The technological revolution has rewritten the script when it comes to operating a small business.
Tech isn’t just reducing costs and streamlining traditional business operations. It’s also giving smaller businesses and entrepreneurs access to a much larger global talent pool.
The correlating ascension of the remote work world in the last couple of years has also made it easier than ever to tap into a massive global workforce. No matter how big or small your company might be, you can now hire the best talent from San Francisco to Singapore. And you don’t even need to have them on-site, which comes with several attractive financial benefits.
The benefits of going global with your workforce are easy to spot. But there are also several financial considerations that you should keep in mind if you’re going to grow your staff across international borders. Here are a couple of critical thoughts and considerations to keep in mind when hiring overseas.
Complying with local requirements is already a big concern for a small business. After all, as a small operation, you’re trying to balance minimal resources and manpower while still crossing all of your t’s and dotting your i’s. Nowhere is this strain more poignant than in the financial department.
There is plenty of upside to tapping global talent for your small business. However, compliance with another country’s set of rules — on top of your home country’s regulations, no less — can feel overwhelming. It’s an issue that many are aware of as remote work continues to grow as the go-to option for small businesses. In fact, according to international payroll provider Remote’s Global Workforce Revolution report, 30% of decision-makers considered compliance with local labor and tax laws a “challenge to their adoption of remote work.”
It’s important to avoid letting this concern translate into turning a blind eye to the area of compliance. Adopting a “just do it and everything will pan out” argument is never okay. When it comes to things like payroll and financial compliance, asking for forgiveness rather than permission can have detrimental effects. A couple of missteps can undo all of the benefits that you’re looking for in hiring across international borders.
This line of reasoning goes both ways, too. Some candidates may express a willingness to shoulder the risk themselves. This may sound like a good sentiment, but it doesn’t mean you’ll be safe from any negative repercussions.
It’s important to take the compensation and regulation factors seriously. By hiring across the globe, you’re volunteering to send money out of the U.S. and into other labor markets. These areas have their own financial laws, taxes, and compliance rules that govern those earning (and spending) an income within their borders.
The good news is that there is an increasing number of ways to cooperate with overseas rules as a small business. These options don’t require opening foreign branches or hiring administrative staff like a bigger company, either.
Just because you handle payroll and compliance one way in the U.S. doesn’t mean you have to replicate that process when hiring overseas. On the contrary, take the time to go through your options before committing to hiring someone under a specific formula.
SHRM (the Society for Human Resource Management) strongly advises companies to do their homework when it comes to hiring an international staff. They also recommend a few different ways to handle payroll for international workers when you aren’t willing to set up an entire branch of your company in another country. A few of these include:
There are many ways to hire and pay an international employee. Many of these can feel overwhelming on the surface, but often they simply require some research. For instance, In a country such as China, which has stringent regulations for setting up foreign subsidiaries and the considerable benefits of regional prominence and a strong consumer base, partnering with a China PEO can streamline the hiring and paying process
Again, the key is to start with an attitude that takes your international hiring and its associated financial considerations seriously. You don’t have to be afraid or intimidated. Instead, approach the activity with a comprehensive and responsible attitude.
From there, vet your options and consider what avenue of hiring makes the most sense. It also goes without saying that having access to professional wisdom is a huge help. Seek allies through quality legal counsel as well as a good banker and accountant that you can trust.
Take the time to enter the global workforce with a strategy in place. Set up the necessary infrastructure from the get-go, too. That way, once you have everything up and running, you can enjoy the benefits of a worldwide workforce with peace of mind.