You’ll usually be able to send a wire transfer to your international contractor from your regular bank. The process for this will vary depending on who you bank with, but in many cases you’ll be able to arrange your payment by logging into your online banking service. The surest way to ensure timely payments is to automate payments using a payroll software like Asanify. But you have to first ensure that the contractor is comfortable with it as well.
#5. Payment Platforms
Doing so lets you pay your contractors promptly and avoid unnecessary delays. International checks—similar to domestic checks—are paper checks issued by one bank, which you can deposit in another. The international contractor must physically receive the check and deposit it in their local bank. The sender transfers funds by providing the recipient’s details, such as the SWIFT code (BIC) and IBAN.
How to Pay International Contractors: 7 Key Things to Consider
Even further, when you pay international contractors, your must comply with the local laws of their country or state of residence. Because individual tax codes can be dense to interpret – and are constantly in flux – it’s in every global company’s interest to consult international payroll companies before ferrying funds overseas. Most international contractors must pay their own taxes even if their income lands up in their bank account from abroad. Classifying domestic employees what are retained earnings is often straightforward, but misclassifying foreign independent contractors can lead to penalties. To maintain that excellent relationship with your global contractors, there is nothing as crucial as paying them right and on time. That said, despite your best efforts and intentions, paying someone in a foreign country comes with a variety of challenges.
International money order
Contractors receive payments in their local currencies, ensuring smooth transactions. You’ll want to consider the time it takes to process payments internationally, as some methods may have longer lead times, especially when paying by https://mbg.puree.maison/dealerships/ paper check. International money orders provide a secure way to send money across borders by requiring prepayment before issuing the money order.
- As we’ve seen through this article, there are many different aspects to understand and overcome when paying foreign independent contractors.
- If the working relationship resembles an employer-employee arrangement, engaging through an Employer of Record (EOR) may be more appropriate.
- Your business is going to grow, and the payment method you choose should be able to grow with you.
- Bank transfers typically have lower fees but can only be utilized for domestic transactions, so you won’t be able to pay your international workforce using this method.
- An EOR makes paying overseas employees and complying with local labor laws simple as they become the legal employer of your offshore workers.
- Without proper processes, this leads to a litany of errors, which is costly for a business and frustrating for contractors.
Well, a contractor relationship retains high flexibility when scaling your workforce. You can access highly specialized skills on a short term basis, for a single project or for a predefined amount of time. However, high merchant fees charged by credit card companies for payment processing can significantly impact overall payment costs. With Transformify (TFY), you can simplify the entire contractor payment process — from onboarding to payout — ensuring speed, compliance, and a great experience for every worker you engage. On the other hand, offering fast, flexible, and reliable payments builds loyalty, improves retention, and strengthens your reputation as a great client to work with. Some services advertise zero fees but make their money on a poor exchange rate.
Pros of Using Wise
- Regularly review and update your contracts to reflect any changes in the law, business practices, or relationship with the contractor.
- As you see consistent success in a new market, it might make more sense to hire workers through an employer of record.
- Paying in your own currency may lead to conversion fees or rate fluctuations on their side.
- Not only that, but physical mail can get lost or held up in customs or post offices.
- These include using digital wallets or resorting to widely used payment platforms such as PayPal.
- This structure works well for projects where the work volume may change over time.
Instead, the contractor should complete and submit Form W-8BEN to certify their foreign status. There are fewer compliance issues to keep track of with independent contractors. Once you’ve established terms in the contractor agreement and set up paying international contractors international payments, there’s only one main issue you should monitor (see next). It’s critical to correctly classify remote workers as either international employees or independent contractors.
Global contractor management platforms
Revolut offers a money transfer system and deals in gold and crypto payments with no hidden fees. The service also provides a card that currently supports around 130 local currencies. You can choose among different subscription options depending on your company’s needs, the number of contractors, and their location.
Benefits administration
For example, some countries require contractors to register with the government before they can do business and receive payment. Even when some forms aren’t required (e.g., Form 1099 isn’t needed for international contractors), you can still generate them for your operations and use them to resolve disputes or IRS issues. To simplify document creation and record-keeping, you can use an online generator like ours. While international contractors don’t need pay stubs or 1099 forms, you can still use our paystub generator or 1099 generator to create these documents for personal needs. To set the right payment terms for international contractors, you should establish clear conditions that suit both parties.