How to offer benefits for 1099 and international independent contractors 

If your business hires a combination of employees and independent contractors, you may have wondered how to create a stronger culture across your workforce and how to put every team member — employees and contractors alike — in positions to succeed.

It is increasingly common for companies to offer benefits to their long-term contract workers. Benefits like healthcare, stock options, and PTO are a great way to attract and retain top freelance talent and build trust within your organization.

Types of benefits for independent contractors

In this article, we’ll explore why you should consider offering contractor benefits and how to create competitive benefits packages for everyone on your team while avoiding potential risks.

See also: Expert guide to employee and contractor misclassification

Why more companies are hiring 1099 and global independent contractors

The rapid growth of the gig economy is undeniable. Spurred by changes in technology, the economy, and the workforce, more workers than ever are turning to short-term gigs and freelancing to earn extra income or grow their careers.

Although this movement includes all sorts of workers, much of the growth of freelancing since 2020 has been spurred by technology and design freelancers (and the tech companies hiring them). The benefits of freelancing for workers include flexibility and variety of work as well as higher hourly wages on average than non freelancers. Some contractors prefer freelance work because their untaxed checks are greater than what they would receive as employees. Further, contractors have more control over what they can write off on their taxes.

For businesses, hiring independent contractors is an easy way to add extra bandwidth and scale faster. Tapping into contractor talent can be particularly powerful for small to medium-sized businesses looking to stay lean and access global talent. According to Nadia Vatalidis, director of people at Remote, “Many companies in the startup stage are not yet ready to set up global entities to hire international employees, which can make hiring contractors an attractive alternative.”

However, large companies also rely on freelance talent. In 2019, Google hired more contractors than employees. This is a growing trend in the tech industry, with many companies using contractors for 40-50% of their staff.

Businesses turn to contract workers when they need to scale as well as when they require niche talent for special projects. Contractors can offer their skills and knowledge part-time or short-term without having to be onboarded as full-time employees. For contractors with valuable skills who don’t want to settle down with one company, freelancing can be the best of both worlds.

Why offer benefits to 1099 and global independent contractors

Bruce Gilbert, director of benefits at Remote, believes that contractors are a key part of our evolving digital workforce. “Rules of employment are changing, and the world is moving ever closer to a contractor-driven economy.”

Contractors play important roles in the companies they join. In today’s competitive talent market, companies need to consider fair equity for all of their workers to create an environment that will attract top talent and keep their contractors engaged and happy. This starts with understanding the challenges contractors face and working to make their experience easier.

See also: Expert guide to hiring independent contractors

For many contractors, the biggest struggle is not having benefits. In 2017, over half of freelancers in the US reported having no access to employer-based benefits. This means no sick leave, unemployment, paid time off, and in many cases, access to health insurance.

If your business relies on contractor talent, offering benefits to your contractors can go a long way toward building trust with your freelance workforce. This is especially important to consider for any long-term contractors you work with. Working as a contractor can sometimes feel like being a second-class member of the team, and benefits are an equalizer. Deciding whether to offer benefits not only impacts the individual lives of your contractors but brings huge advantages to your company culture. Companies that foster belonging for everyone on their team have a serious competitive advantage.

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Top benefits to offer 1099 and global independent contractors

With freelance talent more in demand than ever, companies not offering benefits to contract workers risk falling behind. Here, we will outline the best benefits you can offer your contractors and how you can create fair equity with your 1099 and global contractor team members.

Health insurance

In the US, the most important benefit you can offer your workers is health insurance. The US is not the only country where employer-sponsored health benefits matter, though. In Europe, most countries have a primary healthcare system that anyone can access, but more specialized care typically requires secondary insurance which can come through employment.

At Remote, we help businesses offer benefits to workers all over the world. In many of these countries, we have partnerships with industry leaders in benefits management to give contractors the option to sign up for their own affordable plans. Our specialists are also available to advise companies on how to cover these costs through stipends.

PTO and parental leave

Needing time off for personal matters, growing a family, and engaging in self-care doesn’t end because someone is a freelancer. While freelancers have the option for greater flexibility and control over their schedules, often they end up working just as much if not more than their full-time peers.

If you have long-term contractors on your team, consider offering them paid time off and parental leave. A global leave policy is a simple way to create fair equity and a culture of belonging across all the workers in your organization.

Home office and continued learning budgets

Offering workers a stipend for their home office and continued learning is an investment in your workforce that will bring direct returns to your business. When workers are comfortable in their office space, they are more efficient and productive. When you invest in your workers to help them learn new skills, they bring that new knowledge to their work and enrich your organization. Stipends also show workers that you care about their wellbeing and ongoing development, which leads to greater happiness and retention.

Stock options

Stock options are a great way to keep workers motivated and engaged at work long term. If you’re offering stock options to your employees, consider offering stock options to your contractors as well.

Remote has deep experience in international equity offerings. Contact us today for an equity incentive planning consultation.

Use our Contractor Compliance Checklist to avoid misclassification

Work through this checklist to help determine if a new hire should have a contractor or employee relationship.

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Risks to consider when offering benefits to independent contractors

When hiring contractors, whether they’re 1099s in the US or contractors in other countries, it’s important to be aware of the potential risks, especially misclassification, which can lead to significant fines and penalties.

When it comes to misclassification, “The biggest risk is the chance that a local authority will determine that the worker is actually an employee,” explains Gilbert. “Since most countries' laws see the employee versus independent contractor issue as binary, companies that offer increased employee-like benefits to contractors run the risk that the contractors will be deemed their employees. This can result in substantial tax and regulatory liability.”

To steer clear of these risks, consult a legal expert in the country where you’re hiring or ask the international hiring specialists at Remote.

Remote makes hiring independent contractors easy

If you’re interested in hiring contractors or exploring benefits for your contract workforce, Remote offers the most simple, secure, and cost-effective solution for contractors all over the world.

With Remote, you can create localized contracts to onboard contractors quickly; make payments to workers in 170+ countries, all in one invoice in your local currency; manage taxes; and allow contractors to buy discounted health insurance for themselves and their families. Contractors on the Remote platform can even set up automated recurring invoices.

Our hiring specialists can help you stay compliant with local labor laws and advise on the best benefits to offer all members of your team. If you’re ready to build a more trusting global workforce, get started with Remote today!