But you also need to give careful consideration to how your remote payroll is experienced by the people who enrol in it: your new employees. Smooth onboarding and efficient, transparent payroll play a role in improving employee satisfaction.
And in the age of the Big Quit, setting up new remote employees quickly and easily can be a real competitive advantage.
Here’s our guide to setting up new remote employees.
Before day 1: preparing new remote employees for kickoff
You want your new hires to hit the ground running. So it’s important that you do as much of the legwork as possible, ahead of time. Let’s get started:
Stay on the right side of local regulations
Going global connects you with talent all over the world. That’s the point of remote payroll, after all. But different jurisdictions have different employment regulations, which is where the complexity arises.
The regulations around hiring people as a foreign entity vary from country to country. For example, in some countries, it’s a legal requirement to set up a local entity or at least partner with one. If you’re unsure about a particular country, take a look at our country’s playbooks to find detailed information about its employment regulations.
Some companies attempt to sidestep the red tape by simply classifying their overseas staff as contractors. But this isn’t always possible, or even desirable, which leads us to the issue of classification.
Classify your remote team members accurately
Before you can enrol new hires in your remote payroll, you must define their role in your organisation. The costs of misclassifying employees as contractors are very high, so getting it right from the outset is essential.
Classifying remote workers within the USA
If your company is registered within the USA and you are looking to onboard remote employees or contractors within the USA, this section is relevant for you.
Who is an employee?
In terms of definitions laid out by the IRS, a worker is an employee if the organisation they work for determines what they do, and how they do it. Organisations have to deduct payroll taxes for all remote employees within the US. Some states have reciprocal tax agreements.
These make life easier for people who work in one state and live in another, by eliminating the need to file two tax returns. Reciprocity saves headaches, so it’s worth knowing where it applies.
Who is a contractor?
In contrast, independent contractors and freelancers are technically self-employed. They perform services for organisations, but they’re responsible for their own taxes. To contract with independent contractors within the USA, you need:
- Form W-9: this informs the payor of the contractor’s personal details, Social Security Number and Taxpayer Identification Number.
- 1099-NEC Form: Businesses must file this form for any contractor receiving $600 or more per annum unless the contractor is registered as a C or S corporation.
If you’re not sure whether you’re dealing with an employee or an independent contractor, don’t take any chances. The stakes are too high. File an IRS Form SS-8 to be on the safe side.
Classifying remote workers globally
As you can imagine, this just gets more complex when you factor in more countries. For American companies, it’s important to bear in mind that at-will employment does not apply in foreign territories.
This should be factored into decision-making before setting up new remote employees on remote payroll, because termination is more complex in these cases.
Nevertheless, these complexities aren’t a reason to not hire international talent. But they do underscore the need to partner with experts who can chart the right course for you. With a global network of fully-owned employment entities, Playroll employer classification is taped. Here’s how it works:
- Payroll account set-up
- Employee classification with pre-compliant contracts
- Playroll takes on the responsibility of paying your employees, including deductions and contributions, in accordance with their classification
With Playroll, you get to focus on your core business, while we handle the legal and compliance rigmarole backstage. You can learn more about how Playroll protects companies from misclassification penalties.
After the launch: supporting new remote employees
Locations researched, papers filed, people classified: now it’s time to optimize your processes for remote teams.
Best practices for remote payroll
Once employees and contractors are through the virtual door, they’ll expect headache-free payroll. And that calls for automation: manual data entry and repetitive administrative workflows are invitations to error. Inaccurate or late payments cause anxiety and dissatisfaction.
That’s especially true in the remote work context, where there’s no brick-and-mortar institution for employees to approach with complaints.
In addition, ensure that new remote employees have ample self-service options at their disposal to view their payroll data. This reduces the demand on your HR team’s time and gives employees confidence. Also, consider integrating time tracking with payroll.
Integrated time tracking keeps data consistent across all systems and allows companies to optimize remote work schedules.
Payment methods: the good, the bad and the ugly
Paying remote workers is far from straightforward. All of the available methods come with significant drawbacks, so this decision is all about finding a balance between convenience for payees and cost savings for companies.
Direct bank transfers using the SWIFT system are still a popular way of making international payments. The major advantage they offer is the relative security and accountability that comes from dealing directly with banks.
But transaction costs and foreign exchange charges can be prohibitive. They’re also fairly admin-intensive and susceptible to manual data entry errors.
An increasingly popular method, digital wallets enable payments independent of bank accounts. Some banks do offer their own wallet facilities, as do some mobile carriers. This method requires buy-in from all parties to work.
Third-party payment platforms offer a quick and easy way to pay remote employees. But, as with bank transfers, you have to consider transaction costs and the extent to which these impede scalability in the long term.
The hole-in-one: Employer of Record
Sounds like a bit too much to handle on your own? Partnering with an Employer of Record is the quickest (and safest) way to get from zero to compliant in multiple jurisdictions at once. As experts in remote payroll, we’re ready to help you set up the right processes now, for lasting success in the future.