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When paying an employee in another country, there are a few things to keep in mind. How are you classifying them professionally? What are the tax obligations vis-a-vis the location at hand? How will you monitor and control the payments made cross-border?
It’s a complex situation to be in, but not impossible to understand or navigate. All you need is the right preparation and the right support. Here’s how to control your overseas salary payments.
Overseas Salary Methods
Payroll methods and obligations vary from country to country, with specific adherence being paid to tax. For example, in many countries around the world, it's commonplace for employees to be paid for 13 months, rather than 12. In American Samoa Salary and Wages, the minimum wage is $5.40 per hour for most industries. The Fair Labor Standards Act (FLSA) applies to employment within American Samoa, and the average salary for jobs in American Samoa is $54,701 per year or an hourly rate of $26.
Specific countries also have certain tax regulations. For example, in Spain, taxes on payroll are deducted quarterly.
Paying your employees overseas may be done in the following forms:
Classifying Employees as Independent Contractors
Classing overseas employees as independent contractors means you’ll have different payroll obligations for them. It may mean you avoid some tax obligations that the contractor, as technically self-employed, would have to deal with themselves.
Read more on the differences between contract employees and independent contractors in our blog on avoiding the complexities of international employment law here.
Paying Via Home Country Protocols
For shorter work abroad, employees can be kept on the payroll scheme and relevant obligations associated with the labor laws of your home country. However, this can depend on the trade agreements that your home and host countries have developed.
Third-Party Payments
Suppose you have a strong existing relationship with a company already on the ground in that country. In that case, you can pay employees through them, as they’ll be in a better position to adhere to the relevant compliance rules regarding payroll. You remit the employee’s salary through them. However, this does call for a good relationship with another business entity - it would most likely be a partner.
Paying Through a PEO
One surefire way of guaranteeing compliant and easily-controlled global payroll is by paying through a Professional Employer Organization. Coordinating international payroll is a challenging prospect, especially if done through multiple suppliers with different local legislation.
PEOs, on the other hand, simplify this process. By centralizing payroll through one digital platform, paying overseas employees is easy and kept in line with local labor laws and tax obligations. After all, PEOs are experts in local knowledge and global compliance legislation.
Here at Global Expansion, we employ the Equus suite to manage your global payroll effectively. However, this is fully controlled by you, meaning that the act of monitoring and controlling overseas employee payroll couldn’t be more effortless.
Real-Time Overseas Payroll Management
In working with us, you’ll enjoy our exclusive rights to the Equus suite. With Equus AssignmentPro, we offer end-to-end payroll management for all your global employees. Through the platform, you’ll be able to benefit from quick tax calculations and salary review management capabilities. Similarly, AssignmentPro offers the ability to:
- Create pay packages and balance sheets with a simple click.
- Report pay to either primary, secondary or shadow locations.
- Send payroll packages to employees in real-time, through device connectivity.
This type of control is an extraordinary strength that you won’t find in other technologies. The Equus suite acts as a counterpart to your expansion process, helping to support you while still giving you full control over employee and payroll management.
You can create fully-developed payroll instructions, including functionality for payroll calendars, loading global pay or wage codes and managing split pay. You can also upload and track compensation output files to quickly generate annual compensation reports for tax providers, amongst many other capabilities.
Working with a PEO such as Global Expansion offers enhanced expansion maneuverability and freedom for you to focus on crucial business developments. With our exclusive rights to the Equus suite, you can maintain full control of your overseas payroll, which is a vital part of the international expansion process. To learn more about this process and the avenues available to you, download our handy expansion guide.
Going Beyond Borders: Expansions Considerations For You
In our guide, ‘Expansion Considerations for Rapidly Growing Businesses’, you can learn about many viable expansion options, their pros, cons and implications. Whether you’re just beginning to consider expanding globally or have already started, this is a great resource for those looking to not only expand their business, but their knowledge as well.
To get your free guide, click here.
