How to Set Up Remote Worker Payroll Simply and Safely

How to Set Up Remote Worker Payroll Systems

How to Set Up Remote Worker Payroll Systems

September 12, 2022


Picture of INS Global



Picture of INS Global



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Key Takeaways

  1. Hiring and Managing Remote Workers Overseas means being aware of unfamiliar employer responsibilities
  2. Independent contractors may provide some benefits over remote workers, but they aren’t a solution for every situation
  3. Outsourcing overseas payroll saves time, money, and management resources


Having workers ready to operate overseas is essential for any global expansion strategy. This may mean employing new staff or setting up new payroll application software for existing overseas. In this case, the need for robust and efficient multicounty payroll systems is vital.

This article examines how you can set up payroll for remote team taxes or pay overseas independent contractors. It also explores companies’ potential benefits by comparing global employment strategies.


Paying Remote Workers in the US


For staff hired or sent to work in the US for overseas companies, several steps are required to pay them securely. As regulations concerning payroll taxes differ from state to state, having robust systems in place from day one can save you time later.

The first step is to classify your remote work staff correctly. This means understanding the different worker classes surrounding employees and independent contractors as determined by the IRS.

For workers fitting the definition of employee, you must be ready to organize tax and payroll on their behalf before they start. Small businesses in particular should be extra aware as mistakes at this stage can cause significant fines or tax liabilities later.

For employees, you’ll have to fully understand all the federal and local taxes applicable to your workers. This will also require setting up a company structure in the US. Should you want your workers to operate in multiple states, you have to give extra thought to the home state of your company.

Suppose an independent contractor agreement might better fit your requirements. In that case, payment requires a W-9 form exempting you from organizing taxes and payroll on the contractors’ behalf. This kind of relationship still requires well-made work agreements and constant supervision. Abuse of the mistake via mistakes or intentional cheating can lead to significant fines.

At the same time, an in-country partner can provide payroll outsourcing services to handle these matters on your behalf. Below, we will summarize some of the most significant advantages of this system for overseas employers.


Can a US Citizen Work Remotely from Europe?


US citizens wishing to work in the EU must ensure they can reside and work there. This would likely mean having an already established company structure that can employ them and provide visa support. It also means understanding the local tax system and having all systems in place before beginning operations.

Remember, US citizens are subject to global taxes wherever they are based. This means that these additional procedures and costs factor into decisions around hiring or transferring US workers abroad.


How to Pay Remote Employees in Europe


Deciding on the best method of paying remote workers in Europe depends on the costs and remote team payroll taxes required. Taxes for remote workers may have to be paid separately in both countries, depending on the target market and principal place of business.

With a company structure already set up in a European country, employers can organize payroll via the normal local channels. These will typically require you to provide pay slips in the local language alongside making all necessary remote worker income tax deductions. However, this method requires a company and HR staff to know every local requirement and procedure.

For the actual payment itself, companies should find methods that avoid international bank transfers, as these will quickly add up in cost. Alternate methods like direct transfer or online services like Paypal may work in the short term. Still, they can become risky depending on the taxation requirements in place.

Without a local entity, it would be best to work with a local payroll outsourcing service provider to manage requirements on your behalf. They can do this while paying your employees as safely and efficiently as possible.


Independent Contractors or Remote Employees? Which Option is Better?             


Independent contractors based in your target market can seem the most straightforward option when considering a move overseas. Managed well, they allow you to get started without the employer responsibilities associated with full or part-time employees.

However, misusing the independent contractor status can have severe repercussions for companies. It would be best to genuinely consider your needs and the differences between the two options before making such a decision.


–         Management Hours


Independent contractors require little to know management time in their day-to-day work. This can sometimes be problematic as these workers must be allowed to determine how, when, and where they complete their jobs. Employers may feel unable to make decisions on critical aspects of the working relationship if they require work done in a certain way.

In contrast with in-office workers, remote workers may require fewer management hours. However, this relationship requires employers to be prepared to allow remote workers greater flexibility and trust. Employers must maintain a delicate balance between their remote workers receiving preferential liberties or feeling left out.


