Payroll compliance is an essential part of running any business, big or small. It’s the process of meeting the federal, state, and local laws that regulate how businesses pay employees and the associated payroll taxes.
Though payroll compliance may sound simple, it can be tricky once you consider the growth of nationally and internationally distributed teams. Payroll rules and regulations often vary significantly from one state or country to another, so staying compliant with all those laws gets complicated.
Failing to comply with payroll rules can be detrimental to your company. The consequences can affect your workforce and create legal problems that could potentially put you out of business. That’s why it’s vital to reduce liabilities and follow all applicable payroll regulations.
There are many different laws governing payroll. The federal legislation that all employers should keep in mind includes:
The U.S. Department of Labor and the U.S. Equal Employment Opportunity Commission are responsible for enforcing these and other federal employment laws.
If your business has international employees, it will also be subject to the payroll laws in each of the countries where your employees reside. The European Union Working Time Directive (WTD), for example, sets limits on how many hours employees in the EU can work each week. Trying to keep up with payroll rules across the world is a big part of what can make paying international employees overseas challenging.
Clear policies and procedures for payroll can make payroll compliance much simpler. It’s worth taking the time to create a manual for your business’s payroll process. From there, make sure all the members of your HR team are familiar with the procedures so everyone is on the same page. Implementing an automated payroll system is one way to improve your existing payroll process.
Payroll deadlines are generally available well in advance, meaning everyone has access to the same information and can plan accordingly. Make note of any deadlines that apply to your business and structure your payroll department schedule around those dates. That way you can avoid the consequences of missing important dates.
If you’re prone to forgetting deadlines, set reminders to help alert you when due dates are approaching.
Maintaining accurate, up-to-date employee records is important for many reasons. When it comes to payroll, you need correct employee records to ensure that your employees receive the right compensation and benefits.
Keep an open dialogue between HR and your employees. You should let your employees know that it’s their responsibility to update the company about any relevant changes in their lives, such as moving from one address to another.
Making a mistake in how you classify an employee can lead to costly payroll errors down the line. Make note of the differences between full-time employees and independent contractors, for instance, and check that all your employees have the right classification.
Keeping up with changing payroll rules and regulations is one of the most challenging parts of compliance—but it’s also one of the most important. If one of the payroll laws affecting your business changes, you need to be aware of it and adapt accordingly.
Unfortunately, keeping up with all these laws can become a full-time job on its own. You can’t afford to miss any payroll law changes, but many businesses struggle to stay on top of them.
Following payroll rules and regulations doesn’t need to be time-consuming and costly. Oyster’s global payroll compliance tool includes built-in legal and tax compliance functions, so you can offload the heavy lifting of payroll
Oyster will manage all aspects of your global payroll and compliance so you can focus on what you do best—running your business. Rather than trying to become an expert in employment law in all the places where you want to hire, why not leave the details to Oyster?
You’ll be able to build a rockstar team while keeping everyone happy and staying completely payroll compliant, no matter where your employees live. The legal team at Oyster studies local laws to create compliant contracts that reduce liability for your business and protect against country-specific risks.
If you’re ready to change how your business handles global payroll compliance, now is the perfect time to get started. Try Oyster’s built-in legal and tax compliance tool for yourself to see what a difference it can make for your business.
Oyster is a global employment platform designed to enable visionary HR leaders to find, hire, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.