Thanks to the internet, it’s easier than ever to broaden your business horizons and operate on a more global scale. The days of being limited to independent contractors and freelancers in your area are over. Collaborators with the specific skills and unique perspectives you want are only a few clicks away. But one obstacle still prevents many companies from tapping into the international workforce: processing payments.
Paying international contractors can get complicated faster than it takes for you to write a simple check. There are countless hurdles to overcome and legal obligations you must meet. Pair that with the headache of dealing with foreign banks, exchange rates, and pricey transaction fees, and working with overseas contractors starts to look like more trouble than it’s worth.
But it doesn’t have to be!
Dots gives you a quick, efficient, and safe way to get every one of your contractors paid on time regardless of where in the world they work. Our API streamlines payment processing, taking the headache out of international payouts. We help you keep your contractors happy, letting you develop excellent working relationships with individuals who can help your business flourish. Whether this is your first time diving into the global workforce or you already have a team of contractors and need a more efficient way to get them their hard-earned pay, Dots has you covered.
What Are the Benefits of Hiring Contractors Internationally?
Companies all over the country rely on non-employee workers. The gig economy is more prominent than it’s ever been, presenting organizations like yours with an enormous pool of talent. But the possibilities are endless when you set your sights outside the country. There’s no denying that working with a local workforce is convenient. But limiting your business to who’s available in your area can stunt your company’s growth and force you to miss out on tons of potential. Thousands of brilliant minds are eager to contribute to your bottom line, and turning to outside help can lead to groundbreaking results.
The ubiquity of the internet makes hiring people from all over the world accessible, and the nonemployee nature of independent contractors offers flexibility for all parties involved. If you’ve never considered hiring overseas help, it may be time to restrategize and rethink your approach to getting outside support.
Let’s look at some of the most impactful benefits of hiring international contractors.
Access a Broader Pool of Talent
One of the biggest reasons to consider hiring out-of-country contractors is to tap in to a much bigger pool of workers. It doesn’t matter whether you’re in a small town or a big city; searching for local help means you have a limited selection of people. That might be OK for simple assignments and straightforward projects, but once you start getting into more complex work, that pool shrinks even more.
When you expand your search to the international workforce, those limitations are a thing of the past. Suddenly, you can work with people who have all skills and qualifications, which makes finding that perfect contractor a breeze. Gone are the days of settling for someone who’s “good enough” or having to hire multiple contractors to get the skillset you need. Now you can find precisely who you need to complete projects.
Get Workers With Distinct Skills
The beauty of hiring freelance gig workers and independent contractors is getting people on your team with skills you might not have in house. There are many instances when you’ll need people who don’t necessarily have a place within your company as full-time employees. For example, you might need a specific type of artist like a graphic designer or photographer for a project. Those skills are necessary for individual projects, but outside of those occasional assignments, you may not have much work for them. Therefore, hiring them as actual employees doesn’t make practical sense from a budgetary standpoint.
So why go international? Expanding your search for contractors to the global workforce allows you to find the best people for the job. It’s a chance to get highly skilled people with the distinct perspective you desire. That’s not to say that local contractors have a limited point of view, but you’re bound to get more options and innovative ideas by turning to individuals from cultures that are different from your own.
Create Opportunities to Expand
If you’re looking to expand your operations, there’s no better way to do that than by turning to contractors from the market you want to enter. Hiring foreign workers is a common tactic for businesses wishing to go global. You might use in-house employees for some tasks and to help establish a presence in another country. However, having that international viewpoint makes a difference.
For example, let’s say you want to do business in Brazil. Why rely on your local contractors to do marketing for the Brazilian audience? Clearly, hiring people who know the culture and understand the Brazilian market is the better course of action. You can set up shop and watch your business flourish with the help of people who know the area and your target audience.
Save on Hiring Costs
We’d be doing you a disservice if we failed to bring up the potential cost savings of hiring international contractors. Having new perspectives and increasing your company knowledge are significant reasons to look outside the country for non-employee help. However, the money you can save on labor costs is a massive factor in why companies like to contract foreign talent.
Wages in the United States are usually significantly higher than those in developing countries. You’d still save money going the independent contractor route with domestic workers compared to bringing people on full time. But you can save even more by covering respectable wages for someone living in another country.
When you go international, you can turn a limited hiring budget into a competitive contract for workers in a country with a low cost of living. This allows you to invest in your business even if you have limited funds to do so. Your company invests in its financial health while giving a lucrative opportunity to an international contractor who deserves it. It’s a win-win!
Get All-Day Coverage and Productivity
Have you ever considered how international contractors could boost your organization’s productivity? You are bringing in more people to complete work, and you’re hiring individuals in different time zones. That fact alone opens up what’s possible for your business.
Right now, you might have difficulty finding people willing to work that dreaded graveyard shift. Offshore contractors can fill that gap. Hire people in countries on the other side of the globe, and everyone can contribute to your company’s bottom line during their respective daylight hours.
International contractors are fantastic when you need 24-hour coverage. For example, you can hire people from other countries to remotely monitor crucial systems during your local off-hours, complete low-priority projects when no one is in the office, or offer live customer support.
How to Make Payments
No matter why you choose to hire international contractors, Dots makes paying them a cinch. The Dots API can change your entire approach to handling contractor payouts. Instead of manually processing payments or jumping through hoops to perform a simple transaction, Dots takes care of everything behind the scenes.
Integration doesn’t take very long at all. In most cases, it takes around 10 minutes to start implementing. After that, the hassle of completing international payouts is gone.
