It is one thing to hire international employees, and it's a more complex challenge to handle global payroll accurately. Paying foreign employees and independent contractors can be challenging. It is a tedious and complicated procedure with constantly changing rules.
Fortunately, you can outsource these crucial yet complex responsibilities to a third-party platform via global payroll outsourcing. Payroll outsourcing is one of the significant trends in modern businesses. According to a survey, companies that fully outsourced their payroll globally increased from eight percent to 12 percent between 2015 and 2019. There's a plethora of third-party platforms in this field, like Skuad, that can handle this crucial procedure for you. Read more to discover how to choose the ideal payroll partner and what payroll functions you can outsource.
What Is Global Payroll Outsourcing?
Global payroll outsourcing is when a company hires an external payroll platform to manage the process of paying its international staff. A global payroll service that specializes in managing payroll processing in foreign countries to ensure compliance.
They streamline your global payroll by helping you manage payroll activities in one place. These firms are unique for guaranteeing expert payroll solutions for your employees abroad.
Some payroll outsourcing services also double as a global PEO or EOR. They assist with other crucial HR duties such as hiring, managing, and providing employee benefits to your international workforce.
One platform to grow your global team
Hire and pay talent globally, the hassle -free way with SkuadTalk to an expert
What Are the Payroll Functions You can Outsource?
Payroll processing is a multifaceted activity that can be a lot for your small HR team to handle. 15% of small businesses fully outsource their payroll responsibilities. Although you can outsource all your payroll functions, you may choose to handle some aspects.
When working with some payroll services, handling certain payroll functions is cheaper than outsourcing the whole process. Thus, you may need to perform some payroll functions in-house while you let external experts handle the rest. Here are some of the major payroll functions you can outsource:
- Payment disbursement. Knowing that your employees receive their payments when due can be a major relief. Consider outsourcing this function and let the experts figure it out.
- Tax and social security deductions. Making mandatory tax and social security deductions can be tricky. Since some employees work longer hours than others, there's pressure to make these deductions.
- Net payment calculations. To determine an employee's net earnings, you must calculate their total earnings and make certain deductions. Payroll outsourcing companies have the tools to ensure accurate salary calculations.
- Tax reporting. At the end of a payroll cycle, companies must report their payroll and tax operations. It's easier to let the external team file the report.
- Payroll compliance. Compliance is a big deal. It shows that you're not violating labor or tax regulations. Global payroll services are experts at making sure you process payroll according to the law.
- Payroll data security and backup. The U.S. Department of Labor outlines the record-keeping requirements for employers. Global payroll solutions don't only back up your payroll data, but they help you keep them secure for compliance.
Benefits of global payroll outsourcing
Outsourcing your global payroll duties can help you achieve your organizational goals. Here's what outsourcing your global payroll does for you:
Save Time and Money
Companies always look for more ways to complete tasks on time and reduce spending. A global payroll service can offer you both. These payroll companies use automated systems for processing payroll. The software helps process multiple employee payments on time.
You only have to input specific commands, and the software takes it from there. Thus, you don't need to keep hiring many people to handle payroll as your workforce increases. With a global payroll system handling your payroll, you have more time on your hands.
Reduce Work-related Stress
One of the major causes of work-related stress is the inability to meet the growing demands of work. Another is not having enough support to carry out daily duties.
As your company grows, your workforce increases. This increases the workload on your HR team, leading to stress and inadequate support. Fortunately, you can help your staff overcome this problem by outsourcing major payroll functions.
As an employer, you must pay attention to the employment and tax laws in your operating countries. It helps you comply with the laws. Failure to comply with these rules may result in penalties such as fines, temporary business closure, or prison time.
A global payroll service provider can help you avoid these penalties, especially when they double as employers of record (EOR). An EOR bears the risks of hiring, filing taxes, or complying with laws.
