Doing business abroad comes with a variety of challenges, but few aspects of your expansion are as daunting and complex as implementing global payroll. Fortunately, there are a number of ways you can prepare to meet this challenge.
Here, we explore how businesses can prepare themselves for setting up global payroll in a new market during international expansion.
Research and Decide
Before establishing any sort of strategy for your payroll implementation, it is important to understand the unique challenges you will face in your target market. Fortunately, a number of organizations now publish their own Global Payroll Complexity surveys, which will help you to determine the level of difficulty you will face in navigating your chosen market’s payroll system.
Having this information to hand will help you make the most informed decision when it comes to the choice between keeping your payroll in-house or outsourcing it to a specialist, third-party organization who can take care of your accounting services. For companies with the capability to take on the challenge, retaining an in-house global payroll department often cuts down on disruption to your existing HR practices and provides significantly easier oversight through the entire process.
However, many companies may find that their requirements are too complex and that a third-party provider can more sufficiently provide the necessary expertise and resources. If you do choose to rely on third-parties, it is advisable to limit the number of providers you use to avoid errors and delays.
Begin Your Preparations Early
The implementation of your payroll should form an early part of your expansion strategy. This is especially important for markets with very high complexity, such as those in Continental Europe, but the same principle should apply no matter where you are hoping to achieve your overseas growth.
Having all the necessary infrastructure and systems in place before you expand into your new market will ensure that things run smoothly and efficiently, and help to cut down on delays and unforeseen complications.
One particular aspect that is often overlooked at this stage is ensuring that you have valid employment contracts for your overseas employees. These are often mandatory under local employment laws and they can be required for setting up payroll.
Establishing the legal contracts for your overseas hires should, therefore, form an integral part of your overall expansion strategy.
Research Your Legal Structure
Whether you choose to retain your own team or seek the assistance of outsourcing firms, it is important to clarify that your business has the correct legal structure within your chosen markets. Setting up a legal entity or registration within your new market may be required to ensure regulatory and tax compliance, and avoid setup delays and potential liabilities. This will also impact your employment contracts as it will determine which entity is the employer of record.
Establishing a payroll in your new market that works efficiently is a major step towards achieving genuinely global growth. Taking the time to prepare adequately with thorough research, a cohesive strategy and a clear idea of your objectives can play a significant part in ensuring that your business’s international expansion is a resounding success.
Author’s Bio: Galvin International is an international business expansion concierge that provides solutions for global growth. Get in touch to learn more about their global payroll services.