How to Hire Foreign Remote Talent for Your Startup

The ongoing global pandemic has brought about a sudden realization that remote work can actually work. Consequently, startups seem to be increasingly open to hiring remotely. While in many cases that may amount to hiring a neighbor to work from home, many companies are looking across national borders too. However, many startups and founders might not be familiar with hiring from abroad. Hence, we put together a few tips on how to hire foreign remote talent for your startup.

Getting the contractual relationships right

The first item on our list might be a given for many, but it’s good to mention it regardless. If you’re hiring foreign talent for your startup and the intention is for them to work remotely from another country, an independent contractor relationship is likely your best best. Trying to employ directly in a foreign country might get you into some nasty permanent establishment issues and tax trouble. Furthermore, a contractor relationship tends to provide a bit more flexibility, while still allowing terms close to conventional employment.

Consider the shift in liabilities when hiring foreign remote talent for your startup

Now that we’ve established that you’ll probably want to hire talent from abroad as contractors, here are a few things to consider when doing so.

Firstly, one main feat of a contractor relationship is that it shifts some of the company’s responsibilities to the individual. For instance, in a normal employment relationship, the company is likely responsible for paying for social security, pensions, etc., and in some jurisdictions, even withholding payroll taxes. However, in the case of contractors, these responsibilities tend to fall on the individual. Now, this is probably less hassle for the company, but bears consideration.

Therefore, when discussing compensation and salaries, startups should take into account the contractor’s side. They might have to bear the cost of some of these items themselves. In other words, a contractor earning the same gross salary as a normal employee is likely to end up with less net, thanks to these costs. Furthermore, when hiring remote talent from abroad, it’s the local rules that apply. For instance, in our home bases of Finland and Sweden, the compulsory social security and pension payments can be quite high.

Build culture by unified practice and similar access to perks and incentives

Another important consideration when hiring contractors – especially remote ones – is integrating them to the team. While in many contexts this might amount to team building activities and company trips – and they are important! – there’s another side to it as well. It’s often beneficial for team integration and longevity to have people working on similar terms, whether they are contractors or “normal employees”. In practice, this means things like option pools, incentives, perks like healthcare, insurance etc. Of course, figuring out a good way to offer these for a remote contractor is a bit of work. But it’s likely to pay off in the long run!

Adjust working practices to accommodate for foreign remote talent

When you’ve hired foreign remote talent for your startup, it’s an opportune time to revisit your team’s working practices. You’ll want to do this to make sure they align well with a new foreign team member. Sometimes you may be hiring from a place with significant time zone difference. In such situation, startups and the individual often agree on some overlap of working hours. However, in such cases, it’s good to take into account the individual’s personal situation. You’re more likely to get their best work from them if they can keep living life outside of work too.

Also, in terms of the day-to-day, we should always try our best to enable remote team members easy access and convenience to participate in team meetings and other important discussions. For such, an alignment on times is a good option, and you can consider e.g. holding meetings on the agreed overlap time. As you grow and may hire from more locations, things will probably get more complex, but all in all time zone differences are seen as a barrier less and less.