How can you set up an effective payroll system for remote employees?
In the post-pandemic era, remote work models are becoming more mainstream in the corporate space. In fact, major companies like HubSpot are adopting it as their main operational model and ditching most of their office spaces.
The Talent Tech Outlook Report in 2022 showed that remote working is the new normal, with 82% of employees across the world preferring to work from home. Tools for remote work are likely to become even more prevalent, as Forbes Magazine predicted 70% of the global workforce to work remotely by 2025.
However, the perfect picture is being marred by corporate structures’ sluggish adaptability to remote working. Important company operations like payroll management systems are still struggling to cope with a hybrid workplace model in many organisations.
Payroll management can be complex, as is for companies employing a large number of vendors and employees. However, throwing globally distributed remote employees and contractors into the concoction makes things even more complex.
Therefore, organisations and payroll management teams must build effective payroll systems that can handle the rigour of remote employees. Let’s dive deeper into the challenges of handling payroll for a remote working model. We’ll also consider how you can set up a payroll system that’s also suitable for remote workers.
What are the challenges of handling payroll for remote employees?
Effective payroll ensures that all employees are paid on time in accordance with the relevant labour laws and regulations. Remote working models can involve a globally distributed workforce, which brings in a lot of complications.
Here are some common challenges of handling payroll for globally distributed remote employees.
- Legal compliance with different tax regulations and labour laws for different provinces or countries.
- Currency exchanges in case your employees or contractors live in a different country.
- Issues and challenges associated with international transactions
- Effective management of payroll data for employees across the world
How can you set up an effective system for handling the payroll of remote employees?
Setting up an effective payroll system for remote working can ensure smooth and hassle-free payroll management for all your in-office and remote employees. Here are some tips to help you tweak your payroll system for a hybrid or remote working model.
Keep track of all kinds of remote teams in your company
Your company’s payroll and taxation liabilities depend upon how you classify your remote workforce. This will help you determine the exact compensation for your employees as per relevant minimum wage laws, insurance regulations etc.
The usual classification for remote workforce includes full-time remote employees, independent contractors or vendors, and full-time contractors.
Be aware of different paying options
A good way to make your payroll system seamless is to know all the payment methods that are prevalent where your employees come from. That way, you can also almost be sure that your payroll is compliant with the local labour laws.
Your paying options can include direct deposits into the employees’ bank accounts, checks from the company account or transfer through payments apps like Venmo and PayPal.
Keep a close eye on the tax structure for employees and vendors
If your employees come from a different state, province or country, it is important to be aware of the tax regulations there and pay them as per their local laws. You may have to register with the local tax agencies and unemployment agencies in those states.
Outsource the job to an efficient payroll agency
Keeping track of all the different tax laws, regulations, and payment options in different states or countries can be tedious. On top of that, you might have to be aware of job market statuses in different regions.
An easy option to streamline all of this is by outsourcing the job to a reputed payroll agency. They are usually adept at compliance with foreign government tax and labour laws.
Adopt a good payroll tool or service
If outsourcing payroll isn’t an option because you have a limited budget or you’re a small company, you can consider trying out an online payroll app or platform. This can automate many of your payroll tasks and help with effective payroll data management.
How can you become adept at payroll management for remote and on-site employees?
Payroll management is at the heart of the functioning of any company because employees won’t work unless they’re paid. Therefore, making the payroll system more efficient and adaptable to different operational models such as remote working can help your company grow and succeed.
An easy way to learn about payroll management is to take up a relevant course on the subject. That way, you can learn about different aspects of the process, such as balancing financial reports, bank reconciliations and vendor payments.
IBAT College Dublin offers a great Diploma in Bookkeeping and Payroll, which can help you if you are interested in a payroll career.
The course can help you get familiar with essential payroll duties like social insurance calculations and payslip processing.
Click here to enrol programme today.
This article was written by Sweha Hazari.