How to DIY Multi-Company Payroll & Cross-Border Payments in 2023
Different countries have different tax rate & deadlines
Original author Talenox: How to DIY Multi-Company Payroll & Cross-Border Payments in 2023
Payroll processing is one of the most important, and also one of the most time-consuming, tasks for any business with multiple companies spread across the globe. If you’re looking to expand your business and carry out multi-company payroll processing, you’ve clicked into the page. In this article, we’ll show you how to do your multi-company payroll.
P.S. If you’re looking to carry out multi-company payroll for just one country, you may like to check out our article guide on what to consider when shopping for a good payroll software.
Familiarise yourself with the tax regulation and deadlines of each country
If you are running a few offices with employees based in multiple countries, it is important to familiarise yourself with the tax regulations and deadlines of each country. This will ensure that you are compliant with the law and that your employees are paying the correct amount of tax.
Different countries have different tax rates and deadlines. Take for instance, the deadline for filing monthly payroll taxes.
In Singapore, the deadline is the 14th of each month for submitting CPF (Central Provident Fund which includes CPF, Self-Help Group funds and FWL – Foreign Worker Levy). Hong Kong’s deadline for the MPF (Mandatory Provident Fund) is slightly earlier in its submission deadline at 10th of each month. In contrast, Malaysia’s final submission date is the 15th of the following month for its EPF, SOCSO, EIS, PCB (MTD) and HRD levy.
Then there are annual employee income tax submissions that require employers to report their employee’s total earnings. Take for instance, the deadlines for:
- Singapore’s Form IR8A – 1 March of the following year
- Malaysia’s Borang EA – 30 April of the following year
- Hong Kong’s Form IR56B – 1 June of the following year
By familiarising yourself with the tax regulations and deadlines of each country, you can ensure that your multi-company payroll process is compliant with the law and that your employees are paying the correct amount of tax.
Understand how local wage laws affect your cross-border payments
It is important to know the minimum wage in your area and to make sure that all employees are paid at least this amount. Take for instance –
- Malaysia: All employers in Malaysia, except those with fewer than five staff, are required to pay each employee at least RM1,500 per month in salary from January 2023 onwards.
- Hong Kong: The minimum wage is HK$37.5 per hour for all workers except domestic workers.
However, do note that a minimum wage is not the wage that employees may think they are entitled to; after all, an employee’s expected wage is highly based on the market rate for the job position, as well as their work performance.
Of course, there are some countries like Singapore that adopts the Progressive Wage Model (PWM), which prescribes minimum wages for certain economic sectors. This covers Singaporeans and Singapore Permanent Residents (PRs) working in the cleaning and security sectors, as well as in landscape companies on NParks’ Landscape Company Register. Do note that the minimum wage for each sector under the PWM is not standardised, and there may be different wage ladders for different categories of jobs within each sector. The minimum wage amount for each sector also increases over time.
As an employer, you should also be aware of any overtime laws that may apply. An employee can only work up to 72 overtime hours in a month for Singapore and 104 overtime hours per month in Malaysia. Some countries like Hong Kong do not have a maximum overtime limit.
We understand how daunting it may be to apply the latest labour laws to your HR processes every time you set up a new company or branch in a new place. That’s where HR software like Talenox can come in. Talenox takes care of location-specific tax calculations, levies, and others.
Develop and maintain a global employee database
The employee database should generally include the following information:
- Contact information
- Date of hire
- Performance reviews
Localised information could include the following:
- Identification number
- Identification documents
- Statutory details
- Next-of-kin details
Classifying workers correctly is one of the most important aspects of do-it-yourself payroll. You need to make sure that you are correctly classifying employees and contractors. This will ensure that you are withholding the correct amount of taxes and paying the correct amount of benefits.
Whether you’re a business owner or an HR professional, you can’t be managing all the nitty-gritty details by yourself, can you? Let your employees help you. With self-service employee data entry, you can control the type and amount of information to fill out. Employees may also view their paychecks and apply for time-off through their accounts.
Establish multi-company payroll policies and multi-country payroll procedures
This consists of calculating and preparing paychecks, direct deposit, and payroll deductions. You also need to keep track of hours worked, vacation days, sick days, and any other time-off that your employees have taken. Don’t forget to update payroll records by entering changes in exemptions, insurance coverage, savings deductions, and job title and department/division transfers. And finally, ensure you provide employees with itemised payslips that are statutorily compliant with labour laws, if necessary. This will all help you to avoid mistakes and ensure that your employees are being paid correctly.
Thankfully, there are many software programs available to help you with payroll. These programs can automate many of the tasks involved in payroll, such as calculating paychecks and preparing tax forms.
Select your global multi-company payroll software carefully
From entrepreneurs to SME business owners, HR administrators with no prior experience to Finance controllers of MNCs, even outsourcing consultants with a portfolio of clients – many of them face the problem of not knowing what to do when it comes to processing cross-border payroll and how to efficiently update or archive them.
Good payroll software can simplify the entire multi-company and multi-country payroll process with tip-top accuracy. One such software is Talenox, which allows users to easily:
- Create multiple company subsidiary accounts under one main account
- Enable the settings for multi-currency processing in the system
- Process payroll with multi-currency
- View multi-currency payslips and payroll report
Integrate your multi-company payroll solution with other business software
Make sure you payroll service integrates with other business software that allow similar multi-company management capabilities. This will make it easier to keep track of employee hours, vacation time, and other important information.
There are a few different ways to integrate your payroll software with other business software. One way is to use an application programming interface (API). An API allows two pieces of software to communicate with each other. This means that you can send information from your payroll software to your other business software, and vice versa.
Another way to integrate your payroll software with other business software is to use a third-party integration service. There are many different services available, and they all work differently. Some services will allow you to connect your payroll software to your other business software directly. Others will require you to export data from your multi-company payroll software and then import it into your other business software.
Finally, some payroll services offer pre-built integrations with popular business software. This means that you don’t have to do any work to connect the two applications. You simply need to enable the integration in your payroll settings.