The nature of work is changing. More and more, companies are going remote. In part the global pandemic has catapulted an unprecedented number of companies into remote working, however this shift was already underway not least because of the freedom and flexibility remote working gives both employees and employers.
Being remote-friendly means that companies can attract the specialist talent their business needs from a global talent pool, while people can secure employment from top companies no matter where they are based. The flip side, however, is navigating the operational complexities of hiring and onboarding new-found talent in different geographies. When growing your remote team, what should you watch out for?
Focus on Employing, not Contracting
Growing your remote team by employing rather than contracting is not only much more rewarding but also of lower risk.
Contracting is a popular choice for many global companies. But compared to employing, contracting can actually be very risky for your remote business. If you misclassify an employee as a contractor, local authorities will consider your company to be non-compliant. You may be liable to pay back taxes to the authorities and benefits to your employees, along with additional hefty fines.
Contracting is actually not very popular in many countries. This means that any working relationship can easily be interpreted as an employment relationship. So the risk of non-compliance is very high for companies hiring in multiple geographies.
What’s most important is that employing allows you to build a strong and driven workforce that is aligned with your company’s objectives. Unlike contractors, they are incentivised by your commitment to them and by your company’s success. In a nutshell, a goal-oriented remote team means long-term growth for your business.
Minimise Permanent Establishment Risk
Building a remote team and expanding your business is hard work. Exposing yourself to Permanent Establishment (PE) risk can pose an added financial and legal burden. Employing remote talent can be a way to minimise your PE risk.
A Permanent Establishment is a permanent place of business where a company carries out revenue-generating activities. Some companies assume that by hiring remote contractors, they can avoid PE risk. But if a contractor is conducting revenue-generating business for you, that could trigger a PE presence for your company.
Although employing does not get rid of PE risk, it can significantly minimise it. By employing compliantly, your company’s operations remain transparent to local authorities. This means employing is a lower risk structure and authorities will be less likely to penalise you. With PE risk off your mind, you can focus on nurturing your remote team from the start.
As a fully remote, and internationally, distributed team at Omnipresent we understand – first hand – the benefits of going remote but also its challenges. Using a tech-driven approach, we have a wealth of experience supporting small and medium-size businesses with the employment of their remote talent wherever they are in the world.