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The contractor economy didn’t appear overnight. Since 2020, businesses have increasingly turned to independent talent, driven by the need for flexibility, cost efficiency, and speed. What began as a pandemic-era shift has become a permanent feature of how work is done.
With the megacorps adjusting to cut costs, global trends in employment shifted, creating a new gap to bridge for businesses and HR professionals - hiring the right independent contractors and navigating independent contractor agreements.
This guide walks you through the entire contractor hiring process in ten clear steps. From defining your project scope to managing payments and performance, you’ll learn how to:
- Define Project Scope & Requirements
- Source Qualified Contractors
- Conduct Pre-engagement Due Diligence
- Assess Classification And Compliance Risks
- Negotiate Rates And Payment Terms
- Draft & Sign An Independent Contractor Agreement
- Collect Tax And Regulatory Documentation
- Onboard Your Contractor
- Manage Performance And Feedback
- Offboard And Close-Out
Use it as a checklist. Share it with your team. And if you’re hiring across borders, we’ll show you how to do it with fewer headaches using a unified platform like RemotePass.
Let’s dive in!
Step 1: Define Project Scope & Requirements
Start with a clear overview of the project. Define the goals, ensuring they are SMART (specific, measurable, achievable, relevant, and time-bound). Outline the deliverables, key players involved, expected impact, and how success will be measured.
Consult your internal team to map out necessary skills or qualifications, feasible timelines and a budget that aligns with the experience and expectations for the role. Ensure there is full clarity and alignment internally on what the project is.
Helen Russell, Chief People Officer at Hubspot, reflected our thoughts on clarity, saying, “If people don’t know what they’re aiming for, how can they hit the target?”
This foundational clarity helps you write a stronger job description and streamlines sourcing, onboarding, and delivery down the line.
Pro Tip: A good JD spells out specifics of the job, the hire you're looking for, and cuts off the crowd.
Step 2: Source Qualified Contractors
According to Jim Collins, renowned business analyst and author, “People are not your greatest asset. The right people are.”
That difference is what makes or breaks contractor hiring.
Depending on the role, the best place to start your search is specialised platforms like Upwork, Toptal, and LinkedIn. For niche projects, leverage carefully curated internal talent pools, alumni networks, and referrals from people who understand your standards and field.
Look beyond glossy portfolios. Focus on relevance and results. Has the contractor solved problems similar to yours? Are their testimonials strong and specific?
Unlike full-time hires, contractors aren’t hired for potential; they’re hired for proof. Don’t overlook red flags. Misalignment early on leads to missed deadlines and wasted spend.
Pro Tip: Always review portfolios with your project goals in mind, not just visual appeal. A slick design means nothing if it doesn’t map to outcomes.
Step 3: Conduct Pre-Engagement Due Diligence
One of the biggest time sinks in contractor hiring?
Lengthy interviews that only reveal dealbreakers after you’ve invested hours.
Avoid that trap by front-loading your due diligence.
Brandon Sammut, Chief People Officer at Zapier, says it best: “In today’s talent market, bad actors can slip through the cracks if your hiring process isn’t built to catch them”.
Once a candidate shows promise, verify the essentials:
- Identity and credentials (certifications, licenses, degrees if required)
- Portfolio relevance to your project
- Client reviews and references
- Digital presence (LinkedIn, GitHub, Behance, etc.) for consistency and professionalism
- Any red flags in public communication or prior work
Pro Tip: Use a brief skills task or paid test project to screen top candidates. It’s one of the fastest ways to spot fit and filter out fluff.
Step 4: Assess Classification & Compliance Risks
Luciana Nascimento, HR Business Partner at Spotify, explains this challenge aptly.
“Local markets face a unique set of economic and regulatory challenges. Political instability, fluctuating economies, and varying labor laws require us to be agile and adaptable”.
This is a summary of what compliance is.
Aaron Hall, renowned business attorney and Founder of AttorneyAaronHall.com, explains this further in saying, “Misclassifying workers due to an unclear understanding of legal definitions and defaulting to contractor status to cut costs is a major risk”, and we agree.
It is important to fully explore these details to avoid financial loss and reputation damage.
Each country has its version of the “contractor vs. employee” test, usually based on:
- The level of control you exert
- Exclusivity of the relationship
- Financial independence of the worker
- Integration into your company’s operations
What passes for a contractor in one market may count as disguised employment in another.
This is where RemotePass fills the gap. Our Contractor of Record (CoR) handles classification checks, verifies local labor laws, and flags risks across 150+ countries so you don’t have to. Staying protected doesn’t need to cost you endless hours.
Pro Tip: Your contracts, communication, and performance expectations must reflect the contractor’s independence. You should tailor documents to comply with local laws that favor your firm and the contractor.
Step 5: Negotiate Rates & Payment Terms
Discussing rates upfront sets expectations, builds trust, and prevents disputes down the line.
