Establishing a payroll administration process is complex, and it becomes even more so for companies working with international team members. Managing payroll efficiently can become a full-time job for companies as they work to avoid fines and penalties. As a result, many businesses choose to outsource their payroll to a third-party provider.
International Payroll Administration Requirements
The first step to tackling global payroll is establishing a legal presence in your target market. To place employees on a local payroll, companies need a taxpayer ID. Businesses obtain this through a foreign subsidiary or a more flexible option, like an employer of record (EoR).
Companies that have the resources to handle an international payroll administration in-house must meet compliance requirements. This includes registering a local office or subsidiary with in-country authorities and managing all withholding requirements and liabilities in each of its international locations.
Companies that handle their own payroll administration must manage the following to stay compliant:
- Taxes—which change regularly
- Pension contributions
- National health insurance contributions
- Holiday bonuses
- Required annual bonuses
Also, in some international markets, employers must follow a monthly payroll schedule. Lastly, payment, remitted taxes, social security, and other entitlements must be provided in the international employee’s local currency. Companies ill-equipped to handle this undertaking can expect hefty fines or penalties.
Flexible options like partnering with an employer of record (EoR) allow companies to obtain a legal presence in a new country quickly and compliantly. This solution helps companies maintain compliance with international payroll administration, employment contracts, benefits, withholding management, and onboarding.
Learn more: What Is an Employer of Record?
Managing International Payroll Administration
Monitoring international requirements for payroll administration can easily overwhelm companies as they approach global expansion. For example, many small to mid-sized companies lack the necessary resources to manage these tasks in-house. To combat these global payroll challenges, companies may choose to outsource payroll to help them ensure compliance and better manage their international employment needs.
For companies that choose to outsource payroll, a global payroll solution provides peace of mind that international employees are taken care of. A global payroll provider handles international payroll requirements and ensures you stay up-to-date on regulatory changes.
Learn more about international payroll outsourcing.
What Is International Payroll Administration?
International payroll administration not only involves processing employee payroll and depositing checks but also includes management of taxes, pension contributions, holiday bonuses, health insurance contributions, and required annual bonuses. Overseeing these areas also helps ensure compliance in international markets.
What Is International Payroll Processing?
International payroll processing is the management of employee compensation and paycheck distribution. This also ensures compliance needs are met through filing taxes, overseeing annual contributions, bonuses, and more.
How Do You Do Payroll for International Employees?
Payroll for international employees involves everything from tracking employee hours to filing taxes. Payroll reporting and compliance must also be taken into account.
Take the pain out of hiring and paying international employees by partnering with an employer of record like Velocity Global. Our integrated Global Payroll solution coordinates international payroll operations to overcome complex tax laws and ensure compliance. Gain peace of mind that your global teams receive payments accurately and on time, every time.
Reach out to Velocity Global today to see how our approach to international payroll can benefit you.