#Shield GEO » Hiring Foreign Workers Without Setting Up a Company Comments Feed alternate alternate alternate -- -- menu Hiring Foreign Workers Without Setting Up a Company Category: EMPLOYMENT, GLOBAL EMPLOYMENT ORGANISATION -- -- Category: EMPLOYMENT, GLOBAL EMPLOYMENT ORGANISATION There are advantages and disadvantages of hiring foreign workers outside a company’s home country, and one key challenge is the need to comply with local employment laws. Many countries require a local -- -- comply with local employment laws. Many countries require a local corporate entity to run payroll and meet withholding requirements for workers. However, the steps required to set up a full company in a foreign country can be daunting. -- When a business evaluates the pros and cons of setting up a foreign company, there need to be compelling reasons to justify the effort. If -- company, there need to be compelling reasons to justify the effort. If the primary purpose of establishing a company is hiring foreign workers, then there may be alternatives that are faster and cheaper when entering a new market. -- -- when entering a new market. There are four potential ways of hiring foreign workers without establishing a legal entity in the host country. Not every option is available in all countries since in some locations running a remote -- -- Home Entity Employment If permitted, the easiest method of hiring foreign workers is through the existing home country company, without setting up an additional -- the existing home country company, without setting up an additional entity in the host country. Expat workers on assignment will typically be on the payroll at home, and the only change required is to set up some method of payroll in the host country. The same payroll could be -- -- be on the payroll at home, and the only change required is to set up some method of payroll in the host country. The same payroll could be used for local, resident workers as well. “France, Estonia, Sri Lanka and some other countries offer a payroll -- -- “France, Estonia, Sri Lanka and some other countries offer a payroll law compliance option for the employer, under which foreign employers with no in-country premises can make special “payroll only” registrations with in-country tax and social security agencies so they -- -- The disadvantages for this method is that it may only work well for short term contracts, since the special payroll registration will not relieve the foreign worker of tax obligations or work permit rules for longer engagements. Subscribe to get more insights like this. -- -- If a business has an established relationship with local suppliers in the host country, they may be willing to formally employ the foreign worker on their payroll. This approach can also be used with affiliates, joint ventures or other partners, who can be utilized as a -- affiliates, joint ventures or other partners, who can be utilized as a local entity if a company has a large number of foreign workers in the host country. However, if the company has already gone through the process of setting up a venture or subsidiary they might also be in a -- -- Pros This way of hiring foreign workers can be effective where the local partner has sufficient knowledge of compliance issues and how employment is viewed in the local market. -- -- One obvious disadvantage is where a company does not have any partner or other affiliate in the host country, and will have to use another approach. In cases where only one or two foreign workers are on assignment, there may be more efficient ways to handle their payroll that do not involve the supplier or partner. -- -- Outsourced Employment Through a Third Party (GEO) Hiring foreign workers without setting up a company can be accomplished by using a GEO or professional employment organization as the local employer of record. Although the GEO is a third party to the primary -- -- by using a GEO or professional employment organization as the local employer of record. Although the GEO is a third party to the primary employment contract with the worker, it handles all aspects of in country compliance with established local partners -- -- Case Studies of Employment Without Legal Entity The ability to hire workers without a legal entity will depend entirely on the employment laws of the host country. The following few illustrations show how different each country will view this practice, -- -- * Employing in Canada without a legal entity Hiring foreign workers and running payroll in Canada without a local entity could pose problems, since there must be some means of withholding tax. -- -- These rules make Canada an ideal location to use a GEO service for local employment and withholding purposes * Employing workers in China without a legal entity -- Although the Wholly Owned Foreign Enterprise is the most formal corporate form in China, “…under Chinese law a Joint Venture may -- corporate form in China, “…under Chinese law a Joint Venture may employ both Chinese and foreign workers. Individual labour contracts are required and must be submitted for approval to the local labour bureau.” -- -- Independent contractors may not be hired in China in lieu of employees, so that is not an option for a foreign company. Many companies use a third party employer in China, such as a FESCO or GEO to comply with local employment laws. -- -- third party employer in China, such as a FESCO or GEO to comply with local employment laws. * Employing workers in Mexico and Japan without a legal entity In these two popular business destinations, it is not possible to hire -- -- In these two popular business destinations, it is not possible to hire foreign workers without incorporating, so the use of a local partner or GEO service would be necessary to avoid the expense setting up a full company. -- -- Read More Hiring Remote Workers in Germany: A Guide for US Employers -- Category:EMPLOYMENT, REMOTE WORKERS -- Hiring Remote Workers in Germany Working Style United States employers will generally find that most Germans can speak English in a working capacity. However, there are still some key differences -- -- * INCORPORATION * PAYROLL & TAX * REMOTE WORKERS ARTICLES -- -- * INCORPORATION * PAYROLL & TAX * REMOTE WORKERS [white-shieldgeo-logo-V2.svg] -- -- + INCORPORATION + PAYROLL & TAX + REMOTE WORKERS +1 877 457 7691