5 ms·

Ask HN: Is this normal for US companies hiring full-time remote?

I am offered a full-time remote position from a US company. However I'm told I need to set up a ltd. company in my home country and sign a contract with them through that company. I'm told I'll not be getting any equity, health care package or any other benefits offered to regular employees since they can't hire me as an employee legally. I am not sure if it is true and want to know if this is a normal case for others who work full time remote for US company (as I'm assuming they are also not legally allowed to work in US). Salary offered is decent if I'm just working as individual contractor. Filling out W8BEN form has worked for me in the past working with US based clients. However setting up a ltd company I would be paying much higher taxes, health insurance etc charges (ignoring the up front cost required to setup such company). I'm negotiating the offer so any tips or advice would be helpful, thanks.

onion2k 11y ago
They're not hiring you. They're contracting you for your services through an independent company (that you'd own). There's a reason why contractors charge more than employees - to cover all the costs you're finding out about now. If you're contracting at normal employee wages then, financially speaking, you're getting a pretty bad deal. That doesn't necessarily make it bad job though - if it's something you really want to do then it could still be worthwhile.
- firsttimeremote 11y ago
  Thanks for laying it out straight for me. I feel pretty stupid now that this seems to be the truth. I was led to believe I was being interviewed for a full time employee position. I wouldn't have wasted 5 rounds of interview time and a take home exercise that I spent 2 days full time working only to find out in the end they would be low balling me with this caveat. At least I have time to negotiate now.
  - jtfairbank 11y ago
    Every company will try to get you for as low as they can. Don't think of it as wasted time, this is a really valuable learning experience regarding contracting, and even a chance to practice your negotiation skills. :)
    - firsttimeremote 11y ago
      I appreciate your positivity, great advice, thanks.
selmat 11y ago
I had the same opportunity few months ago. I was interviewed for position/contract where US corporate was hiring through UK agency. They have a lot remote engineers over the world with reporting to the US/UK manager. All of hired engineers have to have own company or entrepreneurship license in domestic country. Charges are above average wages, but you have to take care about all related staff: insurance, taxes etc. In this case it's better to hire accountant, but it's still worth.
- firsttimeremote 11y ago
  Definitely going to hire a CPA. Thanks for your inputs.
rosspackard 11y ago
I don't believe this is a bad deal. Hiring a full time remote in another country would probably carry complex legal requirements in the United States (they basically are saying they have a foreign office in your country). This would significantly raise their cost. Then on top of that they would have to follow all regulations for operating their business in your country and all employee/employer regulations which requires even more legal knowledge. (BTW the W8BEN I don't think is valid for fulltime employees because the employer would be specifying how and when you work) Maintaining all of that for a company in the US is a huge time and money cost. On top of that, maybe operating a foreign office would raise their taxes significantly. Overall its not a bad deal just because of this. Just make sure that you factor in the cost of any benefits and if you get taxes are worse for being a contractor (though you may be taxed less if you are able to write things off like in the US).
- firsttimeremote 11y ago
  Thanks for your response. Just to be clear, they are not asking to open their subsidiary in my country on their behalf. They are asking me to set up a company on my own name and invoice through it. One time setup cost is also expected to be borne by me. Good point about W8BEN, thanks.
  - rosspackard 11y ago
    I am not saying they are asking to open a subsidiary. I am referring to the fact that if you were a full time employee (instead of an independent company) then they now have a fulltime employee working in a different country which under US law would mean they are operating a foreign office in your country.
jtfairbank 11y ago
So you're a full time contractor instead of a full time employee. This is a very gray zone in the US, which is probably why they require you to setup a company that you are working through. That's because hiring an individual full time moves them from contractor => employee under US law. At this point it's just a business decision. Extra taxes and costs for you? Document what they are, bump the offer up by that amount, and counter. They most likely don't know the tax law in your country and so they won't realize this is a burden to you. "It's fine to not pay me healthcare or give me options, but there's an issue with having to setup my own company. In my country companies are required to pay XX% tax on revenue, and then I also have to pay a personal income tax. I'm happy to setup the company to make this work, however to do so you'll need to bump your offer up by XX% + $Y,000 for the additional overhead that comes with managing the company's paperwork, registration, and legal fees."
- firsttimeremote 11y ago
  Excellent, this is why I love HN (using a throwaway atm).
seekingcharlie 11y ago
I wouldn't say you are being "low balled" here. I also work full-time remote for a US company and I bill through my company in Germany. You could be hired as an actual employee, however they would legally need to follow the law re employee tax/benefits of the country that you reside in. This is obviously a pain to manage between both parties, which is why "digital nomads" bill through their own ltd. You could negotiate extra for benefits, but it sounds like you will have the work locked-in (i.e. you're not a typical contractor who can charge a premium as the work is fixed). Where do you live? For me, the difference in being taxed as an ltd is trivial; actually, it's better as I can claim extra back as expenses through the business, like electricity, internet, etc.
- S4M 11y ago
  How do you deal with the risk due to FX rate? Your salary is probably constant in dollars but not in euros the currency you use.
  - seekingcharlie 11y ago
    I don't really worry about it. If I could predict the direction of currencies, I wouldn't be working. Sure, I have extra bills compared to my on-site colleagues but I also get to live in a city with a much lower COL. I'm sure there are ways to optimize my setup further but I'm generally content getting a US salary in Europe.
deleted 11y ago
[deleted]
wprapido 11y ago
where do you live, which citizenship you have? yeah, we remote employees / contractors / freelancers / consultants do invoice through our own ltd companies an accountant unless they are really expertized in cross-border deals usually is not of much help, but there are some knowledgeable if you are from EU, establishing residence, registering an ltd in britain and getting paid in UK makes sense more than doing that in mainland europe. given there is double taxation treaty between UK and rest of europe (EU and non-EU) you don't owe your country any taxes as you paid them in the UK. also, you can get paid by that company without changing residence as a sole trader in your country of residence millions of mainland europeans have their companies incorporated in the UK
- firsttimeremote 11y ago
  Great. I have no problem setting up a ltd and invoice through that. I just wanted to know if this was common (which from your comment it seems it is) and if I should negotiate the offer as the expenses of contracting through a company are higher vs expenses as an individual contractor. Thanks for your input.
  - wprapido 11y ago
    sure, it's how most of us work. well, as per default your contracting rates should be at least your salary + expenses and if you are any good (both, as an engineer and a salesman or at least one of the two) your rates should be multiples of that. if it's a long term contract, rates can go a bit lower. if it's a short term gig, rates go up as they need to cover your living and business expenses between gigs
raincom 11y ago
I don't know where you are located. In US, setting up LLC S-corp or C-corp is darn easy; and this way of set up does not lead to higher taxes, etc. In fact, it leads to lower taxes. Check with a local accountant who is competent in these matters.
- wprapido 11y ago
  he said he is not american neither US resident
- firsttimeremote 11y ago
  Unfortunately I'm neither american nor a US resident. I'm in from Philippines.
gesman 11y ago
I used for work for IBM Research for 6 years in that type of arrangement. What you're paid is not "salary", but rather "rate". They're not hiring you, they're signing contract between them and your company. It could be a good arrangement that could evolve into long lasting, beneficial relationship.

