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 overseas 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 International PEO partner.
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 International PEO allow companies to obtain a legal presence in a new country quickly and compliantly. This service is made to help companies maintain compliance with international payroll administration, employment contracts, benefits, withholding management, and on-boarding.
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. In these instances, outsourcing payroll can help companies better manage their international employment needs.
For companies that choose to outsource payroll, an international payroll service provides peace of mind that international employees are taken care of. A global payroll service handles international payroll requirements and ensures you stay up-to-date on regulatory changes.
Take the pain out of paying international employees. Reach out to Velocity Global today to see how our approach to international payroll can benefit you.
Updated on 11/11/2019