How to Make a Job Offer and Hire People in a Remote Team

You’re an HR manager, operations director, or startup founder, and you've decided to build a remote team. Congratulations, that's a right decision! Fully remote work allows you to hire people more cheaply and quickly, saving money on office space, and more.

How to make a job offer and hire people in a remote team

Before diving into the offer itself, let’s briefly clarify an important nuance about distributed work:

• Remote team: A team working outside the office.

• Distributed team: A team working from anywhere.

This distinction is crucial because distributed teams are the most advantageous format for startups. You hire people where the required skills are available at the right price. For example, hiring an AI specialist — an LLM model developer with 4-6 years of experience in San Francisco will cost you an average of $240,000 per year, whereas hiring a similar specialist in Eastern Europe will cost around $102,000 per year. The hiring speed is also two to three times faster than in California. This is why we see a global trend toward distributed teams and work-from-anywhere models. :)

Now, onto the Offer!

You have two options for the type of relationship to include in the job offer:

1. Service Agreement

2. Employment Agreement

A service agreement outlines the services the individual will provide, the timelines, costs, and termination conditions. All of this should be clearly stated in the offer.

An employment agreement will require you to have a legal entity in the country where your future employee resides.

In both cases, you can use the services of Global Payroll companies like Deel, Oyster, Remote, or Mellow. They assist with managing both service agreements and employment agreements (in countries where you don't have a legal entity). However, it's important to understand all the pros and cons of this solution (later, we will review each of the Global Payroll leaders and provide an honest comparison of who to choose in 2024). Be sure to specify the type of relationship in the offer if you decide to use a Global Payroll service.

Hiring: Salary Considerations for Distributed Teams

When making an offer, always state the compensation as gross, before taxes!

1. Jurisdiction Changes: For global teams, it’s common for members to move frequently. You may encounter a situation where an employee relocates to a country with higher taxes and demands a raise because you offered a net amount.

2. Tax Legislation Changes: Tax laws change in different countries. If you promise a net amount, you’ll be responsible for the actions of other governments.

3. Progressive Tax Rates: In countries with progressive tax rates, an employee may earn additional income, increasing their tax rate, which can become a burden for you.

Additional Document Tips

1. Documents to sign with contractors: Service Agreement, Non-Disclosure Agreement (NDA), Intellectual Property Rights Agreement.

2. If your global company is registered in the USA, you need to additionally sign with contractors:

• Form 1099-NEC (Nonemployee Compensation): If your foreign contractor received payments for services totaling $600 or more during the calendar year, you must issue Form 1099-NEC. This form is used to report compensations paid to nonemployees.

• Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting): The contractor must fill out and provide you with this form. It certifies that the contractor is a foreign person and indicates their country of tax residency for withholding purposes. It's important to obtain this form before making the first payment to the contractor.
  

By following these guidelines, you can effectively manage offers and hire overseas in a distributed team.