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Do You Need a US Bank Account to Hire US Workers?

Posted by Stacey Jones

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Jul 17, 2019 5:00:00 AM

Opening a US bank account can be a difficult process. There are many reasons a company chooses to do so, but there are also times when it may not be the right solution.

Many global companies worry that they won’t be able to hire American workers if they don’t have a US bank account to draw from. Is it absolutely necessary to have a US bank account before you hire an American worker?

Identify the Type of Worker

Do you need a US bank account to hire US workers? The answer is, “it depends.” The first step is to take a look at the type of worker you’re entering into an agreement with.

If you’re hiring an independent contractor, you don’t need a US bank account. You and the contractor will negotiate the terms of payment, which will include currency and method of payment. If you pay large sums, it may help you to have a US bank account and maintain a balance in it.

Does the situation change when it comes to hiring employees for your business? While it’s not strictly necessary to have a US bank account, opening one can make it much easier to administer US payroll for employees.

How a US Bank Account Helps

Foreign employers may be required to withhold payroll taxes and remit them to the IRS. To do so, the employer will need to register with and receive an employer identification number from the IRS.

Once you have an EIN, it becomes easier to open a US bank account, although you’re not out of the woods yet.

Not every foreign company will want to register. You might be testing out the US market before committing to opening a branch office there, for example. If you plan to hire American employees, however, you’ll need an EIN.

Without the EIN, you can’t administer payroll taxes for your US employee. You don’t necessarily have to open a US bank account to pay these taxes, but there are some complex rules if you want to pay through a foreign institution.

First, all funds sent to the IRS must be in US dollars. If you send your payments from a foreign bank, they must be affiliated with a US bank. Smaller banks may not be able to provide this requirement.

Having a US bank account simplifies the process. It also helps you avoid fluctuating exchange rates and additional fees, such as wire transfer fees.

No Bank Account? No Problem

Suppose you’re setting up in New York, and you want to hire an employee to help. You’ll need an EIN, but the process of getting one can be difficult for international companies.

You could choose to wait and maybe miss out on hiring the brightest talent for your new office. Or you could partner with a professional employer organization.

The PEO is already established where you want to do business, and they’ll act as a co-employer when you want to hire an employee. They already have an EIN, which may speed the process along.

They can also assist you by providing access to a US bank account, which they already have set up. Better yet, they could help you navigate US payroll taxes and regulations. It’s the easiest solution to what can otherwise be a convoluted and slow process.

Start Hiring Employees Today

The world of business won’t wait, so work with a PEO to cut through the red tape around hiring American workers for your business.

You don’t need to have your own US bank account, although it can simplify your payroll. What you really need is a partner with the expertise and resources to help you get started today.

 

Topics: Pay International Employees, international business, Workers Overseas

How to Manage Employees Overseas Effectively

Posted by Ray Gonder

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Jun 17, 2016 9:00:00 AM

How_to_Manage_Employees_Overseas_Effectively.jpgThere are many benefits to hiring workers overseas. With the world more connected than ever, finding the candidate that ticks all your boxes can happen—except that they might not live in the same area code. But with the many benefits of overseas employees, there are some challenges that make managing them a potentially stressful situation.

Essentially, your options can be broken down into three categories: Either you manage employees overseas yourself, and potentially save costs, though you’re going to be spending a lot of time trying to communicate effectively and learn about the laws and regulations of a foreign country. You can also hire someone overseas to manage and hire your employees, with the potential drawback of having to pay a manager and offer all the benefits they are entitled to as an effective manager. Finally, you could partner with a PEO that will manage your overseas employee for a flat rate fee.

Here are some tips to help effectively manage employees overseas, and a few pros and cons to consider when you do finally decide on which route you’re going to take.

Communication

Communication is the foundation on which your management relies. You need to be able to convey your ideas clearly to the team overseas for them to fulfill their designated tasks without your immediate oversight. It can be challenging because you and your overseas employees might not even speak the same native language. When writing emails, make sure that you avoid idioms or slang that would confuse non-native speakers. Everything should be written in clear language and in detail to avoid ambiguity. Planning regular conference calls with your employees is a must.

It’s even more important if your overseas team is in a time zone where both of you only have a small window of opportunity where you’ll both be at your work desks. Making sure that you have a clear template for assigning tasks via email will help insure a consistency of tasks that are fulfilled adequately.

Hire an Effective Overseas Manager

Setting up a chain-of-command might be valuable to your business, whether that be someone who is available at hours when you’re not, or even an overseas manager who can make executive decisions in your absence. Hiring a manager in the overseas country is additionally beneficial, since they will also be more familiar with the laws, regulations, and culture of that country and as long as they’re experienced and capable will let you rest knowing your company is in good hands. It’s also going to be easier for them to monitor and hire foreign workers for your company, and their cultural insight during the interview process can only be an asset.

Partner with an Overseas EOR

Another possibility is partnering with a foreign EOR (Employer of Record). An Employer of Record will be able to manage your overseas employees for you and will have a qualified team of professionals keeping track of all the laws, regulations, and paperwork that’s necessary in order to manage your team. It will be up to the Employee of Record to handle all the HR tasks, effectively alleviating you of any potentially risks and liabilities that could occur as you attempt to wade through managing both a local business and a team overseas.

Without you having to spend all that time learning about the laws and regulations of a foreign country, and dealing with the cultural tensions that may occur as you attempt to handle overseas employees, an EOR will help you focus on your vision, content that your overseas employees are able to work and assist you in your business to the best of their abilities.

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: Workers Overseas

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