How Global Teams Can Manage Payroll

Managing payroll and employee payments is an important part of your business, and when it’s done incorrectly, it has big implications for compliance and employee satisfaction. Failing to pay compliantly can lead to harsh regulatory fines, impact your ability to operate in certain areas around the world, and damage employee trust.

Therefore, it’s important every business understands payroll, particularly businesses that want to tap into the global talent network. In this article, we’ll help you build a foundational knowledge of what payroll is and why it’s essential to get it right. Let’s get to it.

What is Payroll Management?

The meaning of payroll management is simple on the surface. Essentially, “payroll” is the HR term referring to the processes that make sure employees receive their wages promptly and without any issues. But payroll and payroll management are about much more than just paying your employees.

Payroll management also ensures that businesses remain compliant with regulatory bodies and government agencies and that the appropriate taxes and withholdings are remitted from employee wages. Additionally, payroll management goes hand in hand with your business’ benefits package and plays an important role in recruiting staff and keeping them happy.

How to Manage Payroll

The payroll management process can be broken into three parts, each of which is equally important for maintaining regulatory compliance and avoiding any snares along the way. Let’s take a look at the steps for doing payroll here:

Pre-Payroll Data and Information Gathering

The payroll management process begins with businesses gathering, verifying, and sorting the information they’ll need to eventually process payroll.

This information includes things like employees’ payroll numbers, how many hours employees worked, whether or not they took vacation or sick time, and whether they took any unpaid leave.

Additionally, if an employee is hired, terminated, or has changes to their benefits during the pay period, that will also be noted during the pre-payroll phase.

Calculating Employee Pay

The second step of the payroll process is calculating each employee’s pay. An essential part of this step is accurately withholding taxes and deductions for various benefits. This step of paycheck management keeps your business compliant and ensures your employees are taken care of and receive the correct compensation.

By the time this calculation is complete, you’ll have information for the net pay each employee will receive.

{{tag-featured-event}}

Making Payments to Employees

Finally, you will issue compensation to employees. You must also make sure that the taxes and other withholdings are remitted to the appropriate government agencies and any third-party benefits providers. Make sure to keep records from each pay period in case you need to reference them in the future.

As you can see, payroll can be a lot of work, even for businesses with just a handful of employees in one location. As your business expands globally, the payroll process can become increasingly difficult. To make matters as simple as possible, turn to a global payroll solution platform like Omnipresent to ensure your business is paying compliantly.

What Are the Different Ways to Manage Payroll?

There are a number of common ways employers manage payroll; however, the method your business ends up choosing will largely depend on things like your company size, where your team is located, and what your company’s priorities are. Let’s take a look at some of the most common types of payroll management systems:

Manual In-House Payroll

For small businesses that only have a handful of employees, the most obvious option for managing payroll might be to do it manually, in-house. However, doing in-house payroll is cumbersome and may not be a sustainable solution as your business grows. As a business gets larger, the increasing number of variables can lead to errors, inconsistencies, and various regulatory issues.

For businesses that are expanding globally, it can prove challenging as well, as HR teams might struggle to learn or fully understand a foreign jurisdiction’s payroll taxes. Therefore, as businesses grow, they’ll often turn to one of the next payroll management solutions.

Payroll Management Software

Another common way businesses manage payroll is by using payroll management software. These systems allow businesses to keep their payroll in-house while reducing some of the struggles and issues typically associated with manual in-house payroll systems.

Payroll management software allows businesses to automate some of the most difficult and time-consuming parts of the payroll process and mitigate many risks that come with doing payroll manually. For example, updates to tax codes or regulations could be missed if one employee is responsible for the payroll. However, payroll management software will usually automatically update to reflect those changes or at least inform you if you need to take action.

However, payroll management software still might not have the capabilities to manage international payroll processing. For that purpose, businesses are best off outsourcing their payroll to an expert payroll management partner.

Payroll Management Services

Payroll management services are one of the best choices for businesses that are expanding globally or simply want to outsource their payroll systems for ease and peace of mind. The main advantage to global payroll services is that they’re capable of compliantly handling and managing payroll systems across the globe.

This means that businesses can tap into a global talent pool while knowing their payroll will be fully compliant with tax codes and regulations in countries they’re not familiar with. Trusting a global employment partner like Omnipresent to handle your payroll can help reduce HR costs and alleviate your business’ administrative burden.