onion2k 11y ago

They're not hiring you. They're contracting you for your services through an independent company (that you'd own). There's a reason why contractors charge more than employees - to cover all the costs you're finding out about now. If you're contracting at normal employee wages then, financially speaking, you're getting a pretty bad deal. That doesn't necessarily make it bad job though - if it's something you really want to do then it could still be worthwhile.

firsttimeremote 11y ago
Thanks for laying it out straight for me. I feel pretty stupid now that this seems to be the truth. I was led to believe I was being interviewed for a full time employee position. I wouldn't have wasted 5 rounds of interview time and a take home exercise that I spent 2 days full time working only to find out in the end they would be low balling me with this caveat. At least I have time to negotiate now.
- jtfairbank 11y ago
  Every company will try to get you for as low as they can. Don't think of it as wasted time, this is a really valuable learning experience regarding contracting, and even a chance to practice your negotiation skills. :)
  - firsttimeremote 11y ago
    I appreciate your positivity, great advice, thanks.

selmat 11y ago

I had the same opportunity few months ago. I was interviewed for position/contract where US corporate was hiring through UK agency. They have a lot remote engineers over the world with reporting to the US/UK manager. All of hired engineers have to have own company or entrepreneurship license in domestic country. Charges are above average wages, but you have to take care about all related staff: insurance, taxes etc. In this case it's better to hire accountant, but it's still worth.

firsttimeremote 11y ago
Definitely going to hire a CPA. Thanks for your inputs.

rosspackard 11y ago

I don't believe this is a bad deal. Hiring a full time remote in another country would probably carry complex legal requirements in the United States (they basically are saying they have a foreign office in your country). This would significantly raise their cost. Then on top of that they would have to follow all regulations for operating their business in your country and all employee/employer regulations which requires even more legal knowledge. (BTW the W8BEN I don't think is valid for fulltime employees because the employer would be specifying how and when you work) Maintaining all of that for a company in the US is a huge time and money cost. On top of that, maybe operating a foreign office would raise their taxes significantly. Overall its not a bad deal just because of this. Just make sure that you factor in the cost of any benefits and if you get taxes are worse for being a contractor (though you may be taxed less if you are able to write things off like in the US).

