Here’s what you need to know about foreign subsidiaries:

• A foreign subsidiary is a separate legal entity that is owned or controlled by a parent company based in a different country.
• Having a foreign subsidiary allows a company to hire employees and conduct business in a foreign country without running afoul of local laws.
• Hiring independent contractors eliminates the need for a foreign subsidiary as they are not considered employees and are responsible for their own taxes and compliance with local laws.

Want to get a jump-start on hiring abroad, without a foreign subsidiary? Sign up to Thera for $0—it’s the platform that lets you hire and pay contractors, all around the world. Once you’ve found someone, use Thera to make the hire and run payroll: you can get going in days, not the typical weeks or months that a foreign subsidiary or Employer-of-Record would require. Sign up here and onboard your team in minutes.

Or, keep reading to learn more about foreign subsidiaries.

What is a foreign subsidiary?

A foreign subsidiary is a separate legal entity that is owned or controlled by a parent company based in a different country. This type of business structure allows companies to expand their operations and conduct business in foreign countries without having to navigate the legal complexities of doing so as a foreign entity.

By establishing a foreign subsidiary, companies can hire employees, open bank accounts, and purchase property in the foreign country, which can help them to better serve their customers and gain a competitive advantage in the global marketplace.

What’s the difference between a subsidiary and an affiliate?

A foreign subsidiary is an entity that a company opens in another country, so that they can hire and pay their people there while staying compliant with local laws.

An affiliate, on the other hand, is a company that is affiliated with another company, but is not owned or controlled by it. Affiliates often share common branding, products, or services, but operate independently and make their own business decisions. Companies may form affiliate relationships to expand their reach, share resources or expertise, or enter new markets without incurring the cost of establishing a separate legal entity.

With Thera, you don’t need an affiliate or a subsidiary—you can start hiring today for $0.

Why you don’t need a foreign subsidiary to hire abroad

Hiring independent contractors abroad removes the need for a foreign subsidiary because they are not considered employees and are responsible for their own taxes and compliance with local laws. This means that companies do not have to navigate the legal complexities of setting up and maintaining a foreign subsidiary, which can be time-consuming and costly. Instead, they can simply enter into a contract with the independent contractor, which allows for faster, cheaper, and more flexible hiring.

In addition, hiring independent contractors abroad also allows companies to access a global pool of talent, without having to set up a physical presence in the country. This can be especially beneficial for companies that need to hire specialized skills or fill a short-term project. By using independent contractors, companies can also avoid the costs and risks associated with employing staff, such as paying benefits, providing training, and complying with full-time employment laws.

Start hiring today with Thera for $0, without opening a subsidiary

With Thera, you can compliantly hire & pay your contractors in 150+ countries, without ever touching the legal complexities of opening a subsidiary. It’s what smart remote teams do to stay flexible, autonomous, and compliant. Want to take a peek at the platform? Head here and see how Thera makes global hiring feel like magic.