To learn more about Omnipresent’s global payroll solutions, book a consultation today.

Challenges Businesses Face When Managing Payroll

The challenges your business could face while managing your own payroll depend on a number of factors.

• Compliance: Businesses that are managing their own payroll manually are putting themselves at risk of non-compliance each time they run payroll. A simple miscalculation can be the difference between an employee not getting paid properly or the business failing to remit the correct amount of taxes to a government agency. 
• Lost time: Doing your own payroll can sound like a great way to save money, but when hours are being devoted to it, every business will grapple with whether the time spent on payroll would be better used elsewhere. Unless you have a dedicated team, outsourcing the task is often a better solution than managing payroll in-house. 
• Lack of expertise: Particularly when companies rely almost entirely on payroll management software, they may find issues their software can’t guide them through. In these instances, being without a dedicated HR expert can lead to issues with compliance. While top payroll-management software often has customer service available, it still might not be able to address your problem completely.

Important Things to Know About Payroll Management

Let’s summarize some of the key points you should take away as you consider your business’ payroll management process: 

Handling Payroll Properly Is Essential for Keeping Employees Happy

Payroll accounts for many other perks your business might offer, such as paid time off, sick leave, and unpaid leave. Therefore, payroll is intimately tied to the benefits that make your business an attractive company to work for.

Using global payroll services can ensure payroll is adjusted according to the area your staff live in. This helps your business respect local traditions, such as public holidays. 

Accurate Payroll Management Processes Are Critical for Compliance

While payroll reporting requirements will vary based on your business’ size, where your business is operating, and where your team is located, it’s important to report payments, taxes, and other deductions at the appropriate times to avoid any regulatory fines and to ensure your compliance with labor standards. 

Payroll Management Is about More than Just Your Business’ Success

Payroll and payroll taxes often contribute to important social programs such as parental leave and state-sponsored health services. Ensuring that your payroll is properly handled isn’t just good for your business; it’s good for your employees, their families, and the communities they live in.

Other Payroll Management FAQs

By now, it’s probably clear that payroll management’s impact on your business’ success and your team’s satisfaction can’t be understated. However, payroll management is a complex topic, and you might have additional questions, so we’re answering some common payroll questions here:

How Often Should You Run Payroll?

The payroll schedule that your business settles on will depend on several factors. Some of these factors include legal requirements; some local jurisdictions, unions, or employee collective bargaining agreements may require payroll to be run at a specified cadence. However, this won’t be the case everywhere.

In some cases, how often you run payroll may simply be at the discretion of your business. Common payroll cadences include weekly, bi-weekly, semi-monthly, and monthly pay periods. You might choose a cadence based on factors such as the amount of time it takes to run payroll for your business and what running payroll costs your business.

How Long Does Running Payroll Take?

Running payroll will take a different amount of time for almost every business. It’ll depend on things like how large your business is, as well as what type of payroll management system you use.

For businesses that manage payroll themselves, running payroll may take a significant amount of time. Businesses that use payroll management software - rather than, say, a spreadsheet - can often shave a significant amount of time off the payroll process. Businesses that outsource payroll will typically spend the least amount of time running payroll.

What Should You Include in Your Payroll Policy?

A payroll policy is an element that can have a big impact on keeping your business compliant. It also provides a guide for any questions from employees or regulators when it comes to your business’s payroll.

Payroll policies provide guidance and clarity by defining things like: 

• Breaks: A payroll policy will typically clarify whether short breaks like lunch are paid or not.
• Defining the workweek: Defining when the work week begins and ends is essential for accurate reporting, as well as setting expectations for employees. Including this in your payroll policy is important for being transparent with employees and regulators.
• Deductions and taxes: A payroll policy should include information on what taxes and deductions are being taken from an employee’s paycheck and why they’re being taken.
• How working time is calculated: For hourly workers, it’s important to have a clear policy outlining how working time is calculated.

Payroll policies can include countless other items as well. A good payroll policy will provide transparency for employees, hold a business accountable, and provide a written record for any disputes that may arise.

What’s the Difference Between Full-Cycle Payroll and Off-Cycle Payroll?

Full-cycle payroll is essentially just your standard payroll process. It refers to the total time between employee payments. On the other hand, off-cycle payroll refers to non-standard payments made to employees. This typically occurs to remedy a payroll error or make up for missed payments.