Total newbie on this. What is the easiest way to pay an employee living out of US, but having a USD account in their country, given I am based in US? I want to do it properly as if the employee is getting paid by the company on a payroll, generating a paystub. Checked out Deel, but seems like too much effort for just a single employee (not looking to increase at the moment).
Will the answer change for a contractor in same situation?
If you try this sort of thing in Australia, you violate the Alienation of Personal Services Income Act 2000, and will be in a world of pain. Many other countries (including e.g. many post-2004 EU members) have similar laws against "stealth" employment, enforced with varying degrees of eagerness and effectiveness, as common in that region.
If you're only serving a single client, you're usually not a contractor. If you pretend to be, and if the tax office ever decides to scrutinize what you do, chances are they'll tear you a new one. Insist on having an "employer of record" that does things by the book, and knows local regulations, tax codes, and mandatory insurances.
In the same time if your customer does have legal presence in your country of residence then that's entirely different situation amd tax office might see it as tax avoidance, though this will depend on country of your residence as laws are implemented differently in different EU member states, and also the legal form of your own company.
If in doubt, hire accountant who specializes in your area.
I just read an article claiming that in Germany employers of record are treated like temp agencies and thus limited to 18 months.
I know this word! Yes, it's a shitty situation :)
We researched ways to pay him legally, but for a six month contract it turned out to be much easier to simply pay an agency that pays him and does the paperwork.
Essentially it is presumed that most workers are full-time employees, and it is difficult to maintain a contractor due to tax liability and labor laws.
If you insist on a non-contractor relationship, find a business (Oyster, Remote, maybe Deel do this) to act as the Employer of Record and get ready to pay them a ton to do it.
The only cheap and easy way to do this as an employer is with contractor relationships.
The other way for him would be to setup legal entity so that you could work with him as contractor or Freelancer. In some countries, such as my own (Serbia), freelancers can be payed directly, without the need for them to setup any kind o f entity or register with EoR. You should check if something like that exists for your employee.
See https://www.irs.gov/businesses/small-businesses-self-employe...
In some EU countries it might be worth the headache since you'd also pay considerably less taxes than if you were an employee
I'd add it's easier to do B2B than regular employment, that will make your life easier as you will not carry the burden of figuring out taxes- your contractor will know better their circumstances like tax residence.
