Company News — 3 min
Tired of the payroll headache? Eager to let someone else take care of the details?
You’re not alone. In Remote’s Global Workplace Revolution Report, decision-makers at small- and medium-sized businesses expressed concern about their ability to keep their finances compliant in a remote-first world. Companies outsource payroll more than any other function, with about half of U.S. companies trusting outside help to manage their finances.
Outsourcing payroll can make sense for companies with as few as two employees and as many as tens of thousands, but making the switch doesn’t happen automatically. To make a smooth transition — and protect your business and your employees in the process — you should first understand the reality of your financial situation.
Before you learn how, you must first understand why. Are you sure your business would benefit from outsourced payroll? Many companies realize immediate advantages, but it’s still important to recognize the signs you should outsource payroll.
For example, if you aren’t much of a numbers person, you probably need to outsource from day one. Your employees depend on you for on-time and error-free payments. If you can’t provide that, they may start looking for a more dependable employer.
If you have a small team and feel comfortable managing payroll yourself (or leaving it to a trusted team member), you may not need to outsource. However, keeping the function in house puts all the responsibility of compliance on you. That could expose your company to risk if not managed carefully by someone who appreciates the full weight of the responsibility.
Once you bring international team members into the picture, outsourcing evolves from an advantage to a necessity. Your business must work with an employer of record to hire full-time employees in other countries legally. Try to pay your international employees as contractors, and you could open yourself up to massive fines and penalties. Unless you want to waste time and money on a lengthy court battle in a country thousands of miles away, you would be far better off working with an employer of record.
If you find yourself wondering whether you need help, you almost certainly do. When you start reading articles with titles such as, “What to do before you outsource payroll?” you definitely do. Keep reading to learn how to get started.
Begin your payroll outsourcing process by taking inventory not only of your financial documents but also of your needs. Which employees will you need to pay through your new payroll provider? Do any of them have special circumstances?
Not all payroll providers service the same kinds of clients. If you don’t know the difference between a PEO and an EOR, for example, you may get deep into talks with a vendor you like before realizing they don’t offer a critical service you need.
Go through your roster of employees and ask yourself a few questions to figure out the kind of partner you need.
Don’t know the answers to all of these questions? Don’t worry. In speaking with outsourced payroll providers about your needs, you will learn more about location-specific requirements and how a partner like Remote can help you avoid expensive compliance mistakes no matter where you hire.
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