Hiring employees in Brazil is an expensive prospect. What you’ll end up paying in taxes and employment benefits could be just as much as the salary itself. To hire an employee with a monthly salary of R$10,000, you can expect to pay R$20,000 all in.

This is the reason why so many Brazilian companies prefer to hire independent contractors. The problem, however, is that a worker is not an independent contractor just because you say they are. In many cases, it doesn’t even matter what the contract says. What matters is the actual relationship.

This isn’t all that different from the US. Determining whether someone is an employee or not depends on the amount of control and independence they have in doing the work. Can they determine their own schedule? Do they work out of their own office using their own equipment? Are they allowed to work for others? These are just some of the factors used to differentiate between an employee and an independent contractor.

And for those of you who think you can just use a contract in English governed by US law, think again. Work performed in Brazil is always governed by Brazilian law, and a person performing work can always file a claim in a Brazilian court for employment benefits.

Your best option? We encourage you to prepare and plan in advance. The better you understand the risks, the better you’ll be able to design a structure that protects you and best serves your business.