Every business is unique and different in terms of its size, goals, and requirements. Although, payroll is something all organizations need to manage. Payroll outsourcing service providers have made the complex process stress-free and enabled professionals to focus more on core responsibilities.
The digitization of the economy has completely changed the way we work. Morning meetings in your boss’s office have been replaced by Zoom meetings. Overtime in the office is replaced by flexible working hours, and instead of living in your urban apartment, people work from exotic places.
Earlier, only a few self-employed had the freedom to work remotely. However, the pandemic has forced many organizations to adopt remote work. Studies show that 40 million people in the United States alone will permanently make working from home. Who would have imagined giant organizations that employ thousands of employees, working from home with productivity and efficiency?
A recent survey indicates that most employees are comfortable working from home. 60% of professionals claimed that their stress levels had decreased, and 66% believed that working remotely had increased their productivity. Many companies are looking to make permanent changes when it comes to working remotely.
Remote work is here to stay. It enables employees to maintain work-life balance, flexible working hours and increased productivity. Companies must prepare themselves to successfully integrate remote workers and manage remote worker payroll.
Factors to consider while pushing remote workers
When your company is located in one location, and all of your employees travel to work from a common workplace, payroll processing is pretty straightforward. Although when your employees are located in different parts of the world, payroll becomes complex in terms of,
- Determine who should pay taxes
- State or federal tax laws
- Labor laws in that particular region
- currency exchange
- tax withholding
- Pay frequency
Because of these complexities, there are greater chances of error and penalties. Outsourcing the payroll process is a strategic step companies must take to pay remote workers.
Impact of COVID-19 on Payroll Outsourcing
The COVID-19 crisis has led to the diversification of business operations around the world. Due to the massive public health crisis, even the safest Business Continuity Plans (BCP) are not well equipped to handle the situation.
Payroll and HR teams need to keep up with evolving requirements and help employees get used to a “new normal” work environment. A recent study indicated that outsourcing in Payroll process It helped them stay ahead of the curve and easily implement and adapt new operational changes.
Key challenges in processing payroll for remote employees
Recruiting remote workers has proven to be very beneficial. You have access to the global talent pool, better innovation, and creativity in your work. However, hiring remote workers located in different regions of the world comes with its challenges.
Let’s understand the main challenges companies face and how they can overcome these barriers.
1. Staff classification
It’s tempting to label employees who don’t come to work as “independent contractors.” It transfers tax liability from the company to the individual. Although employees cannot be considered independent contractors once they start working remotely. This puts HR professionals in a bewildering situation.
It is important to consult a payroll expert or outsourcing payroll service providers who can help develop payroll policies that can help better categorize employees.
2. Legal compliance and legislation issues
Maintaining compliance is one of the biggest payroll processing challenges. The task becomes more complicated when you have employees working remotely in different countries or countries.
Furthermore, many employees have become mobile across states and countries. Understanding and complying with state and federal laws in many different areas needs a well-versed team of the military with good knowledge about these laws. Apart from these laws, companies should be aware of the different labor laws for each region.
States may have different laws regarding retirement, overtime, vacation, health care, etc. Managing large amounts of data and staying compliant becomes critical. An outsourcing company with a team of experts working on payroll processing can save the day. The outsourcing companies ensure that you remain committed to cross-country compliance and reduce heavy penalties.
3. Data security
Payroll fraud can be committed in various ways, such as bogus employees, false wages and commissions, injury fraud to claim insurance, etc.
Investing in an experienced outsourcing company that uses automated software reduces the chances of error. Only limited employees should have access to critical payroll data.
Managing workers’ payroll remotely is difficult and error-prone. Even a single mistake or inconsistency can cause mistrust among your employees. Using a simplified system is the best way to avoid inconsistencies.
Outsourcing payroll will help you consolidate and centralize your company’s data. Data retrieval and compliance processes are meticulously done.
5. Time setting
Another challenge created by working from home is how to measure an employee’s working hours. Also, since employees are not physically present in the workspace, how can employers ensure that their remote workers stay on task.
To solve these problems, employers should limit telecommuting opportunities to key employees. Software must be used to track productivity. Telecommuting guidelines should be developed and communicated to all employees. Constant check-in with their employees will also help in keeping track of the work being done. Timekeeping scams that identify fraudulent activities and their consequences should be included in remote work policies.
Global Market for Payroll Outsourcing Service Providers
- The growth of the payroll outsourcing market has shown a consolidated growth and is expected to reach $10,336 million by 2023 at a compound annual growth rate of 4.4%
- Newer technologies such as cloud-based software are expected to ease the complexity of payroll services.
- India is a trusted market for Payroll Outsourcing Solutions all over the world.
- Consolidation of payroll services, automation of processes, outsourcing of payroll in multiple countries are the commonly adapted payroll trends.
- Technology has played an important role in creating a global payroll strategy.
- Many hybrid payroll solutions are offered by outsourcing service providers to companies that want to protect their data.
- Outsourcing significantly reduces expenses by avoiding investing in new technologies and hiring new employees.
- International outsourcing companies are working hard to devise solutions and software tools for automated record keeping and accounting.
Changes in the tax structure
If you are considering converting your beach house into a permanent office or moving to a tropical location, you should consider how this will affect your taxes.
Due to the pandemic, people are working remotely from different locations in the world. They travel and change job sites frequently. This means that your company will have to pay taxes to the new governments. Businesses should be aware of how tax obligations are set by different governments to avoid any penalties.
Many discussions have taken place regarding changes in tax policies in light of telecommuting. The responsibility for paying taxes passes from companies to individuals. Officials should think about how these changes will affect government revenue.
Why should you consider outsourcing payroll?
Many businesses still rely on manual payroll, which is time-consuming, expensive, and prone to errors. When it comes to dealing with remote workers, the process becomes even more baffling for HR professionals.
An easy and proven way to simplify payroll for remote workers is to outsource payroll. An effective outsourcing company can help you tackle language barriers, navigate across multiple time zones, currencies, and regulations.
An outsourcing company helps you comply with external policies and laws. Many fast-growing companies trust outsourcing partners who can support HR professionals with their foreign employee payroll. Companies can easily conduct global expansion at lower costs than traditional expansions and with simplified payroll processing. This approach saves time, cost, and eros opportunity, and you’ll have the world’s best talent working for your company.
Difference between Paysquare
Paysquare is one of the best Payroll outsourcing companies in India. With 20 years of experience, Paysquare has helped customers navigate through unprecedented times. Paysquare has always helped customers address their account, payroll, temporary staff, and LMS needs. As times change, outsourcing the payroll process has become a necessity, and Paysquare is your safest bet. Numerous customer testimonials are evidence of the company’s success and efficiency.
Outsourcing payroll management for remote employees to a third-party payroll provider like Paysquare can help you stay stress-free and focus your attention on essential responsibilities. Unprecedented times require unprecedented action, and Paysquare helps simplify payroll management for all of your employees.