Even with recent tariffs and economic uncertainties, many American businesses are looking beyond borders to tap into international talent. But how can a US company hire a foreign employee without running into legal, financial, or compliance roadblocks?

The good news is, there are multiple ways to hire foreign employees, whether full-time workers or freelancers. In the end, it will all depend on your business needs, budget, and long-term goals.

This article outlines three practical options for US companies that want to hire international talent legally and efficiently, while optimizing results and saving money and time.

1) Establish a legal foreign entity

One of the most permanent options for hiring foreign employees is to open a legal entity in the country where you want to hire. This approach is ideal for companies planning long-term expansion or hiring multiple team members in the same country.

This means you’ll need to register your business with the appropriate authorities, which can be time-consuming and expensive. Hiring full-time employees means you must adhere to local employment laws, such as minimum wage, social security contributions, paid leave, and termination rules.

This option can be an effective way to do things if a company already has extensive international knowledge, as well as a deep understanding of regulations by the US Department of Labor, or plans to establish a long-term presence in specific countries. 

2) Partner with an employer of record (EOR)

For companies that want to hire full-time international employees without setting up a local entity, working with an employer of record (EOR) is a fast, compliant, and scalable solution.

An EOR is a third-party organization that legally employs your talent on your behalf. You manage the day-to-day work of the employee, while the EOR handles compliance, payroll, taxes, benefits, and HR support.

For a fixed fee or a monthly percentage, global EOR services tend to be the best options for companies that are looking for flexible and cost-effective expansion. A good employer of record will also provide insights into local customs and traditions that could impact the work environment.

3) Hire independent contractors

Hiring foreign independent contractors is another popular route for US companies that want to hire foreign professionals for short-term projects or flexible roles. This approach is often used for freelance work or consulting arrangements.

In this case, detailed contractor agreements are crucial to define the scope of work, payment terms, and intellectual property ownership. Furthermore, contractors are responsible for their own taxes, benefits, and insurance, although they may charge premium fees for their work.

Getting freelance assistance can be a great solution for projects with tight deadlines, especially for short-term work. However, beware that treating someone like an employee while classifying them as a contractor can lead to penalties and back taxes.

How to choose the best option for you

When deciding how a US company can hire a foreign employee, the right path will depend on your specific goals, timeline, and risk tolerance. Each of the three main hiring models offers distinct advantages that should be carefully considered.

If you’re building a long-term presence in a specific country and plan to hire multiple employees there, establishing a legal entity may be worth the initial investment. While this route involves a complex setup and ongoing compliance costs, it offers maximum control and commitment in the market. It’s best suited for larger organizations or businesses with established international operations.

For companies seeking a faster, low-risk entry into foreign markets, partnering with an Employer of Record (EOR) is often the most strategic option. An EOR allows you to legally employ international workers without setting up a local branch—ideal for testing new markets, scaling remote teams, or hiring in multiple countries at once. It balances control with convenience, while helping you stay compliant with local labor laws.

On the other hand, if you’re working on short-term projects or need specific expertise on a flexible basis, hiring independent contractors can be both efficient and cost-effective. However, this route comes with the risk of misclassification and requires well-drafted agreements to protect your business legally.