How To Pay Freelancers Overseas - Guide For UK Entities

Remote working and collaboration is now easier than ever before. Thanks to advances in cloud-based software and video conferencing tools, it’s possible to have teams operating all over the world.

For businesses, this has created growing opportunities to hire talented freelancers and contractors. With geographical location no obstacle, employers are no longer restricted to the local talent pool. They can tap into worldwide talent.

However, these new opportunities also come with new challenges. Hiring and paying freelancers in other countries can be complex, especially when multiple currencies are involved.

Read on to find out more about how to pay freelancers overseas, in our helpful guide for UK entities.

We’ll also look at a solution ideal for global businesses of all sizes - Wise Business. It offers convenient international mass payout tools, so you can pay freelancers all over the world for low fees and great exchange rates.

💡Learn more about Wise Business

Hiring foreign freelancers

The global freelancer market is thriving, with most based in countries like the US, Turkey, Colombia and Mexico. The UK is also a popular spot for international freelancers to set up shop.¹

The most common freelancer jobs are in fields such as writing, editing, design, art and creative, web development and business development.¹ However, it’s possible to find a full range of skills on the global freelancer marketplace.

If your organisation is thinking of hiring foreign freelancers, you’ll need to know where to look.

The first step is to understand the different routes you can take to hire overseas freelancers as a UK-based business. The most common options include the following:

• Hire contractors under a services or consultancy agreement
• Take on employees under an employment contract.

The first option is the most flexible, but you’ll still need to check your legal obligations before hiring freelancers and contractors.

To find freelancers for an upcoming project, you can use large marketplace platforms such as Upwork, Fiverr, Freelancer and PeoplePerHour.

Alternatively, you can reach out to your existing network of clients and customers for recommendations. You could even use social media or professional networking sites like LinkedIn to find the skill set you’re looking for.

International freelancers - challenges and opportunities

Hiring international freelancers comes with exciting opportunities, as well as a number of new challenges. It can be a tricky balancing act, as you try to get the most from the experience while avoiding extra headaches, paperwork and costs.

Some of the main opportunities on offer include the following:

• Access to a global talent pool - find talent almost anywhere, whether you need hard-to-find skills or a quantity of freelancers to work on a particular project.
• Flexibility to scale up and down based on demand
• A chance to tap into local expertise in a particular country, which could open doors to other opportunities in that location
• Cost-effectiveness - hire the people you need for a particular project, without the additional costs of a full-time employee.

But at the same time, hiring foreign freelancers may also come with challenges. These can include the following:

• Complexity and extra costs when paying freelancers in their own currencies
• Compliance risks when working with people in other countries - there’s a chance you could fall foul of local tax, labour and payroll regulations.
• Limited oversight on the work being carried out.
• Availability - the freelancer you need may not always be available when you need them, as they have other clients.

How to pay freelancers overseas

Freelancer payment can be complicated when people are located overseas, especially when spread across multiple countries.

If you’re using a freelancer platform, you may also be restricted to its payment tools - which will likely come with fees and charges.

You’ll have much more freedom on payments if you opt to hire freelancers through personal relationships or sourced from word-of-mouth recommendations.

You can pay your global freelancers using your own choice of payment system. This could be through your bank, global payroll system or another payment solution such as Wise Business. We’ll look at this in more detail shortly.

Learn more about Wise Business
multi-currency account 🌎

Payment terms

One of the most important things to establish at the outset when working with international freelancers is payment terms.

You need to outline and agree how, when and by what method you’ll be paying each freelancer. This should be in writing, with copies provided to both parties.

This can help to prevent issues, disagreements or misunderstandings further on in the working relationship. It can also prevent payments being unnecessarily delayed.

Compliance with tax regulations

One potential pitfall of hiring freelancers from other countries is compliance. As a UK-registered business, you have certain obligations with relation to tax filing, payroll and reporting. There are also contract and employment laws to adhere to.

On top of this, you need to check that you won’t be falling foul of the local labour and tax laws in the country the freelancer is based in.

Obviously, this can easily become very complex. This is why it’s recommended to seek professional advice before hiring your first freelancer. There are also global payroll platforms and software available to help.

There are some UK regulations such as IR35 which can be extremely difficult to navigate, so expert advice is strongly recommended.

Pay freelancers overseas - Discover Wise Business

Looking for the best way to pay international freelancers? Wise Business could be the powerful payment tool you’re looking for.

Tax complexities aside, one of the biggest challenges of paying overseas freelancers is currency. Your freelancers will expect to be paid in their home currencies, and not doing so could limit your access to the global talent you need.

It can be expensive to make payments in multiple countries from the UK, with banks charging high fees and offering poor exchange rates. It can also be time-consuming manual work, setting up lots of different payments.

Wise Business makes it easier and cheaper. You can easily make batch payments and pay up to 1,000 people in just a few simple steps. There’s no need to manually pay out to vendors or employees. All you need to do is fill in one spreadsheet and Wise’s smart tech will do the rest.

You’ll only pay low fees, with discounts available for larger monthly volumes. And you’ll always get mid-market exchange rate, which could help you make considerable savings in the long term.

As well as making international payroll easier, Wise Business also has an open API so you can integrate it with your other business tools.

This includes accounting software such as Xero or QuickBooks, enabling you to meet your HMRC and Make Tax Digital (MTD) obligations.

Plus, payroll can be automated with the Wise open API, which means that large volumes of payments can be distributed in seconds.

💡 Read TalentDesk's complete case study

Wise Business is an authorised and regulated financial services provider, which uses advanced security tools to protect its customers.

Hiring freelancers in other countries offers all kinds of opportunities for UK businesses, giving you access to skills you might not be able to find closer to home.

You can scale up with extra support when a major project comes in, without the extra costs of taking on staff. And you can potentially expand into new global markets, using local expertise to help you get started.

But of course, hiring and paying international freelancers will always come with complications. These can be navigated and overcome, but you’ll need to do your research and get expert advice.

At least with solutions such as Wise Business, the barriers of payroll in multiple currencies (and the expense that comes with it) can be overcome.

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Sources last checked on date: 01-Sep-2023