Managing payroll isn’t easy, and finding the payroll process that works for your company can be stressful. When your company starts expanding to other countries, it gets more complex. You have to navigate local laws and regulations. There are also differences in languages and currencies, which can make payroll overwhelming.
It's where a global payroll service can be beneficial. It allows you to streamline payroll and maintain compliance in new countries.
An experienced team managing the global payroll for your company will free up your time so you can focus on your core business activities.
How do you manage a global payroll?
Small businesses with a few global employees will likely manage international payroll in-house. The same is true for large global companies. It's typically the most cost-effective solution for the two. They hire a person to manage payroll for those few employees or a whole team to do that company-wide.
However, there's also the curious case of middle-sized companies. For them, it’s too much for one person to handle, yet hiring a whole team is too expensive. These companies often decide to outsource global payroll operations. They rely on an Employer of Record (EOR) or a Professional Employer Organization (PEO) for global payroll.
In short, an EOR offers to hire global talent without requiring you to set up a local entity. Unlike a PEO, working with an EOR will shield you from the potential legal implications of poorly managed payroll.
Still, how do you know if a global payroll provider is right for your business? Here are some guidelines for choosing the best global payroll service.
Finding the right Global Payroll Provider: All you Should Know
When outsourcing global payroll operations, the right PEO or EOR can take many responsibilities off your to-do list. They can ensure every employee receives their salary on time and the relevant HR processes are compliant.
However, you should vet providers carefully. After all, you're outsourcing a significant part of your business. Here's what to look for as you explore your options so that you can identify the right provider for your business.
1. Location
Your global payroll provider must have a presence in the country where you're looking to hire. Check which countries they cover, and compare the locations with your growth and expansion plans.
Keep in mind your company's short-term and long-term expansion plans. You may be considering a single country today, but that might change in the future.
Your global payroll provider will do their best to onboard your company as efficiently as possible. But, the process can be rigorous and time-consuming as it involves dealing with sensitive data. By choosing the right provider and vetting the locations, you can go through the process as quickly as possible.
When interviewing providers, remember to ask about their expansion plans. Their coverage may not include a specific country today, but, like your business, they also aim to grow. They might have new countries in the pipeline, or consider adding them to accommodate your needs.
2. Compliance
Having a presence in a country you want to hire in isn't enough. Your global payroll provider should also have an experienced and well-informed team. They must know local legal requirements, currencies, and other relevant factors.
It's vital to choose a provider that is knowledgeable about regulations in countries where you plan to expand. The main goal is to avoid any potential legal issues or complications down the line.
It's a deciding factor, yet the one most difficult to estimate. Look for customer reviews to help you understand how familiar your provider is with local regulations in a particular country.
3. Features offered
Most global payroll providers offer the same services. You should expect your global payroll service to:
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Manage payroll and withhold tax,
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Distribute payslips and paystubs, and file taxes.
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Perform compliance checks,
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Assist with worker classification,
It should also provide:
However, not all offer the same set of services. Take your time to review the specific features and services of each global payroll provider to ensure they meet your company's needs.
4. Employees and contractors
A reliable partner should help you cover all your bases. So, if you have employees and independent contractors on your team, you need a global payment provider capable of addressing relevant requirements for both.
There are different rules for these two entities in some countries, complicating the payroll further. This is why some payroll providers avoid contractors altogether and focus only on employees. If you rely on contractors often, this could be a deal breaker.
The best providers can also offer their help with classification and legal compliance in this matter. They can help you lower the risks of misclassification or help turn your contractors into employees.
5. Trustworthiness
You will have to share sensitive data about your company with your global payroll provider. That's why you need a competent and reliable partner—one you can trust to keep the data safe. Make sure to evaluate your global payroll provider's software against best practices in data security.
Your payroll provider should provide all the needed information in their privacy policy. They should also have a strong data encryption and data retention policy.
The software should be compliant with relevant regulations, including GDPR as an example. Also, remember to inform yourself of the provider's backup plan and how they would respond to a potential data breach.
6. Client support
A good provider will equip you with both global payroll software and support when using it. The platform should be easy to use and provide the necessary features without overwhelming you and your team. You should be able to quickly find the data you need and perform any tasks without having to read an extensive user manual to do so.
The platform should also provide a strong set of features since you will rely on it to automate manual and complex tasks. It should also provide detailed and accurate reports, preferably in real-time.
Remember to ask the provider whether the platform can integrate with your accounting software. It can help minimize the inherent risks of manual data entry and further streamline the payroll process.
Also, if the platform becomes overwhelming or confusing, you need the provider to be there and offer support and guidance. Check relevant user review sites to see what other users have experienced. You need to know whether you can rely on them to help you out quickly and efficiently.
7. Additional services
Don't settle for the basics, especially if they come with a significant price tag. You rely on a provider to run payroll operations smoothly. But, they should also help you scale up or down quickly or perform additional, agreed-upon HR functions.
You may need to make ad-hoc payments beyond the salary to your employees, for example. A good provider should be able to support it while staying compliant with local regulations.
Most providers will offer you a demo, a free trial, or a run-through of their platform and processes, so take advantage of those. It will help you estimate whether the provider is worth your trust and price tag.
8. Pricing
When you evaluate providers, pricing should factor into your decision. Global payroll providers offer a variety of pricing types, so you should find the one that works best with your budget.
Make sure to shop around and see which provider offers the most features for the money you're willing to pay. You don't want to compromise on essential features since it could cost you much more in the long run. But it doesn't make sense to overpay for features, either.
Choosing your Global Payroll Provider is all about vetting right
There are many reputable global payroll providers, so try to evaluate them in detail before you sign up for their services to choose the right one.
The first step is always to assess your business goals and needs. You should consider the number of global employees you have and plan to hire in the future. Note which countries they come from. You should look into aspects of your payroll operations that you'll benefit from outsourcing. Also, be pragmatic about your budget.
Once you have a solid idea about your company's current situation and where you'd like it to be in a couple of years, compare the list with potential providers. It will limit the choices and simplify your search for the right global payroll provider.
Remember to interview each provider and take advantage of any demos, run-throughs, or free trials they provide. Clients' reviews can also help you estimate the quality of service you can expect.
Finally, having the right global payroll provider can ensure further business growth. Make sure to vet each based on your specific needs and requirements before you decide. With the right partner, you can have efficient payroll processing and no worries about compliance.
FAQ:
What is global payroll?
Global payroll is the process of managing payroll for employees in different countries. It provides salaries for your global team while staying compliant with local regulations.
How does global payroll work?
Global payroll works by centralizing all payroll processes for global employees in one system or with one provider.
It allows for consistent and accurate payroll processing. It also ensures compliance with local regulations in each country.
How to do payroll globally?
To do payroll globally, companies must establish a legal entity in each country where they employ workers. Or, they can partner with a global payroll provider.
A global payroll provider is an organization that manages payroll across multiple countries. They streamline the payroll for accurate and timely payments to employees worldwide. The provider can also ensure compliance with local regulations.
