Expanding your international business means expanding your talent pool. But foreign talent-hiring comes with its challenges. There are many local employment laws and regulations that must be followed. Additionally, managing payroll in multiple countries adds complexity to the already difficult task of managing a global team. Local payroll providers are a popular option for businesses looking to implement global payroll and navigate payroll compliance in new markets.
However, choosing the right payroll provider for your company can be difficult. Many times, HR and legal teams don’t know what criteria a great payroll vendor must meet. There are also many questions about payroll software services in general. What are payroll services? What should you look for in a payroll provider?
We will answer your questions about payroll service in this article and offer some tips to help you choose the best payroll service provider for your organization.
What is a payroll service provider?
A payroll service provider, or simply payroll provider, is a company that provides payroll processing services to businesses that don’t have the expertise or knowledge to manage payroll internally. Outsourcing payroll can help businesses save time and money, especially when setting up payroll in multiple countries. According to a survey, 26 percent of respondents said they rely on international payroll providers for all matters related to global payroll processing.
What are the responsibilities of payroll providers?
This may seem like an obvious question, but the answer isn’t as simple as you think. A payroll provider can handle your payroll. What do payroll services mean?
If we are talking about contracting a partner payroll, it means that the payroll specialist will usually:
- Calculate the gross and deducted pay for all employees
- Retire income tax and deduct any other contributions, such as social security
- Pay the employer’s payroll tax and social contributions.
- Pay your payroll taxes and file
- Take care of sick leave and get paid time off
- Payroll processing
- Keep track of payroll records
- Provide detailed reports
The provider will handle all of the admin and calculations and deposit wages and salaries into your employee’s bank accounts. This additional service is often required in the world of global payroll.
This is because, depending on where you live, there might be laws that prohibit the use of external service providers to pay your employees. Foreign employers will need to use their bank accounts to pay employees. This could mean opening a local account in the destination country, such as the US. However, foreign employees can be paid directly through their bank accounts in other countries like France or Germany.
Sorted: Which types of payroll providers exist?
International payroll providers differ in their services and how they are set up and organized. There are generally three types of payroll providers for global payroll management:
Globally owned and managed payroll provider: One single provider of payroll services that offer services in multiple countries. This leaves the customer with one contract, one partner for questions and one platform for data consolidation and reporting.
Local Payroll Provider (sometimes called In-Country Payroll Partner): These providers offer their expertise in processing payroll in one country to foreign companies looking to open new markets.
Payroll Aggregator: Payroll provider that partners with several in-country providers to provide customers with a broader country coverage. The aggregator usually processes the payroll in each country under a single unified service contract.
Global payroll processing can vary depending on which service provider is used. It can be done locally, centrally, or in regional hubs that group processes according to cultural and time zones.
How to set up global payroll.
Knowing the different types of global payroll providers available, now it is time to ask a more interesting question: How do you choose a payroll provider for your company? We have compiled a list of key criteria and questions that you can ask potential payroll partners to help you decide when looking for the right fit for your company. First, we will give you some tips on selecting a payroll vendor. Next, we will discuss the details of global payroll solutions.
Selecting payroll services: General tips
Payroll partners should follow the exact requirements as any other service that you have contracted to support your business:
Get feedback from clients about the customer service they received and how fast their inquiries were processed. You should also check if you were assigned an individual representative within the company who you can reach directly if you have any questions.
Reputation and expertise: Request certificates, qualifications, etc. To prove the provider’s expertise and knowledge, ask for certificates. Check reviews and the track record of the provider.
Excellent value for money: But the price is not everything. You want to ensure that you aren’t paying more than you need.
Simple to understand and use, the pricing system and the system should be transparent. The reporting metrics must be clear, and the interface to the system should be simple to use.
The following criteria can help you narrow down your choices of payroll companies:
Targets to process payroll: What level of performance can your payroll partner ensure? What is the time it will take to correct payroll processing errors?
At the automation level, many tasks related to payroll can now be automated. Your future payroll provider should use the most automation possible to you don’t need to be paid to perform simple bookkeeping and admin tasks.
Updates on compliance: How frequently do they need to update their system to comply with local tax laws?
Service Features: What payroll features and services are they offering? This question can be answered by creating a list of feature requests that you can share with potential candidates. Are there any additional services they offer that you could add as your payroll requirements change?
Your company’s expansion into new markets means the payroll process becomes more complicated, and data sets get more significant. Businesses need to be able to monitor payroll costs and have a system that alerts them to any changes. It is important to ask upfront about the reporting.
There are two types of global payroll providers: those with their own payroll companies in each country they cover and those who rely on local payroll partners. Ask if you will be able to contact the organization directly or rely on the partner’s in-country to resolve any payroll issues.
While you might be still in the initial stages of your company’s global expansion with only a few people working remotely, this is likely to change. It is essential to have a reliable payroll provider to help you reach your growth goals. They should be able to adjust to your expanding team and can still manage your payroll efficiently and legally. Ask potential payroll providers what happens if your business expands.
Payroll data is very sensitive. It must be protected at all costs, regardless of whether it is processed in one country or multiple locations. Global payroll makes data security even more complicated because data is collected from different jurisdictions, each with different employee data privacy requirements, and then transferred to one or more platforms for storage and analysis. Your new payroll provider should ask you one important question: How can you ensure data security and protection?
Integration of other tools
Multinational businesses often use software solutions that simplify global administration with operations in multiple countries. The global payroll software you choose must be compatible with other tools and have interfaces that allow for integrations. Ask every vendor about the ability to integrate your system with other management and HR tools.
A standardized system that works in every market is essential for global payroll. It is essential to choose a global payroll provider that is simple to use by your HR and management teams. It would help if you considered your employees before making a decision. Do they have access to their payslips, etc.?
How Lano chooses its payroll partners
Lano works with almost 130 payroll providers worldwide to help you implement global payroll for your company quickly and easily. You can rest assured that all our payroll partners are carefully chosen, so you get the best possible payroll experience. We carefully select new providers for our network.
- High standards in data security and protection
- Have a solid track record and are experienced in their field.
- Our start-up clients have shown that they can adapt to rapid company development.
- Are you an expert in payroll compliance?
- Integrate seamlessly with our platform
There’s no need to waste time comparing different payroll service providers to find the right one for you. Contact us today and let us help you find the best payroll partner for your company. Our innovative platform allows you to integrate existing providers and view payroll data for your entire team on one screen. This includes international contractors as well.
Do you have any idea about the details of the payroll software procedure and how the cycle can move in different ways every month? We will help you get more details about one of the best ways to go along with this function of payroll management software.HR Payroll can help you discover an effective method to clutch with payroll.