If you Googled “payroll best practices” 20 years ago, you’d have found the following payroll tips:
- Keep physical files organized and Excel spreadsheets detailed
- Double-check your manual payroll calculations
- Stick to your company’s (one-size-fits-all) payment schedule
Fast forward to today, and payroll 101 looks a whole lot different — especially when you’re managing a global team.
Now, payroll management best practices cover how to manage different vendors or oversee tax systems, employment laws and global payment schedules — all while maintaining accuracy and compliance.
A strong payroll management process sets global teams up for success. But, good global payroll management goes beyond simply paying employees on time. Here, we’ll show you the best payroll practices for global teams and the tools that help optimize your payroll processes. We’ll also offer insights from the experts.
Payroll best practices
Payroll mistakes are more common than you think; the average business makes 15 errors per payroll period. And this problem is only exacerbated when managing payroll on a global scale.
The best payroll strategies help you avoid these, including everything from the preparation of payroll and optimizing payroll functions to safeguarding sensitive data and creating watertight policies. Let’s take a closer look…
Automate your payroll processes with a global payroll platform
Automation is not just a trend in payroll. The more manual your processes, the higher the risk of costly mistakes. That’s why our best piece of payroll advice is this: automate your payroll processes with a global payroll platform that’s designed to reduce manual work, make paying employees across the world easy, and keep you compliant across multiple regions.
Payroll best practices can help you avoid costly global payroll mistakes, but automated payroll features take the guesswork out of payroll planning. A solution like Multiplier can help you with:
- Tax calculation, filing, and reporting
- Payroll processing, including accurate calculation of benefits and compensation
- Multi-currency conversions
- Compliance with tax laws and labor regulations
Integrate payroll with HR tools
We’ve heard it before — software siloes slow down even the most efficient teams. They also create bottlenecks and prevent businesses from making data-driven decisions. In fact, data silos cost the global economy a staggering $3.1 trillion annually.
The same story is true for global payroll teams. Aware of the limitations that fragmented systems have on their operations, 35% plan to enhance payroll integrations with other business-critical tools in the next few years.
Integrating payroll and HR systems enables the flow of data between both functions to improve accuracy. This integration has several other benefits:
- Reduces manual data entry
- Minimizes errors
- Eliminates duplicate data and tasks
- Removes the reconciliation of mismatched data
- Facilitates accurate, real-time reporting
When you integrate your payroll and HR system, updates made in one platform automatically reflect in the other. For example, when you onboard a new employee through your HR system, their payroll details — salary, benefits, and tax information — will also update in the payroll system instantly.
Look out for a solution, like Multiplier, that makes integrations easy. Our solution is designed without lock periods so you can sync data such as timesheets across software.
Create and communicate a clear payroll policy
Knowing how to manage payroll begins with a solid payroll policy outlining key information like payment schedules, salary structures, benefits, and compliance requirements.
For example, while a bi-weekly payment schedule is standard in the US, monthly pay cycles are more common in many parts of Europe. Establishing clear guidelines on pay frequency, overtime rules, and benefits structures ensures everyone is aligned.
Ian Giles, Global Payroll and People Leader advises: “Take stock of where you are, and simplify and standardize wherever possible. Create global frameworks for payroll, reporting, and auditing while allowing for regional customizations, and create a clear set of policies that outline company expectations globally.”
But your payroll policies shouldn’t just exist on paper — they need to be clearly communicated and easily accessible to your global team. You should also conduct regular check-ins to address payroll-related questions and gather feedback from relevant stakeholders — including your employees.
Maintain data privacy and security
Complying with local data security and privacy protocols is a critical payroll best practice.
Global payroll data management involves handling sensitive employee information. Your payroll system is home to employee tax identification numbers, addresses, bank account details, salary information, and more. And even large, well-established companies aren’t immune to payroll data breaches. In 2023, cyberattacks on British Airways and the BBC in the UK exposed employee payroll information.
Not only should your payroll system be SOC 2 Type I and Type II certified, but you must comply with local data protection regulations, including GDPR in Europe and HIPAA in the United States for health-related information. (Pssst – Multiplier can help with this too).
Payroll compliance best practices
Payroll and compliance go hand in hand, but keeping everything aligned isn’t always easy.
With different tax laws, social contributions, and labor regulations in every region, even a small mistake — like missing a deadline — can lead to serious penalties. As Sagar Khatri, Co-Founder and CEO of Multiplier, warns: “Even if you’re delayed by just a day paying social contributions, you’ll pay a large fine. It’s important to understand your risks.”
The risks are real — over 50% of businesses have been fined for payroll non-compliance in the past five years. So, how can you stay ahead of it all?
Stay updated on labor laws
Labor laws vary widely — not just from country to country, but sometimes even within regions. In the US, for example, each state has its own tax rules, employment laws, and compliance requirements. As Sagar Khatri, Co-Founder and CEO of Multiplier, says: “In the US, hiring in 50 states is just like hiring in 50 countries.”
Some states and countries have strict rules on overtime pay, minimum wage, and mandatory benefits like paid leave, while others have more flexible labor policies, making compliance even more challenging. As Anna Lettink, Global Payroll Expert and HR Tech Strategist, says, “The rules are often changing, very specific, and very detailed. They often deal with concepts that are very normal to the working population, but very strange to people who don’t sit inside that country.”
