When trying to hire someone in a new country, it can take on average two months to put in place all off the infrastructure for employment. This includes research (local laws, regulations, taxes) setting up local payroll (often through a consulting firm familiar with the location) and even setting up a subsidiary company which requires it’s own research into taxes and maintenance.
The most difficult part is determining if it is worth it to set up a legal entity (subsidiary). Key factors include, payroll, sales tax, legal cost of managing entity, and employment risk due to employment law. To decide, it typically involves researching, speaking with an international law firm, getting a second opinion from an employment law firm, talk to a tax consulting firm, and speaking with accounting.
However, once it is set up properly once you can mostly hire as many people you need.
See also:
- Back office
- Remote native companies, especially in the EMEA face this problem very quickly when hiring
- RegTech
Links to this note
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Startups Oscillate Between Operating Ignorance and Normalization
As companies grow their operations become more complex and they must constantly make changes. Startups prioritize speed and solving the most important problem, even if it is in exchange for future liability. A useful framing is to think of it as moving between two states—operating ignorance and normalization.