Expanding your business into international markets means that you have access to new customers and new revenue sources. It can be a big boost to your bottom line. But entering into international markets also means added complexity for your business, including paying international employees.
The Complexities of Paying International Employees
Payroll can be a complex process no matter where you are located. Employers must ensure that they comply with their home country’s regulations. Every government has different rules regarding how to report income, what taxes employees and employers have to pay, whether the employer withholds tax from income, the minimum wages, and many other regulations. The challenge for any global business is to ensure compliance in every market while also obtaining reports that executives can use to accurately plan budgets for the future.
Here are a few best practices for paying international employees.
1. Have Unified Payroll Reports
For executives, it’s important to have a payroll system that uses a unified approach to every country in which you have an employee. Because payroll happens with multiple currencies, multiple tax laws, and many other variations, the data can be confusing. If your payroll reports are difficult to analyze, you won’t be able to use them to plan for the future.
A well-managed payroll system should be transparent, easy to understand, simple to analyze in real time, and auditable.
2. Use The Same Process Across All Locations
A survey by Ernst and Young reports that most global executives do not want to trust a single vendor for their global payroll needs since payroll laws and customs are different in every country. When a global company uses multiple vendors, it means multiple processes for payroll, ultimately leading HR professionals to learn a number of disparate systems. That means they have multiple ways to enter information, increasing the chance of error. It also decreases efficiency.
Using a single vendor successfully is possible, but it means finding one that can meet your needs in every country in which you work. Using the same process across your organization can help to alleviate this risk. The easiest way to have both unified reports and processes is to use a single payroll vendor for all your global payroll needs.
3. Safeguard Your Data
Data security is an important aspect of payroll management. Companies trust their employees with a great deal of sensitive information from identification numbers to bank accounts. When employee information leaks or is stolen, it can be very detrimental.
Here are a few ways that you can protect your employees’ sensitive information:
- Train your employees to properly use their payroll software and keep it updated to defend against the latest viruses and security weaknesses
- Educate your employees to recognize phishing schemes and fake emails
- Meet regularly with your payroll vendors to understand their security procedures to ensure that they have a plan to keep your data safe
Payroll for international employees is a complex business, with varying laws, regulations, and customs in every country. These best practices will help to make your payroll processes and analysis easier across the globe. Contact us to learn how we can help.