Building your company on a global scale requires following a series of steps. After you’ve successfully recruited and hired your new in-country team, it’s time to set up your payroll. This process includes carefully considering local payroll regulations, following lawful tax practices, and ensuring your employees receive timely payments. If you’re new to the country, establishing a legally compliant and seamless payroll can be challenging.
At Globalization Partners, we’re committed to supporting your company by adding your employees to our payroll. Through our Micronesia payroll outsourcing services, you can hand over the legal responsibilities of your expansion, so you can continue focusing on your company’s growth.
Taxation Rules in Micronesia
You are required to manage each employee’s social security benefits through the payroll process. Local labor laws impose a corporate income tax of 21% as well as a personal income and social security tax.
You are also required to make quarterly social security contributions on all covered earnings by your employees. In this case, covered earnings refer to any compensation paid to employees up to $7,000 per calendar quarter. You must withhold and pay 7.5% of covered earnings from an employee’s wages to the Social Security Administration (SSA). You also have to contribute 7.5% of covered earnings from your own revenues to the SSA on behalf of your employees.
Micronesia Payroll Options for Companies
When you expand your company into a new country, you’ll need to establish a reliable payroll management system to ensure your employees get their paychecks on time. You can choose from a few popular payroll options, including:
- Remote. You can choose to manage your global payroll from your company’s main location. However, if you decide on this remote payroll option, you’ll need to stay up to date with numerous country regulations to remain compliant.
- Internal. Running an in-house and in-country payroll requires setting up a local subsidiary, hiring HR experts, and managing compliance internally. While this process means you can run your own payroll, it can be time-consuming and expensive.
- Local. If you already have an in-country subsidiary but don’t have the resources or time to handle payroll internally, you can work with a local payroll processing company to manage your paychecks. This is a great way to outsource the responsibility of monthly payroll, but you will still be liable for any legal issues.
- Global PEO. Working with a global PEO such as ours is the only risk-free way to handle international payroll. When you outsource your payroll and liability to Globalization Partners, we’ll hire all your local employees on your behalf, so you can avoid liability claims.
How to Set Up a Payroll in Micronesia
The process of setting up your payroll depends on the route you choose. For example, if you decide to handle payroll remotely, you’ll have to add any overseas employees to your current system. If you opt for a local or internal payroll system, you must first establish an in-country subsidiary. This process involves extensive paperwork and government approvals before hiring any employees.
No matter which route you choose, you’ll have to register all your employees with the Social Security Administration before launching your subsidiary. This entails filing a business form, showing your incorporation certificate and a business license, and sending a record of your employees’ names and social security numbers.
There are no specific terms of termination that you have to follow. If you decide to terminate an employee’s service, you must give them their last paycheck, including pay for any hours worked as well as any unused but accrued leave.
Payroll Processing Company in Micronesia
As a global PEO, Globalization Partners can help you run your payroll smoothly, keeping your company compliant and your employees satisfied. Once we’re established as your Micronesia Employer of Record, you just have to confirm the monthly paychecks and send us the necessary funds — we’ll handle the rest.
Reach out to our team to learn more about our payroll outsourcing services.