 –         Employer Responsibilities


An employer-employee relationship is highly protected in most labor markets worldwide. It often comes with many employer responsibilities that can be slow to manage or subject to damaging fines for abuses.

Making your remote worker’s tax deductions on their behalf may be complicated for overseas companies. You will also be obligated to arrange business expenses or even home office expenses in some cases. This is particularly true for those seeking a long-term solution.

On the other hand, an independent contractor agreement allows employers to avoid many of these responsibilities. This benefit saves time and money in the short term.

Adequately demonstrating that the relationship between company and contractor is correct can be difficult. In these cases, a well-worded contract is necessary.

It can also be challenging for companies to plan for a long-term future. There are often several additional roadblocks in place should they decide to hire a contractor full-time later down the road.  


–         Company and Team Spirit


Having your workers perform their jobs overseas as employees or contractors means needing to create a new kind of team spirit. Remote workers are much more likely to suffer from problems like proximity bias than in-office staff.

Similarly, employing the services of too many independent contractors can cause trust or uncertainty amongst existing employees. This is especially true if those contractors are based overseas and don’t share the same cultural background.

In the end, which kind of agreement is best for you is based purely on your specific situation. You should always ensure that your choice is feasible for your target market.


What are the Advantages of Outsourcing Hiring Overseas?


Even after deciding how best to manage overseas staff, you may lack various HR functions in your target market. That’s where having a local partner to provide overseas hiring and recruitment services can be a great advantage.

With the right partner, you can even combine hiring support with employment outsourcing services. A PEO (Professional Employer Organization) or EOR (Employer of Record) can be your one-stop solution to all your overseas needs. These options allow you to get started immediately without needing a local entity.


–         Local Expertise Wherever You Need


The biggest problems with going overseas for your hiring and employment needs surround the uncertainty of unfamiliar local regulations and best practices.

A local outsourcing provider means you will never miss essential information. Their expert help can connect you with the best in local talent quickly and efficiently. With the right local partner, there’s no need for a long and expensive learning curve. Instead, you can hire, onboard, and correctly pay new employees with the right partner without needing any local entity.

The right in-country partner can guide you to the most efficient ways to organize your payroll and tax structures in your target market. Benefits include home office deductions or local tax incentives to save you and your remote workers money.


–         Boosted Efficiency to Save You Time and Money


Streamlining your hiring and employment needs saves you the time required to set up a local entity. You can also manage all your necessary HR functions for a single monthly fee.

Rather than employ new staff to oversee new procedures, an outsourcing services provider gives you all the functions you require.


–         Developing Talent Pools and Networks        


The right in-country partner will give you access to your target market’s time-tested resources and networks. Even when hiring remote workers, an experienced partner can be a significant boost to the efficiency of your hiring and onboarding processes.

Outsourcing means a more comprehensive range of potential applicants through established online and offline networks, letting you bypass expensive setup procedures.


–         Have Your Current Employees Focus on the Tasks that Matter     


It takes time to learn proper procedures or how to use new systems like payroll application software (especially if they require fluency in the local language). This removes existing employees from other more pressing concerns that lead more directly to your growth and long-term success.

Considering multiple countries for expansion can mean large amounts of wasted time. Partnering with a service provider, you receive the help you need to focus on what matters to your growth goals.     



How INS Global Can Help You Run Payroll Remotely


INS Global is a PEO, EOR, recruitment, and payroll outsourcing services provider with over 15 years of experience making the most of the global market.

We provide legal support in understanding your options and building compliant employment solutions overseas. Whether you want to outsource all your remote worker tax deductions or hire professional contractors, INS Global has services to meet every requirement.

With our expert support, your employees can work anywhere while paying taxes quickly and easily, knowing their needs are fully taken care of.

We provide a simple method of global expansion for a low cost monthly fee. With INS Global, you have access to all the HR functions and legal advice you need to succeed.


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