Contract in the USA
| What is the monthly cost of using an Umbrella Company in the USA? | 5.9% of gross billing. |
| Can an Umbrella Company sponsor work permits? | Yes |
| How long does it take to get a work permit in the USA? | E3s take around 4 weeks, TNs for Mexicans take about 2 weeks and for Canadians 2-3 days (and can be obtained at the border). H1B’s on the other hand take a considerable amount of time and the applicant can only start working in the US on the 1st of October of any given year. |
| What is the estimated net retention in the USA for a contractor earning USD 500 per day? | *update pending |
| What is the estimated net retention in the USA for a contractor earning USD 1000 per day? | It depends on which state and which city the contractor is working in. If the Living Away from Home Allowance is applicable for the candidate an estimate would be 70%. |
*doesn’t include the fee for a work permit or other immigration costs
More questions? See the rest of the FAQ for more information on the USA work permit process
Getting Started
Taking a contract in the USA means tackling numerous administrative headaches. Before you even begin working as an independent contractor, there are complicated payroll, tax, and immigration issues to work out.
All this complex admin comes on top of any personal matters you need to sort, as well. Even worse, it can be a huge nuisance when you’re already in the USA, trying to adjust to a huge relocation – and a new contract!
Streamlining even a few of these obstacles can dramatically improve your experience.
Luckily, there are ways to simplify more than just a few…
Freelance USA Requirements
Visas
One of your first hurdles will be securing the proper work permit. To get one, you usually need an employer to sponsor you. This means they take full responsibility for you while you’re working in the country.
That’s fine for full-time employees, but what about independent contractors?
Many clients won’t offer sponsorship for a temporary worker and, even if they do, you’ll need to apply for a new permit for each new contract. This creates a mountain of paperwork each time you want to work with a new client.
Taxes
Additionally, you need to figure out what you owe (if anything) in taxes for your work in the USA.
Of course, there’s also your country of tax residency; you’re likely to owe something on that front, too.
You can take advantage of certain tax structures, but doing so requires a strong familiarity with ex-pat tax law in the USA.
Benefits of working through an Umbrella Company in the USA
You can outsource a lot of these admin problems to specialists at an Umbrella Company (or contractor management company).
An Umbrella Company becomes your full-time “employer,” even though you stay in control of your workload, clients, and schedule. The Umbrella Company simply collects and processes your payments, filtering out social security and any necessary fees.
They can also sponsor your work permit, meaning you get to take on new clients without the aggravation of applying for a new permit each time.
Even better, most specialise in tax law for contractors in the USA and can ensure you’re keeping the largest amount of your earnings as possible. They can even assist you with reducing your tax liability back home.
In short, you get all the benefits of working for an employer, without sacrificing your autonomy as a contractor.
How to get started with the right Umbrella Company
There are a lot of Umbrella Companies out there; finding the right one for you can be daunting.
We’ve researched Umbrella Companies in the USA, and know-how to match contractors with the perfect company. If you’ve already secured a contract, get in touch with us and let us know your situation. We can get you started with the best Umbrella Company for you, or simply offer feedback on contracting in the USA.
Oh, and we don’t charge anything. Drop us a line and get free, honest, simple advice.
Additional FAQ – work permits & payroll
| Is it possible for a foreign national to be sponsored on a work permit in the USA? | Yes. Mexicans and Canadians can obtain TN visas, Australians E3 Visas and all other nationalities must obtain an H1B. |
| What is the cost of a Work Permit in the USA? | H1B is around USD 6,000, TN can cost as little as USD 270 and E3 USD 270. |
| What documentation is required for a work permit in the USA? | Copies of passport, CV, passport photos, and professional references. |
| What is the work permit process in the USA? | For the E3 and H1B, a US company will apply in the US and once approved the applicant must have the visa ratified in the US Consulate of their home country. For the TN visas, the application for Canadians can be done at the border on entry, the documentation would need to be collated in advance. For Mexicans, the application needs to be made in advance of travelling to the US Consulate in Mexico. |
| Can you transfer from a business visa to a work permit in the USA? | No |
| Can we organise a business visa for the USA? | No |
| How long does it take to process a business visa in the USA? | N/A |
| How much does a business visa cost in the USA? | N/A |
| Can nationals of certain countries enter the USA without a business visa (ex. on an entry visa or visa waiver)? | Yes but not to work. |
| What is the minimum salary required per month when a candidate is sponsored on a work permit in the USA? | USD 6,000 per month but it is skillset dependent. |
| How does payroll work in the USA? | Your employer (the company sponsoring your visa) pays the candidate every month. They deduct social security – which is 7.75% for employers and 7.75% for employees. This reduces earnings by over USD 106,800 per year as OASDI (Old Age, Survivors and Disability Insurance) is only due on the first USD 106,800. They also deduct income tax – which is progressive and varies from 10-35% (plus local or state taxes which run from 0-11%) pendant on salary level and region. These deductions are made at the source and paid to the United States tax authorities. Candidates can offset their taxable income with relevant business expenses. The World Bank estimates it takes employers in the United States 55 man-days to ensure compliance with payroll and labour taxes each year. |