As a business owner, you’ve had to contend with payroll management at home. When you expand globally, you’ll need to account for a new set of payroll laws, from taxation to severance. While you may choose to handle this process independently, it can be challenging to stay compliant. With Globalization Partners, our payroll outsourcing services help you streamline your employee payment methods.
Taxation Rules in Grenada
The Income Tax Act of 1994 requires you to deduct income tax from employee paychecks per their tax bracket. Any individual making 36,000 Eastern Caribbean dollars (EC$) or less a year is exempt from any income tax. Any amount between EC$36,000 and EC$60,000 is taxed at 15 percent. Amounts above EC$60,000 require a 30 percent income tax.
You are also responsible for deducting contributions to the National Insurance Scheme (NIS). These contributions consist of 5 percent of earnings from employees and 6 percent of your company’s earnings. If the employee is younger than 16 or older than 60, you only need to contribute 1 percent. The maximum insurable earnings for contributions are EC$5,000 a month.
Grenada Payroll Options for Companies
When you establish payroll for your international company, you have a few options that depend on your company’s resources:
- Internal department: If you create a subsidiary in the country, you can establish a dedicated department for managing payroll. This arrangement gives you the most control but takes the most time and money.
- Payroll processing company: You may decide to work with a third-party payroll processing company in Grenada. While this can alleviate your extra responsibilities, your company will remain liable for any legal mistakes the provider makes.
- Remote management: For a cost-effective solution, you can handle your international payroll with your system at home. This option can be ideal for companies with few resources but requires high-level organization and an in-depth understanding of a new set of employment laws. If you make legal mistakes, you’ll be responsible for extensive payouts you may not be able to afford.
- Global PEO: Globalization Partners offers an Employer of Record model that allows you to hire your employees through our subsidiary. This setup makes us responsible for payroll management, mitigating all your legal risks.
How to Set Up a Payroll in Grenada
Setting up payroll may require you to establish a subsidiary first. This process involves government applications and processing time. Once you have an entity in-country, you can focus on the particulars of payroll.
Regardless of how you manage payroll, you’ll need tax and NIS information for both your company and your employees. Your company should obtain these identification numbers from the Inland Revenue Division (IRD) and the NIS. You also need these IDs from your employees, so you can deduct their income taxes and contributions.
You can terminate workers for various reasons, including misconduct, the inability to fulfill responsibilities, and breaches of contract. Termination may also occur because the employee had a scheduled end date in their contract. You must provide the correct amount of notice based on the amount of time a worker served.
Upon termination, employees are entitled to a severance package. If they worked for at least a year, you must pay them one week of wages for every year they worked. Employees can also cash in any unused vacation days.
Payroll Processing Company in Grenada
When you trust Globalization Partners to handle your payroll management, you can mitigate risk and reduce your responsibilities. While we manage the details, you can focus on the big picture — developing your company. Reach out to our team today to learn more about how we can support your international expansion.