As a company begins to build a remote work team across multiple geographic regions, one central issue is how to pay remote workers. A remote work team might have members that are all in several different countries, which presents a challenge in running payroll. Various alternatives are depending on the worker’s location; including remote payroll tools, payment to a local partner or outsourcing payroll to a third party ‘employer of record’ such as a GEO service.
Several factors will guide a company in selecting a method of paying remote workers. If the remote worker is a contractor, payment is simpler because there are no withholding or tax obligations for the company. Employees will require withholding from payroll, depending on residency and payroll location. An employee in another country may require a company to either outsource or run a local payroll, unless a remote payroll is permitted under local laws.
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How to Pay Remote Employees or Overseas Employees?
To pay remote workers, four payment solutions are available, assuming that the company does not have a subsidiary or office in the worker’s location. It is not feasible to set up an office where every remote team member is located, so one of these four solutions will be easier and more cost-effective.
Pay Remote Workers Through a Local Partner
If a company works with a local partner or affiliate in the worker’s country of residence, then they might be willing to place the employee on their payroll. In essence, the worker would be a legal employee of the partner, and part of their payroll, withholding, and benefits system. The home company would continue to direct and supervise the employees' work.
Pay Remote Workers on Home Country Payroll
Remote employees can be paid via the company’s home country payroll under certain circumstances. Some countries do not allow remote payrolls from a foreign company, but there may be specific laws that permit it as long as the company registers the employee. In that case, payment can be made to the employee while complying with host country withholding requirements.
Payroll Outsourcing Model for Remote Workers
The use of third parties for outsourcing payroll is an effective solution for paying a remote worker in a foreign country (or even between states and regions within the home country). The first choice is to use a local payroll provider that primarily computes withholding, compensation, and then issues the check. The second outsourcing option is a GEO service, that offers full payroll and employment compliance in the worker’s country. The GEO service differs from payroll providers since the GEO has a legal entity in place that functions as the local employer of record for the remote worker.
Pay Remote Workers as Independent Contractors
Often companies will use independent contractors for remote work, and this can simplify the payment process. Since the contractor is responsible for their taxes and benefits, the company simply needs to remit payment to the worker under the agreed terms and schedule.
The best Payroll Tools for Remote Team
These are some of the best remote payroll tools in the market:
The cloud-based system was designed for small businesses and is often described as “cost effective” at $39 per month and $6 per employee.
Gusto offers the following capabilities:
- Payroll (which can be used for independent contractors in addition to traditional employees)
- Benefits administration
- 401(k) tracking
- Automatically files your payroll taxes
- Deductions management
- Benefits and time tracking built right in
- Wage garnishment
It also allows users to calculate, pay, and file local, state, and federal payroll taxes. However, potential buyers should note, Gusto does not offer applicant tracking, compensation management, or performance review applications. Clients who reviewed the solution like its “incredible support team” and “easy-to-use interface”. That said, one user says it sometimes feels as though “certain tasks were taking more clicks than necessary to complete”.
Pricing: You can use Gusto’s payroll features in the packages – Core ($6/mo per person plus $39/mo base price), Complete ($12/mo per person plus $39/mo base price), and Concierge ($12/mo per person plus $149/mo base price).
Hubstaff alleviates the headaches that come with managing time, teams, and payments. Growing your business happens through one streamlined app. You can easily set pay rates for each team member so that payments are accurate and streamlined. Choose fixed or hourly rates, and Hubstaff will calculate payments for time worked. For each payment, Hubstaff generates detailed reports so you can start to see trends and use metrics to improve over time.
Hubstaff offers the following capabilities:
- Hubstaff integrations - Pay each team member for time tracked with Hubstaff automatically using PayPal, TransferWise, Payoneer, or Bitwage. Or, you can set up manual payroll processing if you prefer.
- Cloud-based software - Hubstaff offers time tracking apps for your team members to download and track their time, but the payroll is a cloud-based solution, accessed from your account online.
- Not too complex: Hubstaff was designed to make it very easy for small to large businesses to track their employees’ work time and pay them automatically. It is not as complicated as some other full-service payroll and accounting software solutions. If you’re looking to get up and running quickly, Hubstaff is worth checking out.
Pricing: You can get payroll feature of Hubstaff in 4 plans- Free ($0/user/month), Basic ($7/user/month), Premium ($10/user/month) or Enterprise ($20/user/month) packages.
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Zenefits makes paying your people fast and easy. With a few clicks, you’re done. But don’t worry, it didn’t stop there. Its payroll is packed with advanced features your company needs as it grows larger and more complex. From one-man shops to thousand-person enterprises, its payroll is built to address your unique situation.
Zenefits offers the following capabilities:
- Payroll Integrations - Seamlessly integrate payroll into the accounting and 401(k) platforms you are already using.
- New hire onboarding sync - New hires have their information synced to payroll immediately so they can get up and running on their first day.
- Automatic salary changes - With Zenefits, you’ll never have to enter the same information twice. Update a worker’s salary or hourly rate once and you’re all set.
- Add a pay stub messages - Easily communicate any special payments, including bonuses, special commissions, and more.
- Bulk earnings uploading - Take actions for entire teams--like bonuses or commissions, saving time and avoiding mistakes.
- Contractors - Use Zenefits to pay all your workers, whether they are full-time employees, contractors, freelancers, or consultants.
Pricing: The base plans are – Essentials ($8/month/employee), Growth ($14/month/employee) and Zen ($21/month/employee). You can include the payroll feature as an add-on for $6/month/employee.
Hiring remotely can get complicated because of all the edge cases and legal areas. The best structure for your business to hire, manage taxes, and pay remote employees depends on the unique characteristics of your business. Compared to the benefits you can get, hiring remotely is definitely worth the hassle.
Nothing can give your business the same advantage as having access to global talent. Being able to pick the best team from a pool of talent that spans the whole world will give you benefits that far offset the (short-term) costs you have to make to find out the best ways to set up your team. All it takes is courage and a bit of research. Which tool are you using for Payroll? Please let us know in the comments section below.