Compliance hinges on being informed. Make sure you regularly review changes to relevant labor laws, subscribe to government updates, and join industry groups to help you stay ahead of any changes. Or save time by gaining compliance support from a company like Multiplier.
Ensure accurate employee classification
Misclassifying employees can happen easily when you’re managing payroll for multiple employees across different countries and don’t have a clear handle on local labor and payroll regulations.
This leads not only to administrative headaches for your internal teams, but also serious legal issues. For example, in the US, misclassifying a contractor as an employee could lead to fines, wage audits, and even lawsuits.
Regularly reviewing and auditing your global employee classifications ensures you’re staying compliant. You can also use an Agent of Record to cut out all the stress and ensure correct classification without work.
Accurately manage payroll tax compliance
As well as classifying employees correctly and being aware of the different tax filing deadlines in different countries, you also need to accurately calculate:
- Income taxes based on local tax brackets
- Retirement contributions and pension programs
- Payroll taxes for healthcare
- Relevant tax exemptions
Pro-tip: Global payroll software with built-in tax compliance features can help automate this process and reduce the risk of human error.
Maintain accurate payroll records
Keeping detailed and accurate records is not only a legal requirement in many places, but it also protects your business in the event of an audit. This is especially important for businesses running global payroll.
You should maintain accurate records of the following:
- Hours worked
- Wages paid
- Pay stubs
- Tax withholdings and forms
- Changes to employment terms
Setting up a regular schedule to review and reconcile your employee and payroll records enables you to catch any discrepancies early. By centralizing your data inside a global payroll platform which comes with reporting functionality, you can also stay on top of your records more easily.
Stay on top of key deadlines — and set up alerts so you never miss them
Missing payroll deadlines can result in penalties, but that’s not the only consequence to be aware of. Lettink notes how payroll errors can have much wider ramifications. “Payroll mistakes impact both external reputation and internal costs. If you continue to make mistakes employees, will pack up and leave,” she says.
To keep everyone involved in payroll management on the same page, create a compliance calendar and set up automated reminders for key deadlines like tax filings, payment due dates, and benefits enrollment periods across the countries where your employees are based. Or save time and use a global payroll platform that brings multi-country calculations and reminders into one dashboard, automatically.
Carry out regular audits
Performing routine, global payroll audits helps you catch and correct payroll mistakes before they become serious issues, identify challenges and risks within your processes, and prepare for potential external reviews.
When conducting audits, focus on areas like employee timesheets, tax withholdings, and benefits deductions — these are common areas where mistakes can easily occur.
Tools that help you optimize your payroll processes
With the right set of tools, you can put all of these payroll best practices into action. Here’s a selection of tools that can help you efficiently run global payroll, stay organized, and maintain compliance across different regions.
Global payroll platform: Multiplier
How much easier would global payroll management be with a single tool to help you handle every step of the process?
Global payroll platform Multiplier is that tool. Instead of spending your operating budget on outsourcing payroll to different providers in different countries, Multiplier enables you to manage your global team from one platform.
Designed specifically to not only help you pay global employees easily but to handle the complexities of international compliance, Multiplier’s core features include:
- Automated global payroll management across multiple countries and 100+ currencies.
- A single dashboard to view and approve automatic calculations, make multi-currency payments, and generate local-language payslips.
- Integrations with key HR, accounting, and payment systems.
- Multi-country, multilingual payslips that meet local labor laws and regulations.
- Expert legal support to keep your business, payments, benefits, and taxes compliant in every country.
- Bank summary reports detailing payroll payments, total credits, and debits — ensuring financial transparency and compliance.
- Variance reports that highlight pay cycle differences, salary trends, and potential compliance risks.
- Cost center reports that provide financial summaries by period or department while adhering to local regulations.
Employer of Record platform: Multiplier
Multiplier also offers an Employer of Record (EOR) solution that takes on responsibility for compliance in over 150 countries. By handling all the legal, administrative, and compliance responsibilities, here are the tasks it takes off your plate:
- The onboarding process: We gather the necessary information needed to onboard new hires and create compliant contractors.
- Payroll and benefits: We handle the entire payment process, including tax calculations and withholding, and localized employee benefit administration.
- Compliance: We stay up to date on local labor laws, ensuring you comply with employment contracts, tax regulations, and other legal requirements.
Hire, onboard and manage your distributed workforce, all from one centralized platform that is compliant by design. While our Agent of Record solution is designed to help you compliantly hire contractors, our EOR hires employees on your behalf; you can view all employees in the same dashboard inside our global payroll system.
Take control of global payroll with Multiplier
While maintaining payroll best practices are important, it’s easy for them to become a tick-box exercise rather than a strategic approach. They can also quickly lose their impact when you’re juggling different regional requirements.
With Multiplier, not only can you automate tax calculations, manage employee benefits, and stay compliant with local labor laws, you can consolidate your entire workforce’s payroll needs into a single platform.
No matter where your team is located, our expertise in international payroll keeps you ahead of changing regulations, so you can focus on strategic work.
Ready to simplify your processes and pay global teams effortlessly? Book a demo today.
