More people than ever have been willing to work remotely since the experience of the global pandemic. Although companies are eager to capitalize on this high supply of global skilled labor, setting up a company and hiring can be challenging. For those who want to speed up the international hiring process, partnering with a professional employer organization (PEO) may be the solution.
Working with a global PEO like Skuad can help you fast-track your business development abroad. Skuad provides a unified platform to streamline your international payroll duties and comply with labor law wherever you set up your business.
Read further to learn how a global PEO can help your business expand internationally while you discover the critical factors to consider before you hire globally.
What is a global PEO?
Companies hire a global PEO to help them expand their business, especially in regions in which they already have an establishment. A global PEO provides specialized HR and tax services while ensuring its clients abide by labor laws.
Since the PEO acts on behalf of the employer, its role involves managing employees. It also ensures that employees receive their earnings and administers employee benefits according to international employment laws.
Although a PEO is a co-employer, new employees work directly for the company. They abide by the company’s rules and use their resources for daily activities. On a typical workday, employees receive and execute tasks as company staff.
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The roles and responsibilities of a global PEO
Global PEO provides a unique service that streamlines your hiring and payroll procedures. It helps you manage what is perhaps your company’s most complex asset — human resources. Hiring a global PEO allows you to set up, organize, develop, and compensate your international workers.
Expect to enjoy the following services from a reliable PEO:
Employee recruitment and training
A global PEO usually has a better knowledge of what it takes to hire employees in foreign countries.
Before commencing the hiring process, it will consult with the company with which it is partnering to develop an ideal candidate profile and expectations for the open position. A global PEO will also provide new employees with the necessary training to carry out their duties efficiently in the new environment. These procedures can be time-consuming and capital-intensive without the help of a PEO.
Employee benefit disbursement
Disbursing employee benefits is one of the challenges for small and medium-sized companies. In some countries, the total cost of employee benefits is nearly the same as wages or salaries. A PEO handles this crucial aspect with or without significant contributions from the company.
A PEO can also provide essential benefits such as healthcare, paid leave, and transportation benefits mandated by the government.
Managing employee taxes can be a long and tricky exercise. A PEO balances the books and makes the necessary tax deductions remittable to the government. They report payroll procedures and file taxes before the expiry date.
As a co-employer, the PEO ensures that every employee's work environment is safe. In an internal conflict between employees, it can help mediate and resolve these issues.
Payroll processing and management
Payroll is perhaps the most crucial part of hiring employees globally. Maintaining a steady and timely disbursement of salaries or wages is challenging, especially when hiring outside your country.
A PEO ensures that employees receive their salaries when due and makes the process easy for the co-employer and staff. It determines an employee’s billable hours, calculates earnings, makes deductions, and arrives at the net income amount. Upon establishing an employee’s net income, it processes payment.
Although it may take a few working days for employees to receive payment, with a PEO like Skuad, you can make this transfer to employees with one click.
Global payroll ensures that employees receive their earnings in due time. A PEO can help you achieve this goal in the simplest and fastest possible way.
Like any standard payroll practice, global payroll involves determining an employee’s net income. This process is usually more complex for a global workforce. The number of employees on the payroll, the local labor and tax laws, and mandated deductions determine the complexity of processing payroll, especially in a foreign country.
The challenges of global payroll
You may observe specific challenges when processing payroll for a global workforce. Collecting employee tax information can be difficult when hiring globally. These details are essential for processing payroll, making necessary deductions, and filing taxes.
Determining employees’ billable hours is also tricky. Some employees work longer hours than others, while specific individuals work overtime. Calculating these hours with varying bonuses for multiple employees is relatively time-consuming for remote, international employees.
PEOs have a structure that provides solutions in crucial areas of a business operation, including payroll. They create a framework to enable employees to provide and update their data when significant changes occur.
A PEO also ensures that employees receive their earnings quickly through the most convenient sources. In addition to the everyday perks of working with a PEO, there are more benefits to partnering with Skuad.
Working with Skuad allows you to employ part-time and full-time employees within minutes in any part of the world. With ongoing operations in over 160 countries, Skuad simplifies your hiring process.
Global hiring considerations
Hiring globally is becoming a common trend in business, especially for small and medium-sized companies looking to hire skilled labor at an affordable rate. This once impossible task has become mainstream thanks to the contributions of global professional employer organizations like Skuad.
However, there are specific critical considerations before hiring globally.
Labor or employment laws
Virtually every country has specific laws guiding the daily activities of citizens, companies, and foreigners. There are also specific laws for hiring, which vary across different regions. Ignorance of the law may come with penalties that are avoidable with adequate information.
Learn the employment or labor laws of the country where you’ll establish your company. Labor laws typically aim to preserve the rights of employers, employees, and independent contractors.
They also inform you of the penalties you may incur if you violate any labor laws. Learning every rule regarding hiring employees in a foreign country before establishing your company will likely stall your business establishment goals. Working with a PEO may be the better option to speed up your hiring and business establishment processes.
Usually, employers hire candidates using a formal agreement. These arrangements are generally contracts that stipulate the terms and conditions of employment. A typical employment contract may include information such as the duration of the work, expected earnings, and overtime conditions.
In most regions, employment contracts are either temporary (short-term) or permanent (long-term). Every country has specific labor laws guiding contract procedures. Understanding the differences between these contract types can help you comply with labor laws and save money on operational costs or tax contributions.
The official language
Communication is crucial to understanding and interpreting local laws, collaborating with workers, and complying with the law. You must be able to function in the local or official language of the region in which you are hiring employees .
The official language is the spoken dialect in official settings such as offices, public places, and courtrooms. You may also need to fill out forms in the official language before establishing your company.
You may hire translators to help you communicate effectively. However, you should consider learning the language if you intend to be present or reside in the area.
In virtually every country, employees get certain benefits that independent contractors do not.
These benefits are separate from the wages or salaries they earn. They are bonuses that enhance an employee’s life to the extent that they have less to worry about and can improve their focus on job-related tasks.
Employee benefits vary. In some regions, these bonuses only cover the basics, such as healthcare, while in others benefits may include employee daily meals and transportation allowance.
Before hiring in a country, know the benefits you will provide employees and consider if you can cope with the demands.
Taxation is vital to every economy, including the country from which you plan to hire. Tax rates are different in every country and the tax filing process varies as well. To reduce your spending, you may consider hiring in tax-friendly countries.
With relatively low tax rates, you can inject more capital into other crucial areas of the company. Besides corporate tax, employers also make other monthly contributions, especially social security, to the government on behalf of each employee. Like tax rates, these deductions also vary.
Manage your international workforce with a global PEO
A global PEO can help you onboard employees and make sure they receive compensation and wages in time. PEOs are also instrumental in ensuring their clients comply with local employment laws. These procedures can be challenging to master on your own, which is why partnering with a PEO is advisable.
Skuad has everything you need to build your globally distributed and diverse team, from hiring in minutes to one-click payroll.
When you partner with Skuad, you don’t have to go through the rigors of establishing a local entity. With our unified platform, you can hire skilled individuals in any region with a click. Stay up to date with the latest developments and laws regarding employment with regular insightful information from our experts.
Skuad handles the crucial areas of your payroll management, from work permits to tax deductions, to ensure you stay compliant with labor laws. Contact a Skuad agent today and begin our journey towards international business expansion.