International payroll is nothing new, but for the longest time it was only applicable to large corporations who have offices across multiple locations — this is no longer the case. Now, more and more companies (including startups and small businesses) are making the shift to remote work, which means teams no longer need to limit hiring to a set city/geography. With this shift to a more international workforce, companies need to find the right global payroll solution to meet their new needs.
In this blog we’ll take a deeper look into international payroll for Canadian companies. Here’s what we’ll be covering:
- What is international payroll?
- What are some common issues that pop up when hiring from out of the country?
- What are the benefits of using a global payroll software solution?
What is International Payroll?
Well, to answer that, let's first cover what exactly payroll is. Payroll refers to the act of a company paying its employees or independent contractors. However, simply making the payments is not all that it entails—payroll also consists of the following:
- Maintaining accurate employee records
- Calculating net pay (this includes overtime, tips, bonuses, and so on)
- Issuing payslips
- Reporting, withholding and paying taxes
- Contributing to benefit plans
- Wage garnishments
- Understanding labour laws in relation to paid days off, worker status, overtime, etc.
As you can see, there’s a lot that goes into a company’s payroll—and international/global payroll is often even more complex. Having employees in different countries means different labour laws, different taxes, and different currencies. It’s important to have a tight grasp on these various factors to remain compliant.
5 Common International Payroll Issues
Having the ability to hire employees from different parts of the world has loads of benefits—that being said, there are some common international payroll issues that are associated with hiring internationally.
1. Global Compliance
When expanding your talent pool to hire employees from multiple countries, it’s important to have a firm grasp of each country's different payroll regulations so that you can ensure they’re being adhered to properly. This can be difficult as each country may have different rules and regulations. Some countries will require different information than you are used to, which also needs to be formatted in their own specific way, at a deadline different from your home base.
The good news? Luckily, there are global payroll software programs that you can leverage to make sure that you are staying compliant, no matter what countries you’re hiring from.
2. Standardization
This is another international payroll issue that companies can run into when hiring across multiple locations. Because payroll data and its formatting can vary from country to country, it can prove difficult to establish clear reporting. This requires payroll service teams to manually go through data, which can take up valuable time that could be spent elsewhere.
3. Technology and Integration
When dealing with global payroll it’s important to be able to integrate the payroll data into your company's human resources (HR) management system. This can be difficult when your data is coming from multiple countries that are not yet standardized.
A great solution is to employ an all-in-one international payroll software that can work in tandem with your HR management system to standardize the data and allow for comprehensive reporting. This should be scalable and allow for the onboarding of new team members, no matter where they’re located.
4. Cost
Hiring different people to manage your payroll coming from the various locations that your remote employees are working can prove to be quite expensive. It’s time consuming, after-all!
However, going digital by investing in a global payroll software will not only standardize and streamline payroll operations, but it can also be more cost-efficient in the long run.
5. Security and Data Privacy
Lastly, this is not strictly a international payroll thing, but rather in general—you need to ensure all of your payroll documents and data are secure. When choosing a payroll platform, make sure to ask about the security and privacy they have in place. At Knit, we take our client’s privacy very seriously, and as such adhere to strict policies to keep their data safe.
Benefits Of Using an International Payroll Solution
As you can see, there can be quite a few difficulties associated with International payroll. Luckily, for companies that have international teams, there are global payroll solutions available that can make these issues a thing of the past.
Let's take a look at some of the benefits that an International payroll solution can provide. Hint: they aim to solve many of the above issues!
Reduces the Burden of Compliance
One of the things that businesses who operate globally have to deal with is the difference in payroll compliance mandates, tax, and labour laws from country to country. Staying on top of the various differences to remain compliant can be difficult.
Employing the right global payroll software solution can help solve that problem by providing all of the needed compliance data and providing any updates that may affect that area's payroll. After all, government rules and regulations are constantly changing.
Streamlines the Payroll Process
If you’re trying to manage payroll in multiple countries, it can get pretty messy. By choosing an all-in-one payroll solution, you’ll be able to save time and sanity. It’s also key to keep everything together in one place, which International payroll solutions can help with.
Gives Added Level of Security
Another benefit of using a global payroll solution is the increased level of security that can be gained. When you use multiple providers to handle the payroll services for the business’s various areas of operation it can be difficult to know if they’re all handling the payroll data properly and keeping it secure. On the other hand, when using an international payroll software solution, companies know where all of their payroll data is being stored, and can choose a solo provider that has the cyber security measures in place to keep it secure.
Improved Productivity
As mentioned earlier, one of the big issues for businesses with international payroll is the non-standardized data coming from multiple countries, each with differing compliance rules, currencies, taxes, employment laws, etc… This can lead to quite a bit of extra work and double entry in order to standardize the data to a point that it can be used. With a global payroll software solution data only needs to be entered once, leaving more time for payroll employees to be productive with their other responsibilities.
Clearly, there are plenty of difficulties associated with running a company that operates internationally, or even just hires remote employees. As we’ve outlined in this blog, international payroll can be one of these issues, but it doesn't have to be. Employing the right global payroll solution makes a traditionally tough task, stress free, while also saving time, money, and ensuring that your business is compliant.
It’s free to try Knit’s International Payroll solution. You’ll have 30 days to test out the platform, ask us any questions, and/or get fully onboarded. We’re always happy to answer any questions, or help you out along the way!
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