Remote Work

What are the rules for working for a U.S. company and living abroad?

June 10, 2024
Minh Mai

For some U.S. citizens, a remote job seems like the ultimate freedom. They can live in a foreign country with a lower cost of living or great views (or both), pull in an American salary from an American company, and work from anywhere with an internet connection.

But this dream comes with strings attached. Many U.S. employers require workers to be U.S.-based. There are also questions about paying income taxes, such as how to stay compliant while avoiding double taxation.

Whether you’re an employee looking for that expat life or an employer trying to sort out the rules for U.S. workers living abroad, this guide will show you what you need to know.

Is it legal to work for a U.S. company and live abroad?

In the abstract, yes, it’s legal to work for a U.S.-based company and live abroad. But in practice, it depends on the company, the job, where you plan to work, your classification, your visa, and even your citizenship.

U.S. companies aren’t obligated to hire applicants living outside the U.S., and in some cases, they can’t do so at all. There are legal requirements surrounding classification and misclassification (employee or independent contractor), and work visas (in both your country of residence and the U.S.).

It’s vital to understand and comply with any applicable labor laws in both the U.S. and the host country — for the worker and the employer alike.

What are the legal requirements for working abroad?

Quick disclaimer: We are not lawyers, and you should always consult legal experts and/or immigration services to make sure you’re in compliance. But generally, these are some of the most important legal requirements for working abroad and hiring or contracting those working abroad).

First, make sure you understand the visa requirements and work permits needed for employees, both in the U.S. and the host country. 

Some countries allow people to work short-term on tourist visas but require another type of visa after a certain period of time. Others don’t allow any work on a tourist visa, while around 66 countries encourage remote work by offering a digital nomad visa

Employment taxes also vary from country to country (which can be a determining factor when corporations choose which countries to hire from). And non-residents often find that their foreign-earned income is taxed differently than it is for permanent residents. 

Employees have to fill out a W-8BEN form for the IRS, while contractors and freelancers will complete a slightly different form, the W-8BEN-E.

Employers and employees alike should also be aware of permanent establishment risk. Certain behaviors (such as an expat worker subcontracting to a local) may trigger permanent establishment clauses where the host country deems the business as operating permanently in its borders. 

This can have significant tax implications that far outweigh the benefit of hiring one or two remote workers from the country. 

Benefits of U.S.-based companies allowing employees to live abroad

Given these legal requirements, a U.S.-based company may decide that allowing employees to live abroad just isn’t worth it. But there are numerous benefits to doing so that may outweigh the added administrative and compliance costs.

Access to a global talent pool

First, allowing remote work from abroad can help your business attract and retain top U.S.-based talent living around the world — not to mention a global workforce of qualified non-U.S. talent.

While definitive figures are difficult to calculate, a conservative estimate says there are 5.4 million or more Americans living abroad. A disproportionate number of these are highly skilled and at the top of their fields. 

In other words, in any sector or role where remote work is feasible, some of the best and brightest are living outside the U.S. That’s a talent pool most businesses want access to.

Cost savings

Businesses can also achieve cost savings by allowing remote work. It’s no secret that prime downtown real estate in major markets is expensive, as is outfitting a modern office building. By allowing remote work (including outside the U.S.), businesses can shrink their real estate footprints and thus their overhead costs.

Depending on where your talent is located, you may also achieve cost savings through salary adjustments based on the cost of living. There are plenty of global cities and countries where the cost of living is far lower than in New York or San Francisco. It may be that a location-adjusted salary works out better for the company and the employee.

Stable’s virtual mailbox services can help solve one piece of the expat puzzle: international mail. 

With Stable, employees living abroad can have a virtual address that’s a real U.S. mailing address. They can receive their mail at this virtual address, and Stable’s virtual mailbox service will then make that mail available digitally, saving both the time and money required to ship mail overseas.

Employee satisfaction and retention

Giving your employees more remote work flexibility can lead to higher employee satisfaction and retention rates.

Think of it this way. Say your high-performing employee wants to continue performing, just from a European country like Spain or Germany (or somewhere tropical like the Maldives or Cozumel). You have a choice to make: let them, or risk them departing for a competitor who will.

Allowing people to work from where they want, when possible, allows them to achieve a better work-life balance and often leads to stronger employee well-being.

Enhanced productivity and performance

With a happier workforce working where they want to live, your business can also enjoy better productivity and performance. For some workers, remote work means fewer office distractions and more flexible working hours, leading to a better work-life balance. 

That better balance and greater ability to focus often translates into better performance. One recent study found that allowing hybrid work cut down employee attrition by 35% and increased code output by 8%.

Business continuity

Positioning your business to thrive under remote work conditions also helps to ensure business continuity during unforeseen events. 

We’ve seen this play out plenty in the last decade: natural disasters, ransomware attacks, and a global pandemic all tested businesses’ resiliency. 

Take the pandemic as a worldwide “systems test.” The businesses that were already ready to go remote suffered mild to moderate disruptions. But the rest had to reinvent their systems and processes at the worst possible time (when we were just figuring out social distancing and the supply chain was snarling in unprecedented ways). 

Tips on how to set up a company for remote work from abroad

Getting your business ready for remote work from abroad is a challenge for business owners and leaders, but the potential benefits are worth the investment. These tips can help you as you get started. 

