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How to Avoid Remote Payroll Management Mistakes

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Remote work has taken over the global workforce — and it’s not going anywhere. In fact, 25 percent of all professional jobs in North America are expected to be remote by the end of this year, and remote opportunities are similarly expected to continue to increase across the globe throughout 2023.

Remote work opened the opportunity for companies to hire the most qualified professionals anywhere in the world, without the need to move them to a centralized office. However, this work model comes with its challenges — one of which is remote payroll management.

Why do you need to optimize payroll management for remote teams?

Effective payroll management involves processing payroll transactions, coordinating time control systems, monitoring payroll changes (new hires, resignations, etc.), and more — all while in compliance with local laws and regulations. However, most remote teams are spread across different countries and time zones. This makes payroll complicated and a bit cumbersome when it comes to taxes, labor rules, social security laws, and payment methods and currencies.

Companies must regularly revisit and optimize their payroll management process to remain in compliance with local regulations and requirements. Failing to do so could result in fines or sanctions.

It’s no surprise that payroll management also has an impact on employee retention. According to research, 43 percent of employees say they would leave an employer that repeatedly paid them late or incorrectly.

In this article, we share some key considerations to help you manage payroll for your remote team.

Key considerations for optimizing your remote payroll management

1. Define procedures and policies

Since remote payroll management can be complex, defining procedures and policies will help you avoid payroll errors, and help you scale compliantly.

These procedures and policies must define how you are going to:

  • Collect and verify employees’ information.
  • Store and record documents such as contracts, tax forms, or pay slips.
  • Establish payment frequency and number of payments per year.
  • Track time and attendance.
  • Determine currency according to every employee’s location.
  • Establish a payment method (direct deposit, transfer, pay cards, or checks).
  • Report and update records.

2. Pay contractors and employees compliantly

Regardless of whether your company is hiring contractors or full-time employees, it is crucial to classify and pay them compliantly to avoid mistakes and misunderstandings that could lead to legal breaches.

Contractors are not part of a company’s payroll and must be paid separately and differently from full-time employees.
Contractors have a fixed price, project-based payment. They are responsible for paying their own taxes and don’t participate in any benefits programs. Full-time employees receive wage-based payments, their employers are responsible for paying their taxes and social charges, and they are entitled to receive benefits, vacations, and paid leave.

There are payroll solutions that allow you to hire and pay both contractors and employees on the same platform. This way you ensure compliance when it comes to employee classification and payments.

3. Use automated tools

When it comes to remote work, one of the biggest trends is the use of automation tools in all areas, including payroll management.

Automated payroll systems can help teams simplify and speed up payroll setup and management to increase efficiency and improve productivity.

Quality payroll systems will automate:

  •  Payment scheduling
  •  Tax calculations and filings
  • Tracking of time worked, overtime, and attendance
  • Financial record keeping
  • Payroll data updating
  • Benefits, bonus, and raise calculations

4. Ensure compliance with local rules and regulations

Overcoming payroll and compliance challenges in globalization can be difficult. It is crucial to know and understand that rules, regulations, and requirements vary from country to country, and even state by state in countries like the U.S.

  • These rules and regulations include:
  • Minimum wag
  • Overtime and maximum weekly work hours
  • Leave allowance
  • Pay frequency
  • Required benefits
  • Taxation

Make sure you are well informed on how to set up payroll in each location you hire in to avoid penalties and lawsuits. Monitor local laws to stay up to date on changes that could affect payroll to ensure compliance.

5. Leverage local expertise

Managing payroll requires time, effort, and resources. Even with a quality payroll automation platform in place to streamline the process, it’s important to have access to local expertise. In-country HR and legal experts will help you ensure you’re in compliance will local laws and regulations, particularly as they evolve over time. These experienced full-time specialists can answer any questions you may have so you feel confident about your payroll management process.

As remote work evolves, it is crucial for companies to optimize payroll to ensure they’re paying employees according to local requirements, on time, and without mistakes. This is where Globalization Partners comes in.

Our #1 SaaS-based Global Growth Platform™ lets your business expand quickly and affordably, wherever opportunities take you, without setting up local subsidiaries or branches. With 99 percent payroll accuracy and regional experts available whenever you need them, you can rest assured you’ll remain in compliance with country-specific labor and tax laws — so you can focus on keeping your workforce happy and engaged.

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