HR Mavericks

Eddy’s HR Mavericks Encyclopedia

Remote Employee Payroll

Are you moving to a more remote workforce? Hiring new employees in a different state or having current employees move out of state changes your payroll process. Have no fear — that’s where remote employee payroll can help.

What Is Remote Employee Payroll?

The go-to, all-in-one system for your out of state, international, and contractor payroll needs is remote employee payroll. This system is designed to make the life of an HR professional easier when it comes to paying location-specific employees. Remote employee payroll helps navigate the specific requirements for each employee's exact location. If you’re operating in multiple places, you can’t live without it.

Why Is Remote Employee Payroll Important?

If your remote employees are still in the state your organization is based in, payroll needn't change much. But limiting yourself to hiring only within your state is ineffective, and researching how to pay out-of-state employees is time consuming. With that in mind, let’s look into the benefits remote employee payroll can bring to your organization.
  • Broadens your hiring horizons. Remote employee payroll makes it more reasonable to broaden your candidate pool to out-of-state or international applicants.
  • Adds a layer of protection and support. Rules and regulations from state to state and country to country change frequently, and keeping up on them is a full-time job alone. A remote employee payroll system supports and protects your organization by doing that for you.
  • Removes additional administrative burdens. The administrative tasks for any HR role pile up daily. Moving to a remote employee payroll takes one thing off your list. Free up some time and mental space to focus on more strategic things as you keep your organization running.

The Types of Workers on Remote Employee Payroll

While the location of your office may be in one zip code, your remote employees can be anywhere in the world. Remote employee payroll applies to many different roles.
  • In-state employees and contractors who regularly work in a location outside of the office (this is only applicable if the remote work location has specific laws that differ from the location of the business. Some specific municipalities have their own regulations).
  • Out-of-state employees and contractors.
  • International employees.

How to Set Up Remote Employee Payroll

Let’s dive into the process of implementing a remote employee payroll for your organization.

Step 1: Identify Your Remote Employees

Take a census of your employees and see which of them fit into the categories that would classify them to be on a remote employee payroll. This will help you gauge the need for this type of help. You may decide to keep your payroll in-house or that outsourcing remote employee payroll to a third party would be the best option.

Step 2: Select a System

Once you have the list of those that need to be on a remote employee payroll, evaluate potential systems for your organization. You’ll want to check for the ability to pay employees in multiple states and/or internationally, evaluate the cost, and compare the time commitment vs what you are currently doing. Most systems, should you go this route, have a member of your HR team process the payroll; the system just provides you the vehicle and the support to do so.

Step 3: Consider and Evaluate Outsourcing Potentials

Having evaluated the possibilities, you may decide that it is time to give up the reins of payroll processing completely. While this can be a relief, you’ll want to make sure the vendor you select for your remote employee payroll outsourcing has the ability to keep up with your growing organization. In this option, you’ll provide the vendor with a file for every payroll that they will process on your behalf.

Step 4: Verify for Compliance

Lastly, whether you stay with an in-house payroll system or you’ve made the decision to outsource your remote employee payroll system, it’s best practice to verify continually for compliance. Your company will receive, at a minimum, annual notices updating the percentage that your organization should be contributing for payroll taxes for the locations your employees are working remotely. Other notices updating specific changes in law or tax brackets also come in. You need to ensure these are updated accordingly. While some vendors implement those updates, it’s your responsibility to make sure it's all kept current. One way to verify this compliance is to check the withholdings on a random payroll for out-of-state employees. This does not need to be done every payroll, but as you are implementing a remote employee payroll company or as your rates change year over year, it’s best practice to verify these are being computed correctly.
Shalie Reich

Shalie Reich

Shalie has over 4 years of experience working in a variety of HR positions and organizations including: working as an HR department "of one", working with a start-up based in Europe, to working in a fully established robust USA based HR department. Shalie has experience in multiple states and countries with all aspects of the HR spectrum. She has a passion to share her knowledge and experience to benefit the HR profession!
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