firsttimeremote 11y ago
Thanks for your response. Just to be clear, they are not asking to open their subsidiary in my country on their behalf. They are asking me to set up a company on my own name and invoice through it. One time setup cost is also expected to be borne by me. Good point about W8BEN, thanks.
- rosspackard 11y ago
  I am not saying they are asking to open a subsidiary. I am referring to the fact that if you were a full time employee (instead of an independent company) then they now have a fulltime employee working in a different country which under US law would mean they are operating a foreign office in your country.

jtfairbank 11y ago

So you're a full time contractor instead of a full time employee. This is a very gray zone in the US, which is probably why they require you to setup a company that you are working through. That's because hiring an individual full time moves them from contractor => employee under US law. At this point it's just a business decision. Extra taxes and costs for you? Document what they are, bump the offer up by that amount, and counter. They most likely don't know the tax law in your country and so they won't realize this is a burden to you. "It's fine to not pay me healthcare or give me options, but there's an issue with having to setup my own company. In my country companies are required to pay XX% tax on revenue, and then I also have to pay a personal income tax. I'm happy to setup the company to make this work, however to do so you'll need to bump your offer up by XX% + $Y,000 for the additional overhead that comes with managing the company's paperwork, registration, and legal fees."

firsttimeremote 11y ago
Excellent, this is why I love HN (using a throwaway atm).

seekingcharlie 11y ago

I wouldn't say you are being "low balled" here. I also work full-time remote for a US company and I bill through my company in Germany. You could be hired as an actual employee, however they would legally need to follow the law re employee tax/benefits of the country that you reside in. This is obviously a pain to manage between both parties, which is why "digital nomads" bill through their own ltd. You could negotiate extra for benefits, but it sounds like you will have the work locked-in (i.e. you're not a typical contractor who can charge a premium as the work is fixed). Where do you live? For me, the difference in being taxed as an ltd is trivial; actually, it's better as I can claim extra back as expenses through the business, like electricity, internet, etc.

S4M 11y ago
How do you deal with the risk due to FX rate? Your salary is probably constant in dollars but not in euros the currency you use.
- seekingcharlie 11y ago
  I don't really worry about it. If I could predict the direction of currencies, I wouldn't be working. Sure, I have extra bills compared to my on-site colleagues but I also get to live in a city with a much lower COL. I'm sure there are ways to optimize my setup further but I'm generally content getting a US salary in Europe.

deleted 11y ago

[deleted]

wprapido 11y ago

where do you live, which citizenship you have? yeah, we remote employees / contractors / freelancers / consultants do invoice through our own ltd companies an accountant unless they are really expertized in cross-border deals usually is not of much help, but there are some knowledgeable if you are from EU, establishing residence, registering an ltd in britain and getting paid in UK makes sense more than doing that in mainland europe. given there is double taxation treaty between UK and rest of europe (EU and non-EU) you don't owe your country any taxes as you paid them in the UK. also, you can get paid by that company without changing residence as a sole trader in your country of residence millions of mainland europeans have their companies incorporated in the UK

firsttimeremote 11y ago
Great. I have no problem setting up a ltd and invoice through that. I just wanted to know if this was common (which from your comment it seems it is) and if I should negotiate the offer as the expenses of contracting through a company are higher vs expenses as an individual contractor. Thanks for your input.
- wprapido 11y ago
  sure, it's how most of us work. well, as per default your contracting rates should be at least your salary + expenses and if you are any good (both, as an engineer and a salesman or at least one of the two) your rates should be multiples of that. if it's a long term contract, rates can go a bit lower. if it's a short term gig, rates go up as they need to cover your living and business expenses between gigs

raincom 11y ago

I don't know where you are located. In US, setting up LLC S-corp or C-corp is darn easy; and this way of set up does not lead to higher taxes, etc. In fact, it leads to lower taxes. Check with a local accountant who is competent in these matters.

wprapido 11y ago
he said he is not american neither US resident
firsttimeremote 11y ago
Unfortunately I'm neither american nor a US resident. I'm in from Philippines.

gesman 11y ago

I used for work for IBM Research for 6 years in that type of arrangement. What you're paid is not "salary", but rather "rate". They're not hiring you, they're signing contract between them and your company. It could be a good arrangement that could evolve into long lasting, beneficial relationship.