Payroll Outsourcing

Payroll outsourcing means entrusting another company to handle your company’s payroll. This external company takes care of paying your employees, calculating salaries, deducting taxes, and following all the local employment laws. It’s a popular choice for businesses that don’t have an internal payroll team or want to save time and reduce mistakes.

For example, instead of spending hours each month working out what each employee should be paid, making payslips, and sending out payments, you can let a payroll provider do it for you - safely and correctly.

Here’s how payroll outsourcing usually works, step by step:

1. You share employee details, which include information like names, job roles, salaries, tax details, bank account numbers, and hours worked.
2. The payroll provider calculates salaries based on the information you provide, determining gross pay, tax deductions, insurance contributions, and net pay (the amount the employee actually receives).
3. Payslips are generated and shared with your employees, showing a full breakdown of their pay and deductions.
4. The payroll provider then processes payments to all your employees and the local tax authorities on your behalf.
5. You receive all the necessary documentation and reports for accounting and compliance purposes.
6. Lastly, if anything changes - like a new hire, salary update, or employee leaving - your provider adjusts the payroll accordingly.

This process repeats every pay cycle (monthly, fortnightly, or weekly), and many providers offer a simple dashboard where you can see everything in one place.

Saves time

Managing payroll in-house takes a lot of time and effort. With outsourcing, you no longer need to calculate salaries, check tax rules, or create payslips manually.

Ensures compliance

Payroll laws can be confusing and change often. A payroll provider stays updated with local rules so your business doesn’t miss important deadlines or face penalties.

Improves accuracy

Small mistakes in salary or tax deductions can cause problems. Outsourcing reduces the chances of errors because experienced professionals and automated systems do the work.

Helps you scale your business

If you’re growing quickly or hiring in new countries, payroll outsourcing makes it easier to manage more people without increasing your internal workload.

Cost-effective

Hiring full-time payroll staff or buying expensive software can cost a lot. Outsourcing usually costs less and gives you access to expert services.

Supports global teams

Many providers can handle payroll in multiple countries. This helps if you have remote employees or plan to expand your team internationally.

Also read: Pros and Cons of Outsourcing Payroll

If you’re hiring in different countries, there are a few ways to manage payroll through outsourcing:

Contractor management solution

If you work with freelancers, gig workers, or part-time contractors, a contractor management platform helps you:

• Create contracts
• Make quick bulk payments
• Stay legally compliant in each country

Employer of Record (EOR)

An Employer of Record becomes the legal employer of your team in a specific country. It’s a good option if you don’t have a local business setup but still want to hire full-time employees abroad. The EOR handles:

• Payroll
• Taxes
• Benefits
• Legal compliance
• Local contracts

You manage the employee’s daily tasks, while the EOR takes care of the legal side.

Global payroll software

Some companies use global payroll software to handle payroll in multiple countries. This usually works best if you already have legal entities in each country, since software alone won’t help you stay compliant.

The services you get depend on the provider and your business needs. Here are the most common features:

• Multi-country payroll processing: Handle payroll for employees in different countries through one provider.
• Tax compliance: The provider makes sure your tax payments and reports are correct and submitted on time.
• Benefits administration: Some providers manage employee benefits like health insurance, pension, and paid time off.
• Local compliance: They ensure you’re following each country’s employment laws, like minimum wage, leave policies, or social security contributions.
• Reporting: You’ll get regular reports to help with budgeting, audits, or financial planning.
• Multinational payments: The provider handles currency conversion and sends payments to employees in their local currencies.
• Employee support: Employees can view their payslips, ask questions, or update details using a self-service portal.

The cost depends on a few things:

• How many employees or contractors do you have
• The countries they’re located in
• The level of service you need (basic vs full-service)

Some providers charge a flat fee per employee per month, while others may charge a percentage of your total payroll. Extra services like year-end reports, contract management, or benefit handling may cost more. Check out Native Teams' pricing.