With Dots, you can quickly and efficiently send money in a way that works for your contractors. It gives them a choice on how they want to get paid. Our API lifts limitations and navigates through restrictions. Usually, offering payments through multiple service providers requires establishing distinct workflows for each one. But Dots eliminates that headache. It unifies accounts payable, creating a friction-free payout process. You can even set things to run automatically for a hands-off approach. Once you connect your accounting software and payroll services, Dots does the heavy lifting.
For international contractors, you have many options. If you want to keep things straightforward, you can do wire transfers. Dots acts as the middleman for foreign banks. Our API can process payments in over 100 different currencies, removing the added step of having to convert money. Do business in USD and let Dots take care of conversions to provide localized payments. Best of all, we can get bank-beating foreign exchange rates to ensure that your contractors get the most bang for their buck.
If you want to forgo bank transfers, you can use one of many different digital payment processors. One of the most popular is PayPal. It operates in more than 200 countries/regions and boasts an active user base of almost half a billion people. It’s a quick and easy way to get money to contractors, and Dots simplifies things even further. You can also use services like Cash App, Venmo, Zelle, and others through Dots. No matter which service your contractors choose to use, Dots provides flexibility and unmatched simplicity.
You can even create embedded digital wallets. The Dots digital wallet puts the control in your contractors’ hands while giving you a closed-loop payment system that takes third-party processors out of the equation. Send money to the digital wallet, allow the balance to grow, and let your contractors choose when to cash out.
The Dots API is the best way to make international payments. It’s about providing options and using the most efficient processes available. We take care of every step, opening the floodgates on who you can hire to work for your company.
What Are the Tax Requirements?
Before you start drafting work contracts, let’s talk about tax requirements. One of the most intimidating aspects of hiring international contractors is navigating taxes. When you hire local workers, the process is pretty straightforward. You collect information through a W-9 and create a 1099-MISC for each tax year you pay them.
But what about working with people who don’t live in the United States? That’s where things get confusing. Taxes work differently around the world, and people in other countries aren’t going to have a U.S. social security number or tax ID number. Right off the bat, you’re looking at unfamiliar tax territory.
Generally, tax requirements depend on who you hire, what country they come from, and where the work occurs. If you’re hiring a U.S. citizen living and working internationally, you’ll have to withhold taxes. Withholding is also required if the contractor’s work occurs in the United States. That applies whether the contractor is a U.S. citizen or not.
If you must withhold taxes, you must file Form 1042 to notify the IRS of any payments you make to foreign contractors. Every contractor must also fill out Form W-8 BEN. Form W-8 BEN declares the contractor’s nonresident status before you make any payments.
Navigating the tax minefield can be daunting, and it’s enough to make some companies not consider hiring international contractors. That’s a reasonable thing to worry about from a business standpoint. Failing to submit the proper documents or report payments to the IRS could put you in legal jeopardy, resulting in steep penalties and accusations of nefarious activities.
It may seem intimidating, but don’t let those tax requirements scare you. Dots can ensure that you’re doing everything above board. The Dots API can collect necessary tax information from every contractor you hire. Dots can collect and verify tax information automatically during that initial onboarding process, embed crucial forms like W-8 BEN, and give you one less thing to worry about come tax season.
Dots takes care of tax requirements from the jump. The API keeps all information secure and automates the entire process to ensure you’re doing things correctly. You don’t want to play with the IRS and ignore your obligations. With Dots, you can rest easy knowing that everything is taken care of before you send a single payment. Whether working with contractors directly or partnering with an employer of record (EOR) company, Dots simplifies tax responsibilities.
What to Know About Staying Compliant
It’s not just tax documents you must worry about when working with foreign contractors. There’s also the subject of compliance. In business, compliance refers to the process of making sure that your organization is following all laws, regulations, and standards. There are many complexities to running a business; all it takes is one misstep to put your company at risk.
When hiring foreign contractors, compliance usually revolves around anti-money laundering (AML) regulations. Anytime you move money between your company and a foreign entity, there are risks. It sets off some red flags because there is potential for nefarious activity. More unscrupulous actors could use contract work as a cloak to launder money, fund terrorist activity, or a host of other illegal activities.
Obviously, you don’t want to find your company on the wrong side of those accusations. The legal ramifications of illegal activity happening under your nose are nothing short of terrifying. That’s why compliance exists. It ensures that you’re operating legally and not putting your company at risk. Compliance protects your best interests and your bottom line.
Generally, AML compliance involves know your business (KYB) or know your customer (KYC) verification. Once again, Dots comes in to make your life much easier!
When the Dots API collects tax documents, it performs necessary compliance checks. Dots requests essential identification information and automatically screens it against global watchlists. If anything comes up, you’ll know about it! Dots skips the complications and automates compliance, giving you one less thing to stress about when working with foreign contractors.
Get Started With Dots Today
So much greatness can come from hiring international contractors. Don’t let a few payment hurdles stop you from working with them. Those obstacles are far easier to handle these days, thanks to the Dots API. Dots takes the frustration out of the mix and automates everything to make payment more manageable than ever. With Dots, you can fulfill your tax duties, comply with all laws, and give your contractors a choice of how they want to get paid. Our API does it all behind the scenes, making payouts as easy as processing your standard payroll.
When you’re ready to tap into the potential of the global workforce, turn to Dots! Schedule your demonstration today to see firsthand how game-changing the Dots API truly is.