What are the legal aspects of hiring workers internationally? 1 Answers as of October 20, 2011

We are a USA based start-up, wanting to hire employees internationally. It would be a telecommuting position, but we wanted to understand the due diligence and legal complexities (if any) that comes along with it. Would we have to pay the employee tax in US or the respective country or both? Also, what if we only give them a stake in the company (no monetary compensation)? Are there any legal procedures we have to follow before bringing the person on board in either cases (only salary, only equity or salary + equity) ? Any help with these queries would be greatly appreciated. Thanks

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The answer to your question depends on the particulars of the contract that you have with these employees. The employee will certainly be subject to taxes and regulations that apply wherever they work. Whether they will also be subject to US taxes will depend on their relationship with your company. Giving them an equity stake in the company would not necessarily relieve you of the obligation to pay them a wage or salary for their work. If they really are owners, then they are not necessarily entitled to a salary or a wage. But if they are owners, they must be treated as such. In other words, you can't really substitute equity for pay.
Answer Applies to: Oregon
Replied: 10/20/2011
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