Before you sign off, determine whether you’re paying per hour or project. Hourly rates offer flexibility for open-ended tasks, while fixed fees work best for well-defined scopes.
Start by deciding how you’ll pay:
- Hourly rates offer flexibility for ongoing or evolving work
- Fixed fees work best for clearly defined deliverables
Then lock in the details:
- The currency for payment
- Preferred payment platform (e.g. Wise, Payoneer, RemotePass)
- Invoicing frequency (weekly, biweekly, monthly)
- Service-level agreements (SLAs) for payment timing and performance standards
These terms protect you from reputation damage or legal pushback.
Pro Tip: Add a late-payment clause and define what happens if deliverables are missed. Clarity now prevents chaos later.
Step 6: Draft & Sign an Independent Contractor Agreement
Your independent contractor agreement should clearly spell out everything you’ve agreed on:
- Scope of work
- Payment terms and invoicing cadence
- Confidentiality and data protection
- Termination clauses
- Intellectual property (IP) ownership
Leave any of these out, and you open the door to unclear deliverables, IP disputes, or liability issues.
Each contract needs to be tailored to its local context, especially regarding tax, labour law, and IP protection. A one-size-fits-all approach won’t cut it, and if you’re not sure how to navigate this step, RemotePass comes in handy.
RemotePass offers vetted, country-specific contract templates for over 150 countries, so you don’t have to draft from scratch or guess your way through compliance.
Pro Tip: Even with strong templates, review each contract in light of the specific project and jurisdiction. Local context matters.
Step 7: Collect Tax & Regulatory Documentation
Once the agreement is signed, collect the necessary tax forms to ensure compliance. For U.S. contractors, that usually means a W-9. For foreign contractors working with U.S.-based clients, a W-8BEN is required. For global engagements, local tax requirements vary. You may need:
- TIN (Tax Identification Number) registrations
- VAT or GST IDs
- Proof of business registration in the contractor’s country
This step is often overlooked until audit season hits or you’re preparing for fundraising. Don’t wait.
Tools like RemotePass can simplify this by centralising tax form collection and ensuring you're collecting the right documentation for every jurisdiction.
Pro Tip: Build a checklist for every country where you hire. Staying ahead of tax obligations today saves you legal and financial headaches tomorrow.
Step 8: Onboard Your Contractor
Think of onboarding as equipping a specialist for a mission. If the tools or brief are off, so is the outcome.
Once contracts and documentation are squared away, set your contractor up for success:
- Grant access to essential tools (Slack, Google Drive, Notion, Jira, etc.)
- Reshare the project brief and key deliverables
- Assign a clear point of contact
- Establish communication norms (e.g. async updates, weekly check-ins, time zones)
Contractors may be external, but for the duration of the project, they’re part of your team. Give them the context and connection they need to deliver.
Pro Tip: Schedule a kickoff video call within the first 48 hours to align goals, timelines, and introduce key collaborators. It builds rapport, aligns expectations, and gets everyone pulling in the same direction from day one.
Step 9: Manage Performance & Feedback
Even the best contractors can veer off-course especially when working across time zones or without regular input.
To keep things on track, skip the micromanagement but don’t skip structure:
- Set regular check-ins (weekly or biweekly)
- Define clear milestones and deadlines
- Clarify what “done” looks like for each deliverable
If multiple stakeholders are involved, use a simple scorecard or RACI chart to keep roles and responsibilities crystal clear.
Pro Tip: Tie payments to milestone completion. It reinforces accountability and aligns outcomes with incentives.
Step 10: Offboard & Close-Out
As Mia Baldock, Talent Acquisition Manager at Vicinity Centres, wisely notes: “Offboarding is as important as onboarding”.
A smooth wrap-up not only protects your business but also keeps the door open for future collaboration.
Here’s what to cover:
- Review final deliverables and confirm mutual satisfaction
- Revoke access to shared tools, drives, and communication channels
- Retrieve equipment, if any was provided
- Gather internal feedback—what worked, what didn’t?
- Close the loop with the contractor and explore future opportunities
A clear offboarding process signals professionalism and strengthens your contractor network for next time.
Pro Tip: Add high-performing contractors to your internal talent pool. It speeds up sourcing for future projects and rewards people who deliver.
Next Steps
The reality of hiring contractors is not the same with every firm or talent acquisition team. The steps may be rearranged or vary across companies.
That’s where RemotePass helps. We take the heavy lifting off your plate with:
- Legally vetted contracts for 150+ countries
- Automated onboarding, tax, and payroll workflows
- Rate benchmarks tailored to roles and regions
- Built-in compliance checks to keep you protected at scale
With RemotePass, you can focus on building your global dream team without getting buried in admin or legal risk.
Book a demo today to see how easy global contractor management can be.
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