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Thread: Understanding the purpose of business registration as a requirement for foreign hiring

  1. #1
    Junior Member Cimmerian's Avatar
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    Understanding the purpose of business registration as a requirement for foreign hiring

    If this is in the wrong section - I apologise, I couldn't find a better fit. Move it if need be.

    I haven't been active on here in a while, but this is the best place I could think of to find people willing to offer some input on these matters.

    I'm a 22 year old living and working as a software developer in Cape Town. I have experience starting a Pty Ltd (with partners) in Joburg. SARS registration is a nightmare.

    That being said, I have been granted a very generous offer from a New York-based creative digital media agency owned by a well known international media company. I have been on their hiring radar since before they were acquired by said media company, and the acquisition has plastered a lot of red tape on the hiring process. I've been in direct contact with the CTO of the company for this entire process and he's the one orchestrating everything on their side. I'm under the opinion that while the company that wants to hire me has good intentions, the parent company is making it as easy as possible to terminate me if need be.

    At first, I flew over for an interview but due to not qualifying for the random lottery selection process at the end of it all, I was unable to obtain an H1-B or J1 work visa. So, the company wants to hire me on as a remote independent contractor. However, due to there being no South African presence on the part of the parent company, who maintains the hiring relations and payroll for all subsidiaries, I have been put in a position where I'm required to start a registered business, as it apparently "smooths out" the hiring process. I have a few questions about this that I need some help to understand - even just an opinion will help.

    Business and tax related questions:

    1. What benefit would me being regarded as a corporate entity offer the parent company? I feel like this is due to legal issues that would put me at a disposition, in other words, I don't trust the concept. It makes things sound fishy.
    2. I've been told to register a Pty Ltd entity. Why a Pty Ltd and not a sole proprietor? The latter makes more sense, as I'm not starting this business for any reason *not* outside of actually operating as a business - I'm being hired as an individual contractor, after all.
    2b. If I do register as a sole proprietor, would that cause any issue? Are there downsides?
    3. How would tax be paid in such a scenario? Do I file for personal income tax? Or do I pay tax as a business? Or both? I'm only used to PAYE.

    Payment related questions:

    1. The company that wants to hire me mentioned paying me in Bitcoin (which I am not in opposition of) but then promptly stopped mentioning it all together and they avoid answering any references I make to that initial offer. I see this as another strange red flag. What concerns should I be aware of in this case?
    2. They also mentioned hiring me on yearly contracts through middle tier freelance sites like Elance or Upwork as an alternative, but not everyone on their side was in agreement. I did not oppose this either, but I'd like to understand the risks in any case.
    3. They offered to pay via Western Union - as someone who does not yet own a vehicle, this is a terrible inconvenience and I'm not trusting of WU given the corrupt state of some employees in that industry. Was I wrong to deny this offer?
    4. As an alternative they mentioned Moneygram - which I know FNB allows you to receive via cell-phone banking - but strangely there is no facility for this in the app. It sounds like a service that targets a lower class wealth status market, and I'm not sure if this will be of any inconvenience to me or not, but it was the first I'd heard of Moneygram - so if anyone could explain this more I'd really appreciate it.
    5. They refuse to give a reason as to why they can't just do a direct wire transfer using SWIFT - I'm under the assumption that this is because it's not a facility their bank offers. Would there be any other reasons?

    To me, it seems as if the parent company is making termination of independent contractors as easy as possible outside of reasons around performance/work ethic. I raised these concerns with the CTO, and this is what he had to say on the matter:

    [redacted] [22:03]
    so [redacted] recently mandated to us that all of our independent contractors and vendors be an LLC

    [redacted] [22:03]
    so this came down, independent of your situation but the timing was such that it complicated things

    [redacted] [22:03]
    and this isn't just international people

    [redacted] [22:04]
    if we want to freelance a QA person (which we had been doing) they needed to be an LLC

    [redacted] [22:04]
    continuing from there, [redacted] has never hired or fired anyone on behalf of [redacted]

    [redacted] [22:04]
    so if we wanted to terminate you, it'd be me making the decision

    [redacted] [22:05]
    they do however, control our payroll

    [redacted] [22:05]
    hence why they can mandate the llc thing

    [redacted] [22:07]
    i finished "Remote" the 37Signals book last night. they advise all remote employees function this way -- they form an LLC and are technically paid as contractors

    [redacted] [22:07]
    so apparently, this is how it works on a more than regular basis -- i just had 0 idea (edited)

    [redacted] [22:08]
    ** opinion alert **

    [redacted] [22:08]
    i would say your risk of termination is no different than any employee that i hire. if you do good work, there's no reason you'd be terminated

    [redacted] [22:10]
    the path we took to get here was very roundabout, and therefore i don't fault anyone for thinking it's "fishy" - but the conclusion we've come to I believe is actual quite ordinary and rational

    [redacted] [22:10]
    VERY roundabout, i regretfully have to stress

    [redacted] [22:13]
    if you're referencing any additional "clauses" beyond the registration of a business thing that you found in the IC contract - I can tell you that it's the identical IC contract used all across [redacted]. so the person who writes a story about ISIS to the guy who holds the boom-mic for their [redacted] show all sign this same exact contract

  2. #2
    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Cimmerian View Post
    To me, it seems as if the parent company is making termination of independent contractors as easy as possible outside of reasons around performance/work ethic.
    In many parts of the world, that's just the way they roll. Not all countries share the SA view of the need for statutory employment protectionism.
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