What legalities do I need to consider when paying a remote team (USA to Eastern Europe) of developers?

On paper you have the advantage but after several startups control resides in he who knows how to execute the vision of the company.

You should retain a lawyer, or another qualified individual, to act as the third party designee for the corporation (if you do not have a partner or co-owner who is a US citizen). The designee should prepare Form SS-4 (Application for Employer Identification Number) and Form 8821 (Tax Information Authorization) for the corporation’s president to sign and return.

I consult with clients who are looking for the right outsourcing situation all the time, and the best way to get started is to figure out what kind of outsourcing partner will be the best 'fit' for your needs. After that, it's easy to find out where that type of outsourcing partner/contractor/freelance hangs out and pick a winner. Try writing up some notes about things like: 1) You mentioned you had a small budget - how small? If your budget is $1500 your options are going to be very different than if it's $25,000. Both of those could be considered 'small budgets' in the right context, so try to put a number out there. 2) You also mentioned that you wanted 'good quality, clean code'. What does this mean and are you willing to pay for that? If you are building an MVP and are really short on funds, you might have to use a less senior developer/team and take the risk of getting sloppier code - but sometimes with an MVP that's ok! If you are building a production app, that's a different story. 3) What is your technical and management expertise? Can you create specifications and manage a developer on your own (not easy to do)? If so, you can save money by using a freelancer, etc. If you are very non-technical and will need PM support, you might consider a small group or agency. 4) What does 'website development' involve, in your vision? Design? Copywriting? QA? Server migration and admin? ui/ux? 5) What is your tolerance for going offshore? You will hear lots of people saying that offshore teams all suck, and lots of people saying that they did it and it went fine. Like most software projects, there is a high failure rate but lots of success with offshore. You can save a ton of money, but you can also take a bath so you need to consider whether you are up to the challenge or not - going offshore takes much more patience, attention, documentation, etc. but it can work. 6) What are the skills/tech that you will need? It's best to get a team that is great at the skills you need. If you want a ruby site, hire a ruby shop. If you want a augmented reality site, find a team that is great at that. Watch out for the generalists :) By thinking through questions like the above, you can change your statement from "Where do you go for outsourcing website development" to something like this: "I am looking for an outsourcing partner who would be interested in a 15k-20k project that will be build in python. This application will be evolved into our production app so the quality must be good. I am a good project manager and will work with the developer on the requirements/spec side, and help test. We will need application/db design and development, server administration, and technical support but all design, content, copy, ui/ux will be provided. We will consider offshore teams but you must have excellent spoken english." When you expand your 'what we're looking for' paragraph, the whole search for outsourcing partner gets much easier! If you like, feel free to give me a call and share your 'vendor profile' with me and I can help point you in the right direction.

I've used outsourced services several times successfully. I don't think using geographic location is necessary a good indicator for outsourcing value. In my experience it depends on the type of service you are seeking. For example, I've used crowdsourcing services for logo and web designs and discovered creativity has no geographic boundaries. Neither is the skill level necessarily the only indicator for the best creative. Some designs have been submissions from design student or freelancers with no formal training. As for technical work, I seek service based on the following criteria: - technical competency and skills - communication skills - Process skills (to manage overall risk of project) - references from existing clients. Country is secondary to the above list.

This sounds as a deja vu to me. I have been in a similar situation back in 2000, we could only solve the issue thanks to a good mediator. However every situation is different and hence your route to a solution might be different. It also depends where you are in the world that defines how an email and/or verbal agreement might be a sufficient ground for legal actions. I am not a lawyer and can not judge that.