Does your company operate internationally or plan to expand globally soon? Running a business from more than one country brings mountains of compliance and logistical concerns. One is how to pay international employees and contractors without violating local laws. Another is finding ways to streamline the global payroll process and ensure everyone gets their salaries and benefits on time.
International payroll solutions are an efficient and effective way to address most obstacles hiring global teams can present. These solutions help mitigate risk, save time, and increase productivity. Finding such companies that offer payroll and EOR services to help you with global expansion is a very important step in streamlining your business processes and saving a lot of your time
Below we’ll cover four reasons your company should use global payroll solutions when bringing international teams on board.
1. To Stay Compliant With Local Labor Laws
Every country has its unique characteristics. From cultural traditions and official languages to business practices and employment laws, these features define “who” a nation is. But differences in labor laws, including reporting requirements and worker classification rules, can be complex. Reading and understanding all the fine print becomes tedious and confusing.
While most business owners don’t intend to fall out of compliance with a country’s employment laws, it can happen. Without the right legal and HR expertise on the team, it’s easy to miss tiny details and differences. Working with global payroll providers gives a company the legal and HR tools to navigate international employment regulations.
Payroll providers check off the compliance requirements in each country where a business hires and operates. These details can include variations in payroll taxes, benefits, and social program contributions. Providers can also handle real-time reporting requirements related to gender pay gaps or overtime hours.
2. To Streamline Payroll Expenses
Startups that hire in the U.S. can expect to spend 25% to 50% of their operating budgets on payroll expenses. The average U.S.-based employee can cost between 1.25 and 1.4 times their yearly salary. Other payments, such as taxes and insurance benefits, contribute to these payroll expenses. Hiring global teams may increase or complicate these costs, especially in countries with extensive social programs or higher taxes.
Global payroll providers help streamline expenses for business owners when they expand into other countries. An example is the cost it takes to set up local legal entities. A company usually has to establish a local division or office to hire direct employees in other nations. The costs can add up quickly if a business wants to hire a few people from different countries.
Some global payroll providers also serve as an employer of record. An EOR, such as Multiplier EOR, saves a company from going through the process and expense of setting up separate business entities in different countries. EORs already have entities in several countries and can legally hire international employees on a business’s behalf. Your company can thus save the money it takes to set up and maintain local offices.
3. To Speed Up Global Expansion Plans
Since some international payroll providers also offer EOR services, business owners can put their global expansion plans into effect more rapidly. Typically, you’d have to wait to establish local legal entities everywhere you want to hire employees. This process can become time-consuming and inconvenient if you find the best candidates where you don’t have branch offices.
By the time you get through all the red tape, your ideal candidates may move on to other employers. Setting up separate legal entities in different nations may also be frustrating and confusing. Because laws and business practices can vary, hiring remote teams in distinct markets may be more challenging.
Say you want to expand into Canada and Germany at the same time. A business can usually do that much more efficiently with an EOR. You won’t have to deal with differences in processing times and potential delays. Instead, you can hire employees in both locations simultaneously and get them up to speed on your preferred timetable.
4. To Automate Core Processes
How would you feel if you dedicated hours to a company and your paycheck was wrong? It’s an experience that 54% of U.S. employees have reported in the past. Those errors often include not receiving enough pay or having a paycheck held back because of technical glitches. When companies go global, the chances of committing mishaps like these increase because of variances and complexities.
For example, countries can observe different holidays, impacting banks and direct deposits. Other distinctions in payroll taxes, benefits, and social programs may lead to miscalculations and incorrect net pay amounts. Employees who don’t receive the correct paychecks on time might start rethinking their employer relationships. One mistake, and your business could lose valuable global talent or have to reimburse employees for back pay.
Global payroll providers automate core processes, so you don’t have to worry about paycheck errors. Providers keep track of differences in national holidays, payroll tax changes, and benefits. They typically use the latest platforms and technologies, so international teams get their full checks when expected. International payroll solutions coordinate and centralize all the details for global businesses and employees. These include self-service and onboarding platforms.
Benefits of Global Payroll Solutions
International teams usually bring broader expertise to the table. Businesses benefit from global employees’ cultural knowledge and experience. However, hiring and paying workers in countries outside the U.S. can be tricky to manage.
Compliance with local labor laws and payroll expenses may create challenges and slow down expansion plans. Global payroll solutions eliminate or reduce many international hiring complications and risks. When you work with a global payroll provider, you can concentrate on what you know best: doing business.
Also read: How to Find the Right Sourcing Agent for Your Business?
