Businesses are beginning to understand the benefits of hiring remote employees. In addition, many entrepreneurs realize that a work-from-anywhere arrangement attracts top talents in a more global job market.
Businesses that explore new income sources internationally require a more robust payroll system. Furthermore, hurdles to meet payroll compliance make it difficult for business leaders.
On the other hand, successful global companies have used modern payment technologies to expand their business. As a result, they’ve uncovered new possibilities and discovered potential new income streams. They’ve also deepened their understanding of payroll management on a global scale.
Back then, when companies operated in an office-based setup, payroll, social contributions, taxes, and government contributions were simpler to manage. However, now that employees are at home or even distributed globally with the various country-dependent and labor policies, it makes it harder for HR managers.
How does your payroll process adapt to the “new world” of work? Are your plans agile enough to withstand the changing tides?
Here are the best practices to deal with the payroll process for your distributed workforce.
The Challenge in Taxation
As the workforce grows increasingly mobile and geographically distributed, so do the problems of meeting tax obligations. Tax treaties vary, and authorities in other nations interpret them differently. It takes expertise to comprehend and apply the tax rules, which almost always cause delays. Tax responsibilities may apply exclusively to employees, or they may also apply to employers like you who may conduct business in that country. It might result in tax liabilities as well as payroll withholding requirements.
Meanwhile, it seems that hiring them as independent contractors appears to be a viable option.
However, there are many complexities and potential risks when it comes to different tax laws depending on the country. It’s also an additional burden to your remote staff since they will file their taxes individually.
On Healthcare, Pension, and Social Contributions
Aside from salary, health insurance is an essential benefit you can provide to your global workforce. In a recent study, 60% of people reported that benefits and perks are factors to accept a job offer. Hence, to maintain and recruit top talents, you must increase your overall health benefits package.
Furthermore, many organizations are going full steam to design unique health incentives for their remote teams. However, one of the most alarming issues for businesses is figuring out how to provide health insurance to remote workers in different countries.
Social contributions have substantial economic consequences for different countries. It might also require you to register with authorities and pay employer social security contributions with your employees. It means that you have to establish your local entity in these nations to abide by their labor regulations.
Meanwhile, the emphasis on retirement benefits and pension plans is also an essential topic for distributed teams. As you promote these programs to your remote staff, they are more likely to be engaged at work and stay with your company longer.
We saw some of the hurdles when you plan to run a payroll system for your remote teams. But, no worries, technology is your ally to optimize the process and cope with changing times.
Technology in Modern Payroll
Payroll software integration is the process of connecting your payroll system with other software, such as an accounting application. It saves you time by eliminating the need to enter identical payroll information into two different applications. HR duties such as work time management and bookkeeping software are all often integrated with payroll. It establishes seamless workflows and automates many of the processes. Make sure you look at firms that provide a variety of software integration options.
With a cloud-based solution, you will have more data protection. The server backup mechanism ensures that you do not lose any data, and cloud-based providers put a lot of effort into system security. Your data will be secured and backed up regularly. You do not need to devote IT resources to your program because it is hosted off-site and not on your servers. This cost-effective method also saves you money on installation, upgrades, and maintenance, among other things.
Data Security Improvement
Confidentiality comes first when it comes to payroll processing. However, cyber threats to payroll data are always there. They can strike at any time, from the outside or from within your company.
Payroll-related data must be kept private and safe at all times.
Converting data from your current payroll system is a primary effort when installing a new one. You need to transfer data to your new system like employee demographics, payroll balances year-to-date, current job/supervisor/performance grade, and so on. The options revolve around which data to preserve and which to discard.
Solution: International Payroll Services
One great strategy to expand your business globally is outsourcing international payroll services. It will handle everything on your behalf. It can assist you in staying on top of payroll processing while maintaining foreign government compliance. The local expertise of your Employee of Record (EOR) provider can support your remote employees in everything they need.
Employ is an EOR company that can provide legal answers and solutions for your payroll needs. We can help with your international payroll plans and suggest standard guidelines to start your global conquest of new markets. Contact us today to find out more.
Olivia Yu has decades of experience in the Human Resources industry. She’s the Regional Director for Asia Pacific of a famous international HR company. Olivia’s international experience inspires her to write articles about human resources and global staffing.