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Your guide to international payroll

This article is a submission from Global Squirrels. Global Squirrels is a SaaS platform that specializes in recruiting full-time international employees.

Companies have begun to build their remote teams to prepare for the unpredictability of economic conditions, pandemics, and workforce trends.

When hiring international employees, they often encounter the dilemma of international payment. Can they pay their international employees without adhering to the country’s tax regulations? The answer is no – such operations can be legally penalized.

This guide covers how you can seamlessly pay your international workers while complying with different countries’ payroll guidelines.

Your guide to international payroll

Learn how to pay international employees effortlessly and get to know the insights of such international payment methods here.

Pay remote employees through the company payroll

Paying international employees can be complicated, depending on the size of your project and the countries where your team is located.

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If your project is small and you only have a few remote workers, it might be possible to process their salaries through your local payroll.

Make sure to do due diligence and check with the home and host governments to ensure that all legal regulations are considered.

For longer-duration projects with diverse talent from multiple countries, utilizing an experienced team of professionals who understand all the complex legal clauses can help simplify the local payroll processes while ensuring all tax obligations are met.

Your guide to international payroll

Engage and pay contractors

When considering paying contractors, businesses must be aware of each country’s individual legal regulations.

For example, if a contractor works beyond the expected project cycle length, they should be considered a full-time employee depending on the length of their contract.

This can lead to conflicts between the contractor and their work output and potential legal complexities for your company. As such, it is important to know local laws when engaging with foreign talent or contractors.

Pay through the payroll of local partners

Employing international staff comes with a host of considerations, not the least of which is figuring out how to pay them.

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One solution may be to partner with local businesses in each country, who will act as the legal employer of your remote employees.

The services of local partners are expensive and can vary from country to country, but they offer the benefit of ensuring adherence to local laws and regulations. Working with multiple partners requires diligence as there is potential for confusion when dealing with payments and other legal obligations.

Set up local entities

Paying international employees can be a difficult and expensive process, especially if they are located in multiple countries.

It is recommended that employers set up legal entities in each country to manage the payroll and other HR functions. However, this requires a large financial investment and may not be cost-effective in the long term if the business plans are short-term.

Additionally, employers will have to devote time and resources to maintenance and running these establishments, as well as hiring staff to oversee operations; thus making it an even more costly endeavor.

Pay through the payroll of local partners

Use PEOs or EORs for your international payrolling

When looking to hire an international employee, it is beneficial to enlist the help of an international Professional Employer Organization (PEO) or Employer of Record (EOR) provider.

These service providers, like Global Squirrels, are experts in dealing with global payrolling, benefits, compliance, compensation, and all other HR functions in any country.

A PEO or EOR eliminates the complications associated with hiring internationally, such as working with misclassified employees and dealing with multiple local vendors.

Their team of experts will handle everything necessary for paying your employee quickly and efficiently.

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Derek Gallimore has been in business for 20 years, outsourcing for over eight years, and has been living in Manila (the heart of global outsourcing) since 2014. Derek is the founder and CEO of Outsource Accelerator, and is regarded as a leading expert on all things outsourcing.