you informed.
For instance, legal experts can help you decide which pay method works best according to local laws, as it will vary when working with independent contractors.
The payments processes for contractors
Before onboarding oversea contractors, you’ll need to choose how to compensate them for their work. From transfers to crypto, there are several ways to pay contractors:
- Bank transfers – Though an easy process, bank transfers usually come with steep fees and exchange rates, especially when making cross-boarder payments.
- Credit card payments – You can pay contractors with a credit card on services such as PayPal. Some countries though may enact specific labor laws that charge contractors if they wish to take money out of their account.
- Freelance platform – Freelance platforms are convenient, but often charge contractors fees for using the service, driving up their price quote.
- Cryptocurrency – cryptocurrencies are popular with many workers because they don’t carry high exchange rates and bank fees.
- Money transfer provider – Your business can access payment experts and modern technology to safely make cross-boarder payments.
Whether hiring globally or domestically, make sure your contractor issues an invoice for any work they did for you.
Contractor management with experts
Working with international contractors can save you time, resources, and, even money, but you need to know worker classifications, local tax regulations, immigration laws, and how to safely make global payments. Finding the time to understand all of that on a deep level isn’t always possible when you already have a full-time job.
Papaya Global’s team of experts protect you from liability by knowing the local labor laws and regulations in your market. Quickly pay contractors on time no matter where they are in the world and stay compliant with our contractor payroll solution.
And one of the best parts of Contractor management services? You can manage all workers’ payrolls—employees or independent contractors—from one platform so all actions are accurate and automated. Schedule a demo.
Can you tell an independent contractor when to work?
According to the IRS, if someone qualifies as an independent contractor, you can’t tell them when to work. Independent contractors decide their schedule, materials, and hours. If employers want contractors to abide by specific rules, they’ll need to specify them in a contractor agreement.
How long can a contractor work for the same company?
There is no time limit for how long contractors can work with the same company. The contract relationship can be short or long-term, but the contractor is never on the payroll. They can aslo work with multiple companies at a time.
How do you pay a foreign contractor?
You can pay international contractors through bank transfers, cryptocurrency, credit card transfers, and freelance platforms. You’ll want to consider the pros and cons of each method, as well as the laws and regulation for each country. A contractor management solution can help you automate payments to make sure they’re compliant and delivered on time.
Can you fire an independent contractor?
Unless your contract with your independent contractors has a fixed term, you can terminate the contractor agreement without notice and for any reason. Contractors aren’t protected under some labor laws, but if you want to stop working with them, you’ll need to follow the written agreements you have with them.