What To Expect When Hiring A Filipino VA: Tax Implications, Employee Benefits, And More

What do you do next? What documents and processes do you need to prepare? Do you have any tax responsibilities in the Philippines? How does this whole thing work?

We know you’re bursting with questions, so here’s a quick guide to help you out.

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First things first: what do you need to prepare?

Delegating stuff is easier when you have processes in place. Before hiring a virtual assistant, it’s best to have the following things prepped:

• Your standard operating procedures (SOPs) - your SOPS document how you do tasks within your organization. SOPs on answering customer service emails or uploading social media posts are common examples. Having these in place saves you a lot of time and lessens the back-and-forth between you and your VA.

• Your personal preferences doc - this is similar to a user manual — but instead of business processes, it contains info about yourself, such as your name, email address, social media accounts, preferred calendars, VIPs in your life, and the like.

• Your expectations - mentally prepare by setting clear, realistic expectations for you and your assistant.

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What are the tax implications of hiring Filipino VAs?

Technically, Filipino virtual assistants are classified as foreign independent contractors — they don’t fall under the typical full-time employee category. Since they’re domiciled in the Philippines, they’re also subject to Philippine tax laws, not US ones.

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This means that:

• They do not need to file a 1099 form. This form only applies to individual contractors living in the US.

• They’re responsible for filing their own taxes in the Philippines. Foreign employers like yourself are not required to fill out any Filipino tax forms or paperwork.

• Since your business is not domiciled or registered in the Philippines, you’re not required to cover benefits like healthcare, social security, or 13th-month pay either.

• However, you’re welcome to voluntarily provide allowances and other perks on top of your VA’s salary. We suggest you do that after a 3-month probationary period. We’ll talk about this in the next section.

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So what do employers do on their end?

• Ask your assistant to submit an invoice each month so you have documentation of your payment transactions.

• You have the option to complete a W8-BEN form to declare that they’re foreign subcontractors.

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IMPORTANT

While we’ve worked with Filipino VAs for our own businesses, we’re not accountants or taxation experts. Businesses are unique, so we highly suggest that you consult with your CPA about the tax implications of hiring Filipino remote workers for your business.

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Voluntary perks, benefits, and other allowances

Since your VA is not physically in the US and your business is not registered in the Philippines, you’re not required to cover other hiring costs like healthcare, insurance, bonuses, or 401ks.

However, you’re free to provide bonuses and benefits at your own discretion. This helps you attract more candidates and encourages employees to stay with your company for a long time.

Here are some of the most common perks that you can provide:

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Healthcare

You can add a healthcare allowance on top of your VA’s salary. They can use this to pay for their monthly premiums to PhilHealth, the country’s universal healthcare organization, or enroll themselves in a private health insurance plan.

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Social security and HDMF

You can also reimburse their monthly social security and Home Development Mutual Fund (HDMF) contributions. These can be paid monthly, quarterly, or annually.

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13th-month pay

Filipinos traditionally receive an extra month’s worth of pay during the Christmas season. This Christmas bonus is also called the 13th-month pay.

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Technology allowance

Since they’re working from home, you can provide an allowance for any hardware upgrades or internet costs. If your VA needs to use a paid app to get their job done, you’re responsible for those subscription fees as well.

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Performance bonuses

Run a quarterly performance evaluation and reward your VAs when they hit key metrics or quotas.

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Learn more: Common employee benefits in the Philippines

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Onboarding your VA

Once you’ve hired your VA, it’s time to onboard them into your team.

Lots of employers fail at delegating because they don’t take the time to properly onboard their assistants, so don’t make the same mistake. A thorough onboarding process allows you to:

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• Set the right expectations with your VA
• Grant your assistant access to the necessary tools and files
• Let them know about your company and personal preferences
• Get them up to speed on the projects that are currently on your plate
• Slowly build rapport and trust
• Integrate them into your daily routine better

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We’ve created a comprehensive step-by-step guide on VA Onboarding here.

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The most common challenges in hiring Filipino VAs and how you can solve them

Hiring a remote Filipino employee is one of the best choices you can make for your business. Just like any other venture, however, you’ll likely encounter some challenges. These include:

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• Building trust with your VA
• Getting them to speak up more
• Tracking productivity
• Dealing with power and internet interruptions
• Securing sensitive information
• Dealing with the time difference
• Building a strong company culture remotely

We’ve also created an in-depth guide that tackles these challenges and how you can solve them. Spoiler alert: you can deal with them easily. Check out the full post here.

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Final Thoughts

We get it: hiring a Filipino VA sounds super daunting at first. But with the right guidance and information, you can create a smooth hiring and onboarding process for you and your VA. If you’ve got any other questions, please don’t hesitate to reach out and we’ll do our best to answer them!

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