Payroll Outsourcing Services: The Ultimate Guide for Overseas Employers

Running payroll in a foreign country can be overwhelming with the many different regulations to follow, and calculations needed using local rules. Due to this, multinationals will frequently rely on payroll outsourcing to handle the administrative and compliance steps of paying employees. Even when a company has set up its own corporate entity abroad, it makes sense to outsource payroll to a third party with in country experience.

Go to the profile of Tim Burgess
Sep 03, 2018
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Running payroll in a foreign country can be overwhelming with the many different regulations to follow, and calculations needed using local rules.  Due to this, multinationals will frequently rely on payroll outsourcing to handle the administrative and compliance steps of paying employees.  Even when a company has set up its own corporate entity abroad, it makes sense to outsource payroll to a third party with in country experience.

This guide outlines the types of outsourced payroll services and the pros and cons of each, as well as how to select the service provider that is a good match for your business.

How do Payroll Outsourcing services work?

The payroll outsourcing service steps into the direct administration of running the payroll, including calculating and withholding tax or statutory contributions, filing reports, depositing funds for employees or issuing checks, and creating the payslips.

Exactly how this is accomplished and the range of services available will depend on the type of payroll provider selected.

4 Types of Outsourced Payroll Services: Pros and Cons

There are four main types of payroll outsourcing services available, each with advantages and disadvantages

1. Software/Online Services

There are payroll services offered online as stand-alone virtual systems, or to be used in conjunction with your existing accounting and HR software.  The advantage to this is the calculations are automated and payroll can be generated quickly after you input the data.  But the downside is that the software/system has to be programmed accurately and reflect the specific rules of the host country or you could end up with costly mistakes.

2. Full Service Payroll Providers

A full service provider will step into the shoes of your HR department for the purpose of running a local payroll.  The advantage here is the provider will typically be located in the host country and up to speed on all the local requirements, and will have a knowledgeable staff on hand to assist you.

The downside is that you will be handing over all of your employees’ data and information to a host country provider, and some HR departments may not want the loss of control or risk of the payroll service mishandling information...read more

Shield GEO makes international employment simple. Our customers use Shield GEO to employ and payroll hundreds of workers in over fifty countries. Find out more.


Go to the profile of Tim Burgess

Tim Burgess

Director, Shield GEO Services Ltd

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