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It’s not trivial to setup a presence in another country. You have to understand and follow their unique labor laws, find legal representation/advice, conform to
by softwaredoug 5y ago
It’s not trivial to setup a presence in another country. You have to understand and follow their unique labor laws, find legal representation/advice, conform to tax laws, find a way to equitably pay employees compared to peers outside the country. You have to figure out how you account for profits between the entities (they are legally different countries in different companies). What does it mean too off you have any kind of profit sharing or equity that employees hold? How is that accounted for across N countries employment and tax laws? In a fair way?
There’s a lot of voodoo too you have to figure out. Lots goes unspoken about how exactly you do these things people are too afraid to write down given legal liabilities. Or it’s just assumed to be common knowledge that nobody has to explain. Sadly you have to find someone “in the know” who can sort of nod and wink at you what to do. An example of this is setting up a bank account when you can’t easily show up in person…
It took my last company about a year to setup a UK subsidiary. It took 3-6 months to do the same in Germany. It occupied some of the smartest people in HR and operations, distracting them from other priorities.
Why not a contractor?
Well yes, this is obviously the easiest solution. But it’s dangerous if you intend to treat them as employees. The IRS in the US gives you some guidance[1]. Contractor route can mean they have to spend months without a contract, that they can’t participate in any equity arrangements, you can’t provide benefits like vacation. It might not be very appealing to many…
1 - https://www.irs.gov/taxtopics/tc762 https://www.irs.gov/taxtopics/tc762