Updated: Feb 5
Whether you are a full-time employee or an independent contractor, these are the ins and outs of signing up with an American company as a non-US resident.
It's no secret that the United States is one of the biggest remote work hubs in the world, being home to thousands of remote-first companies. Recent statistics gathered by Flexjobs showed that out of 669 CEO's across the country, 78% agreed that remote work is here to stay long-term.
For remote work hopefuls outside of the US, this boom can also pose a unique challenge. Some of the most exciting remote jobs seem to stem from America, but working for one is often location-restricted. Companies willing to open their listings across world borders have challenges of their own - how do tax and benefits work for a non-US employee?
We've put together answers to all the top questions about working remotely for a US company, and how American companies can confidently move forward with the global talent pool when hiring online.
Working For An American Company: Visa Or No Visa?
One of the common misconceptions associated with working remotely for a US company is that it's not possible without some sort of formal visa requirement being met first. This is something that is commonly believed not just by candidates, but by employers too.
Let's take a look at the real facts in this handy infographic:
The US Department of Labor's regulations regarding hiring for companies does not restrict companies from hiring outside of US American borders. This means that American companies that are interested in the idea of hiring remote workers overseas do not have to withhold any estimated taxes, and the wages do not have to be reported to the IRS either.
How Will The Contract Work?
Remote jobs advertised by US employers will often mention the position being a 1099 contractor position. This can be confusing to those who are used to working with traditional employment descriptions, so let's take a closer look at what it means.
A 1099 contractor is an individual that works as an independent entity instead of as an employee. What this means is that you will effectively be working full hours, but working as a consultant of sorts. This category also covers individuals that are self-employed or acting as freelancers.
The key difference relates to how the employer has to handle taxes. Working under a traditional American W-2 contract means the company has to deduct things like payroll taxes that are payable to the employer. Another important differentiation has to do with benefits - as a 1099 contractor, you may not be eligible for the same benefits that full-time US citizens will be.
The IRS makes use of a specific checklist to determine that an independent contractor has the right job status. These are some of the things they check:
Some of the other questions that may be asked include how permanent the agreement is, whether the worker is an essential part of the business and who pays for the materials used for work to name a few.
How Will Payments Be Handled?
Concerns about sending and receiving payment in USD outside of the US can be one of the reasons why companies (and non-US individuals) are concerned about moving forward in a contract together. Using direct deposit across borders is slow and expensive, which can make it difficult to collaborate.
The good news is that there are plenty of payment options that are lower-cost, faster, and easier to use for both employer and worker. Here are our top recommendations for international transfers:
It's important for employers to pre-vet these options and see which will best fit their needs and the needs of their employees or contractors that are located overseas. As the employee or contractor, you'll need to follow up with the company to find out who will be responsible for the transfer fees that apply.
The Final Word On Working Remotely For A US Company
With the myths busted, facts laid out, and payment options provided, there really is no reason why an American company should shy away from hiring 1099 contractors or full-time employees from around the world. In fact, it can be highly beneficial. Hiring outside of the US can be more cost-effective, and for the contractor earning money in USD instead of their local currency will be a big draw.
If you're a contractor or individual looking to get hired with a US remote company or needing contract-based advice, reach out to us today by clicking here.