In most cases, small businesses cannot run their own payroll in-house for global teams. To pay team members in other countries legally, small businesses have three options: open an entity in each country where employees live, work with an employer of record, or hire workers as contractors.
While some businesses choose to hire all workers as contractors, doing so can create tricky problems related to compliance. Misclassifying international contractors is a serious issue that could cost a small business thousands of dollars, not to mention time spent arguing in distant courts. Hiring international contractors can be a great move, but only when dealing with legitimate contractors and when using an international contractor management platform.
Small businesses sometimes choose to open one or two entities in countries where they have lots of employees and a strong foundation for business. However, few small businesses choose to open entities everywhere they hire, as doing so can be costly and take months to complete.
An employer of record is the fastest and easiest way for small businesses to run payroll for global teams. An EOR allows a small business to hire employees legally in other countries. A global employment platform like Remote manages global payroll and taxes, administers benefits to meet local employment obligations, and handles all issues of compliance.