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What is an International Payroll?

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  • Written By: Tess C. Taylor
  • Edited By: W. Everett
  • Last Modified Date: 26 October 2016
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An international payroll refers to the method by which multi-national organizations pay salaries and wages to employees and contractors who perform work on behalf of the organization. For any organization that does business and has employees or contractors working on a global scale, having efficient international human resource and accounting administrators and updated payroll systems in place saves time and can prevent legal problems from arising. Handling payroll across many regions can often be a detailed process that demands the expertise of experienced international payroll specialists and the payroll software that can manage many different wage, tax, withholding, and other payroll accounting functions simultaneously.

A well managed international payroll accounting process starts with skilled human resources and payroll accounting personnel who are trained to handle the uniqueness of managing payroll for different nations. Tax, withholding, and wage laws are vastly different for many regions around the world, therefore the payroll specialists must be able to stay on top of payroll rules and regulations in order to protect the interest of the organization. These aspects of handling payroll are often carried out using special international payroll software, which calculates payroll for each region..

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In addition to handling basic legal payroll accounting functions, international payroll specialists are involved managing in the unique issues that working abroad creates. It’s obvious that getting a paycheck should be the most critical part of working, however, this can be a challenge with employees working in remote locations. International payroll must be handled with care to ensure that employees everywhere receive timely pay via paper checks, electronic deposits, and transfers in a secure and efficient manner.

There are also specific regional factors that can affect international payroll management. These factors may be cultural and social, as working in other countries often means working under different guidelines. Common occupational wages for different regions can vary greatly so these rates must be carefully handled to avoid discriminatory payment practices. Also, it may be perfectly acceptable in some countries for employees to pay for customer’s meals and entertainment and expense these items on payroll reports. However, in other countries it is forbidden to engage in or reimburse for these activities on the company time.

Due to advances in technology, international payroll can be handled efficiently and with regional laws and cultural norms in mind. Carefully managed international payroll processes help companies to be successful. By managing the very complex aspects of compensation across many nations, a company can generally expect positive results.

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