Outsourcing Payroll? Here's Why You Should Choose an Employer of Record (EOR)

From accessing top talent to market expansion, there are many reasons why a business may consider employing an international workforce. But doing so can be complicated, especially when managing payroll. With complex regulations, varying tax laws, and cultural norms to navigate, there's a lot to consider—so it's no wonder that many companies outsource the task.

But who should you outsource it to?

In this article, we'll highlight the most significant challenges faced by companies paying international employees and explore how—by simplifying processes, reducing costs, and ensuring full compliance—an Employer of Record (EOR) service provider can help you overcome them.

Time, money, and risk: the biggest challenges of managing global payroll

While a global setup offers a vast array of benefits to businesses, it undoubtedly comes with its hurdles. A big one is international payroll processing.

Before you can pay overseas employees, most countries require companies to set up a local entity—a process that can be hugely time-consuming and expensive. Some countries will also have specific requirements, such as needing offices and capital in local bank accounts. Fulfilling these can be onerous, sometimes requiring company directors to visit the country in person.

Once your new entity is up and running, you must also ensure it fully complies with all local tax and labor laws. These vary significantly from country to country and can, of course, change at a moment’s notice. Staying on top of these obligations is no mean feat, and non-compliance can come with severe penalties for companies. And on top of all of this, you’ll also need to put systems in place to make sure that you can pay your employees accurately, on time, wherever they are.

In short, managing international payroll in-house takes time, costs money, and puts your business at risk. That's why outsourcing payroll to a global payroll service solution, such as an Employer of Record, can be hugely beneficial.

How an Employer of Record can help with international payroll processing

An EOR is a global employment service that helps companies navigate all the complexities of international payroll processing by taking on the employer's legal responsibilities—from making payments to adhering to local labor laws.

By outsourcing payroll to an Employer of Record (such as Atlas), you’ll enjoy all of the following benefits:

Full compliance with zero risk

One of the main advantages of using an EOR for international payroll is that they will ensure you’re always fully compliant with local rules, such as tax and social security obligations. Employers of Record specialize in staying up to date with any changes that might affect your company—and as they act as the legal employer for your overseas employees, they also assume all liability for compliance, so you can rest assured that your business is never at risk.

Punctual and accurate global payroll

Another significant challenge of having an international team is ensuring that global payroll is both quick and correct. Differences in time zones, currency conversions, and banking systems can all cause delays and administrative headaches. EORs, on the other hand, will be able to implement streamlined systems on your behalf, making it easy for you to ensure your international employees are always paid accurately and on time.

Reduced costs in the short- and long-term

Contrary to popular belief, outsourcing payroll functions to an EOR can be more cost-effective than keeping them in-house. Setting up a new entity can set your company back as much as $80,000, and managing international payroll internally calls for significant investment in hiring, training, infrastructure, and software. By partnering with an EOR, you can eliminate these overhead expenses. EORs already have the entities and systems needed to run your international payroll and will manage the process on your behalf for a fraction of the investment.

More time to focus on what matters

As well as being expensive, setting up an entity in a new country can be incredibly time intensive. While time frames vary between jurisdictions, it can take as long as 20 weeks in some regions. But by engaging an EOR such as Atlas, who already have established legal entities in over 160 countries, you’ll be set up and ready to go in a matter of days. And these time-saving benefits persist in the long run, too: your EOR will streamline the ongoing global payroll process, enabling your finance team to concentrate on more impactful tasks.

Access to valuable local knowledge and expertise

Managing a global team requires an understanding of not only the legal framework, but also of local customs and culture. One of the main advantages of a good EOR is their in-depth knowledge of all the countries in which they operate. By leveraging this expertise, you can ensure you’re making the right decisions for your company and employees, and avoid costly mistakes.

Atlas: the most efficient way to outsource international payroll

If you want to outsource payroll to an Employer of Record, look no further than Atlas—we can help you pay employees quickly and compliantly in more than 160 countries. As well as assuming all responsibility for global payroll compliance, we'll seamlessly handle payments for your teams across the globe, wherever they are, via one fully automated, globally intelligent platform.

To find out how Atlas can help your business with its EOR services, contact us today.