Every business is unique and different in terms of its size, goals, and requirements. Although, payroll is something that all organizations need to manage. Payroll outsourcing providers have made the complex process stress-free enabling professionals to focus more on core responsibilities.
The digitization of the economy has completely transformed the way we work. Morning meetings at your boss’s office have been replaced with Zoom meetings. Overtime in the office is replaced by flexible working hours, and instead of living in your metropolitan apartment, people are working from exotic locations.
Earlier, only a few freelancers were enjoying the liberty of working remotely. However, the pandemic has forced many organizations to adopt remote working. Studies suggest that 40 million people in the US alone will make work from home permanent. Who would have imagined gigantic organizations employing thousands of employees, working from home productively and efficiently?
A recent survey suggests that most employees are comfortable working from home. 60% of professionals claimed that their stress levels have reduced, and 66% thought that remote working had increased their productivity. Many companies are looking into making permanent changes when it comes to remote working.
Remote working is here to stay. It empowers employees to maintain their work-life balance, flexible working hours and increases productivity. Companies must prepare themselves to incorporate remote workers and successfully manage payroll for remote workers.
Factors to be considered while paying remote workers
When your company is located in one place, and all your employees travel to work from a common workplace, processing payroll is quite straightforward. Although, when your employees are located in different regions of the world, payroll becomes complex in terms of,
- Deciding which entity should pay the taxes
- Tax Laws of the state or federal government
- Labour laws of that particular region
- Change of currencies
- Tax withholdings
- Frequency of pay
Due to these complexities, there are more chances of error and penalties. Outsourcing the payroll process is a strategic move that companies should take to pay remote workers.
COVID-19’s Impact on Outsourcing Payroll
The COVID-19 crisis has diversified business operations across the globe. Due to the immense public-health crisis, even the soundest business continuity plans (BCP) are not well equipped to deal with the situation.
Payroll and HR teams need to keep up with evolving requirements and assist employees in getting accustomed to a ‘new normal’ work environment. A recent study indicated that outsourcing the payroll process helped them stay ahead of the curve and easily implement and adapt novel operational changes.
Major Challenges in Processing Payroll for Remote Employees
Hiring remote workers has proven to be extremely beneficial. You have access to a global talent pool, better innovation, and creativity in your business. However, employing remote workers located in different regions of the world comes with its challenges.
Let’s understand the major challenges faced by companies and how they can overcome these roadblocks.
1. Classifying Employees
It is tempting to classify employees who do not come to work as ‘independent contractors. It shifts the tax liability from the company onto the individual. Although, employees cannot be termed as independent contractors once they begin working remotely. This puts the HR professionals into a perplexing state.
It is important to consult a payroll expert or payroll outsourcing providers that can help develop payroll policies that can help classify employees better.
2. Statutory Compliance and Legislation Issues
Staying compliant is one of the biggest challenges of processing payroll. The task becomes more complex when you have employees working remotely in different states or nations.
Moreover, many employees have become mobile across states and countries. Understanding and complying with state and federal laws of so many different regions need a team of the well-versed army with sound knowledge about these laws. Apart from these laws, companies need to be aware of the various labour laws of each region.
States may have different laws regarding retirement, overtime, leaves, healthcare, etc. Managing large amounts of data and remaining compliant becomes crucial. An outsourcing company with a team of experts working on processing payroll can save the day. Outsourcing companies ensure that you stay compliant across nations and mitigate expensive penalties.
3. Data Security
Payroll frauds can be committed in various ways, such as ghost employees, false wages and commissions, faking injuries to claim insurance, etc. Maintaining security can get challenging for payroll processors.
Investing in an experienced outsourcing company that uses automated software reduces the chances of error. Only limited employees should have access to critical data related to payroll.
Managing the payroll of remote workers is challenging and error-prone. Even a single mistake or inconsistency can cause mistrust amongst your employees. Using a streamlined system is the best way to avoid discrepancies.
Outsourcing payroll will help you standardize and centralize your company data. Data retrieval and compliance issues are done accurately.
Another challenge that ‘work from home has created 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 resolve these issues, employers must limit remote working opportunities to key employees. Software should be used to track productivity. Guidelines related to remote working must be set and communicated to all the employees. Consistently checking in with their employees will also help keep track of the work being done. Timekeeping frauds that define fraudulent activities and their consequences must be included in remote working policies.
Global Market for Payroll Outsourcing providers
- The market growth for payroll outsourcing has shown uniform growth and is estimated to reach $10336 Mn by 2023 at a CAGR of 4.4%
- Newer technologies such as cloud-based software are expected to ease the complexity of payroll services.
- India is a reliable market for payroll outsourcing solutions worldwide.
- Bundling payroll services, process automation, multi-country payroll outsourcing are the popularly adapted payroll trends.
- Technology has played an important role in devising a global payroll strategy.
- Many hybrid payroll solutions are offered by outsourcing providers to companies that want to protect their data.
- Outsourcing significantly reduces the expenditure by avoiding investing in new technologies and hiring new staff.
- International outsourcing companies are working hard to innovate software solutions and tools for automatic record keeping and calculations.
Changes in tax structure
If you are thinking about converting your beach house into your permanent office or shifting to a tropical location, you must think about how that will impact your taxes.
Due to the pandemic, people are working remotely from different locations in the world. They are travelling and changing work locations quite frequently. This means that your company will have to pay taxes to new governments. Companies need to be aware of how tax liabilities are defined by different governments to avoid any penalties.
Many discussions related to changes in tax policies in light of remote working have been carried out. The responsibility of paying taxes is shifted from companies to individuals. Officials must ponder upon how these changes will impact the government revenues.
Why should you consider outsourcing payroll?
Many companies still rely on manual payroll, which is time-consuming, costly, 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 efficient outsourcing company can assist you with language barriers, navigating through multiple time zones, currencies, and regulations.
The outsourcing company helps you stay compliant with foreign policies and laws. Many fast-growing companies trust outsourcing partners that can support HR professionals with payroll for foreign employees. Companies can easily carry out global expansion at lower costs than traditional expansions and with simplified payroll processing. This approach saves time, cost, the chance of eros, and you get the best talent in the world working for your company.
The Paysquare difference
Paysquare is one of the best payroll outsourcing companies in India. With 20 years of experience, Paysquare has helped clients navigate through unprecedented times. Paysquare has long helped clients address their accounting, payroll, temp staffing, LMS needs. With changing times, outsourcing the payroll process has become necessary, and Paysquare is your safest bet. Many client testimonials are proof of the company's success and efficiency.
Outsourcing payroll management for remote employees to an established third-party payroll provider like Paysquare can help you stay stress-free and focus your attention on core responsibilities. Unprecedented times need unprecedented measures, and Paysquare helps simplify payroll management for all your employees.