Understand labor laws

At this stage in your business, you likely have a good understanding of U.S. and state-level labor laws (or you employ people who do). That’s certainly a good thing, but opening hiring up to employees living outside the U.S. means following new labor laws.

In many cases, you’ll need to follow labor laws in multiple jurisdictions, including those in the host country. The more locations where you have remote workers, the more sets of regulations and labor laws you’ll need to keep track of.

To avoid legal issues, we recommend consulting with local legal experts or U.S.-based firms that specialize in this sector. This is especially important if you’re starting a business abroad or you’re a non-U.S. resident opening an LLC in the USA.

Create reliable communication channels for remote workers

You’ll need to set up robust, reliable communication systems that make sense for remote work. You may also have to shift some processes to accommodate time zone differences. Asynchronous communication may be better than synchronous, which might require investing in new communication tools.

Communication platforms like Microsoft Teams and Google Meet are the default places to start, since you’re almost certainly already paying for either Microsoft 365 or Google Workspace. Asynchronous video tools like Loom can be helpful, as can asynchronous knowledge sharing (Workvivo) and project management (Asana,

Stable’s can serve your business in this way as well — our virtual mailboxes make it easier to share and manage mail from anywhere in the world.

Consider financial management and payroll upfront

Working with non-U.S. employees often means paying them in non-U.S. currency. That creates a whole cascade of questions, operational challenges, and ripple effects.

So make sure to set up efficient financial management and payroll systems. Look for systems designed to support remote employees and independent contractors. And make sure they can handle multiple currencies (or can integrate with third-party payment platforms that do, like Stripe and Paypal).

Manage time zones and scheduling effectively

Before you open your business up to remote international work, you’ll have to decide what to do about time zones. 

  • Do you keep all employees on headquarters time (Eastern, Central, Mountain, Pacific)?  
  • Do you set up a range of acceptable business hours (say, 8:00 a.m. Eastern to 8:00 p.m. Pacific)?
  • Do you allow people to work whenever they want?

If you’re used to an in-person, local work culture, option one might be the easiest to implement — but the worst for your international workers.

Option two could be a good compromise, but it does mean people will “miss” each other with some regularity.

Option three is possible with a shift toward asynchronous communication. Your international workers will love this, but it’s the biggest operational change by far. And you’ll still have to figure out what to do about synchronous meetings — async can work for a lot, but not for everything. 

Whichever option you choose, we highly recommend picking a single scheduling tool that’s built to accommodate global work. Set the meeting on the calendar and let the platform localize that time to every worker’s time zone.

You’ll also need to make it clear to your workforce what your expectations for availability and responsiveness are. There’s no one right answer here, other than to make sure the answer you choose is clearly communicated.

Key considerations for managing a globally remote workforce

Once you take the plunge and embrace a globally remote workforce, the challenges you’ll face will morph slightly. You’ve already cleared out the initial hurdles (tax compliance, labor laws, collaboration platforms, and protocols), and now it’s time to move on to effectively managing a growing globally remote workforce.

Consider data privacy and security

Just like companies had to reimagine their data privacy and security practices when they went COVID-remote, you’ll need to reevaluate when you go globally remote.

You’ll face the same challenges as domestic remote work — VPN requirements, managing log-ins from multiple devices, etc. — plus a few additional wrinkles. 

For example, many companies consider the geographic location of access attempts as one security factor. This gets more complicated when some employees request legitimate access from far-flung locales. 

Another challenge is transporting secure documents over great distances, exposing them to the risk of theft or loss. This also slows down work as your international team members wait for something to arrive in the mail.

Fortunately, a virtual address offers greater privacy and security. Many people use virtual addresses for their LLCs to avoid these risks on a small scale. But businesses and expats can use Stable to do the same, enabling a higher degree of privacy and faster access to mail.

Keep scalability in mind

Next, consider how you plan to scale your business and what implications there may be for your employees living abroad. It’s vital to stay focused on big-picture issues (like scalability over time) without neglecting existing processes and systems (like managing an international remote workforce).

Stable’s solutions can easily scale with your business as it grows and adapt to different needs. With Stable, you’ll have an easier time managing a remote workforce — whether it’s a workforce of one or one hundred.

Ensure compliance with local regulations

Last, stay vigilant about following any local labor laws and regulations that apply to remote employees working abroad. Missteps here could cost your business in taxes and fees or even negatively affect your expat employees, invalidating their visas.

For U.S. employees, Stable’s registered agent services can assist in maintaining compliance with legal requirements in all 50 U.S. states and U.S. territories. We’ll take the domestic pressure off so you can focus on compliance in host countries.

Make remote work abroad possible for your business with Stable

You can hire globally remote workers or work for a U.S. company while living abroad. But you have to pay attention to tax laws and employment laws in both the U.S. and the host countries.

To truly thrive with a global remote job or workforce, you’ll need the right tools for communication, compliance, and mail management.

Stable is the ideal virtual mailbox service for international workers and businesses hiring globally. Our highly secure, SOC-2-certified platform lets you easily view and manage your mail online.

Plus, with optional remote check deposit and registered agent services, Stable simplifies your work life in numerous other ways.

Ready to experience a better way to handle mail? Get started with Stable now!

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