Pitfalls of global payroll

24 August 2018

As the world of business continues to change, it is becoming more common for businesses to branch out with their global footprint. Having offices in multiple locations and countries is often a business need across a wide variety of sectors. The transition into a new country brings with it a host of new challenges for companies to take on, including how to pay international staff as a UK entity.

When paying employees in a new country it is critical to know the key factors to be mindful of, in order to dodge the main pitfalls employers experience. Here are our top tips for running an international payroll

Know the local legislations and law

When setting up an entity or payroll in a new country, it is important to be clear on what is required of you as an employer. Each country can vary greatly on aspects of employment such as: standard working hours, standard benefits and types of taxation. Doing some initial research into the country’s main payroll requirements will be a great insight into what to expect.

Know your staff

This may sound obvious, however it is key to ensuring compliance within new countries. Ask questions about who you are paying. Do they work in that country full time, or will they be moving between countries? Are your employees relocating from one country to another, or are they natives of the country you are looking to set up in? Understanding the exact situation of the employees allows you to get advice on how to remain compliant and complete all your employer responsibilities. For example, if an employee is based in two countries there may be some strong tax implications that you must treat correctly from the very start. 

Take expert advice

The complexities and differences in employing staff in new countries means it is wise to take advice, especially around topics such as tax. It is also worth considering what support you will require to run the payroll; will you need a provider who can offer international payroll or will you have staff in the country to run in house?

Consider resource

Does your existing team have the knowledge to run or work with a provider on a foreign payroll? There will be many differences between a UK and international payroll that will have to be monitored so asking a UK team to take on this challenge can be unrealistic. There are also other challenges such as language barriers and time differences to compete with. It’s wise to think carefully about what existing resource there is within the business. 

Allow time for set up and planning

It is worth remembering that before implementing a payroll function and employing staff you must have certain tasks completed. For example, you will need to set up the company, link to governing bodies for payments such as taxes and social security and set up a local bank account. If you decide to use a provider to support with the payroll, ask if they can assist with the set up as often these are services that can be offered. 

In summary, the biggest tool employers need is knowledge. Understanding the requirements in the country they are looking to operate in is critical. Having the right staff, knowledge, seeking expert advice and allowing plenty of time makes for a detailed and successful move into the international payroll arena.

For information on how RSM can help offer support in moving into new countries please contact Simon Balaam.