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International contractor to-do list: 4 tips for hiring and paying foreign workers U.S. companies continue to look overseas for talent, with worldwide employment of foreign workers standing at over 42.5 million workers, according to the U.S. Bureau of Economic Analysis. 4 tips for hiring and paying international contractors Number 1: Ensure the contract is clear. The contractor must report all income and handle their own taxes as the hiring company, you have no legal obligation to handle those issues for contractors. That said, it’s always a good idea to clearly state not only deliverables, but also income and tax obligations clearly in the contract between the hiring organization and the international contractor. It’s important to include language in a contract that protects your company’s intellectual property. Depending on the laws where the contractor is based, they may be able to claim rights to intellectual property for work they created if it’s not specifically stipulated in a contract. Number 2: Make payments and assign reporting responsibilities. Once you’ve hired and accurately classified a worker as an international contractor, you’ll need to set up payments to the contractor. That payment process is usually done through accounts payable, with the international contractor submitting a timely invoice for work completed. Number 3: Know the tax rules. There is no requirement for the hiring company to issue a 1099 to an international contractor, which would be the case if the contractor were based in the U.S. However, a U.S. company engaging an international contractor should provide an IRS Form W-8BEN to the foreign contractor, and ensure it is prepared fully and accurately and is signed and dated by the contractor. Number 4: Know the potential penalties in misclassifying overseas workers. Employee misclassification is when a government considers a worker an employee rather than a contractor. This is usually based on the contractor’s scope of work, and it entitles them to benefits stipulated by the local labor law. If an employer is found to have misclassified and employee, it can result in fines, potential back payments of taxes, insurance, pension or retirement plan contributions, or even jail time. Employer of record solutions like Global Employment Outsourcing (GEO) can help you ensure global worker compliance without taking on the risks associated with international contractors. To learn more visit SafeguardGlobal.com/GEO