Fast and Accurate Payment Processing
Accuracy is one of the recurring challenges of manually processing payroll. Regardless of skill, you might make minor errors with enormous consequences. For example, adding an extra zero can lead to a significant error when reporting payroll to the IRS. This may put you on the IRS's radar, making them flag you for non-compliance.
Thanks to automation, a global payroll system accurately calcifies employees' net income. It also helps you process payments fast. For example, using Skuad's international payroll service can help you disburse payments with just one click. Your employees or contractors may get their money the same day and in their local currency.
Due to the embarrassment of benefits a global payroll service offers, you may easily forget the benefit of partnering with them. You know you're in good hands when you work with the best global payroll outsourcing firms. Not only do they have some of the most advanced payroll processing tools, but they also have seasoned professionals.
Your in-house HR team can learn some of the latest industry methods by working closely with them. Further, these experts provide an outside-in perspective to your ongoing payroll management framework. Thus, they can help you assess your current approach to payroll and determine how to improve.
Disadvantages of Outsourcing Global Payroll
Although the advantages of outsourcing payroll are numerous, it would be risky to ignore the disadvantages. While enjoying the benefits of having others manage your payroll, here are some setbacks you may encounter:
It May Confuse Employees
In cases where the outsourcing company issues payslips, they may bear the outsourcing company's name. Employees would also need to consult the outsourcing company for any payment issues. This arrangement may take a while for your staff to comprehend fully.
Upgrades Can Be Expensive
There's more than meets the eye when working with an outsourcing payroll service. Many have various categories of service plans. You may need to upgrade to a premium package to enjoy personalized payroll services. Although you may enjoy an upgrade's added benefit, it doesn't always come cheap.
Some Outsourcing Teams Can Become Unreliable
Although rare, it's best to prepare for worst-case scenarios when dealing with outsourcing payroll companies. Hiring them implies that you can take your eyes off payroll duties while you attend to other pressing matters.
Imagine the shock of discovering that they have insufficient funds to cover payroll processing costs. This might cause a major setback for your company and halt crucial business operations.
Choosing the Right Partner for Global Payroll Outsourcing
The advantages of outsourcing global payroll duties outweigh the disadvantages. There's a plethora of payroll outsourcing services available. Choosing the right one can be more difficult than expected since virtually every outsourcing firm promises excellent results.
Deciding who to partner with can be easy if you know what to look for the ideal options. Ensure your ideal partner exhibits the following:
Familiarity With Your Brand
Expertise aside, you want a global payroll service with your best interest at heart. You can tell if you are their priority by how keen they are to learn about your vision and goals. Ensure that your potential partner knows a little about your company and industry.
Experience With Companies of Your Stature
It's one thing to show interest in your business and to have experience working with a similar company. Experience is key to offering payroll solutions to reduce the workload on your in-house HR team.
An experienced outsourcing company is in a much better position to troubleshoot unique payroll issues that businesses like yours encounter. Prioritize experience to avoid being an outsourcing firm's guinea pig.
In-depth Knowledge of the Tax and Labor Laws of Your Business Location
A global payroll service prides itself on offering payroll solutions for an international workforce. So, it's only fair to expect them to have what it takes to handle payroll in most countries overseas.
Outsourcing firms can only perform their duties with in-depth knowledge of local laws. From tax and employment laws, you expect a global payroll company to be on top of things. Ensure that they have extensive knowledge of payroll in the country where you want to hire employees.
Streamline Your Payroll Management With Skuad's Global Payroll Platform
Now that you understand the pros and cons of outsourcing global payroll, you want to carefully choose the ideal platform for your workforce.
If you're looking for a global payroll service to simplify international payroll management for you, choose Skuad.
A global payroll platform like Skuad enables effective and efficient payroll management for your organization, regardless of size.
With Skuad, you can compliantly hire employees and contractors, seamlessly manage payroll, and onboard talent in over 160 countries without setting up a subsidiary or an entity.
To know more about Skuad, book a demo today.