Home Blog


5 Great Reasons Global Companies Employ US Workers

Posted by Corinne Camara


May 8, 2019 9:00:00 AM

5 Great Reasons Global Companies Employ US WorkersEven if you’ve expanded into another country before, you might feel overwhelmed by the American market.

Request a quote for US payroll services today!

There are many aspects to consider when you move into the US. As you’re aware, laws are very different, which can cause a tangle of red tape. You need to think about tax efficiencies and corporate structure. Your marketing strategy may need to be tweaked. You might even need to revisit your product offers and packaging.

You also must consider how to staff your business. Is hiring US workers the right move? Maybe you can hire independent contractors to fulfill your needs. Perhaps sending existing employees to the US is the right way forward.

Many successful global companies choose employees over any other work arrangement. Here are a few great reasons you should employ US workers.

1. Global Companies Get Insights from US Workers

US workers can offer you insights into the market and culture. You could hire remote workers from your home country, but if you’re serving the American market, will they connect to Americans in the same way?

Employees from the same cultural milieu can smooth relations with your customers. Your customers will also be able to relate to your workers more easily.

US workers can also provide key insights into the market. They have insider knowledge others in your company may lack.

2. They Provide Geographic Insurance

If you don’t have a physical location in the US, you may see no reason to hire employees on US soil. Operations can run from almost anywhere thanks to today’s technology, and your staff can telecommute.

Much like computer servers should be in geographically diverse areas, global companies should think about having a geographically diverse workforce. This provides insurance for your customers. For example, if complications prevent people in India or the UK from getting to work, your US employees will be on standby.

3. It Creates a Community Presence

Global companies often face challenges being accepted into their new markets. Consumers may see you as an outsider and decide not to buy from you.

One way to approach this attitude is to establish that you care about the communities you operate in. What better way to show you care about a community than by hiring locals.

This helps potential customers put real faces to names. By employing their neighbours, friends, and relatives, you offer local opportunities in the community. In turn, community members are more likely to feel sympathetic and connected to your brand.

Your employees could become your greatest advocates. They may talk up your products or services, as well as recommend you as an employer. In short, US workers can be the best brand ambassadors.

4. It’s Easier Than You Think

You may be reluctant to employ US workers due to legal concerns. You might be worried about tax implications or issues around employment law. How can you let someone go? What are the rules about overtime pay, holidays, or vacation pay? What are the leaves like in the US? What about benefits?

You might think these concerns make hiring US workers too much of a hassle, but it’s not as difficult as it seems. Working with a PEO can help you employ US workers without worrying about the ins and outs of payroll or the tax implications of benefits. The PEO can take on the liability and responsibility for your US workers.

5. It Builds Your Talent Pool

If you’re hoping to continue expanding, then building your talent pool is a good idea.

Employing US workers can help you do just that. When it comes time to expand again, you’ll know you have a strong group of talented individuals to draw on.

Many global companies hire US workers for some of these reasons. It could be a smart move for your business too. If you think it might be a good decision, talk to the experts and discover how the right US talent could help you ensure business expansion success.


Topics: Business Expansion

Global Companies: 5 Things to Keep in Employee Files in the US

Posted by Karen McMullen


May 6, 2019 9:00:00 AM

Global Companies 5 Things to Keep in Employee Files in the USHiring and employment often present concerns for global employers. How do you let someone go? How can you find the right people for the job? What are your tax responsibilities as an employer, and how do you make sure you’re not misclassifying your workers?

Request a quote for US payroll services today!

There are many nuances in this area, including documentation and employee files. You might be wondering what you need to keep in your files. Employing workers creates plenty of paperwork, but do you need to keep everything?

If you keep these five records, you should be well on your way to satisfying most requirements.

1. Global Companies Must Keep Files Relating to Job Performance

You’ll want to keep documents related to the employee’s job performance in their file. This includes records of evaluations and commendations.

These documents are important, particularly if an employee or ex-employee decides to file proceedings against you. Evaluations can show a record of the employee’s performance, which can help establish a pattern of behaviour in a courtroom situation.

2. Tax Documents Are Also Important

Global companies may feel overwhelmed by the number of tax forms they need to fill out or have their US employees complete. Not only are these important to complete, but it’s important for you to keep them on record.

At minimum, you’ll want to keep a copy of the employee’s Form W4 on file. This document allows you to collect and withhold taxes on the employee’s behalf. Employees should be permitted to periodically review and amend the form, which can be difficult if you don’t have it on file.

3. Records Pertaining to Discipline and Complaints

It’s also important for global companies to keep formal documentation of poor employee behaviour, disciplinary actions, and complaints from co-workers or customers. All these files can be presented as evidence in court.

They may also assist you in determining whether to keep on an employee or let them go. If corrective measures have been taken, but the employee’s behaviour doesn’t improve, it might be time to let them go.

4. Information about Compensation

You’ll also want to file records around notices of raises. You should supply employees with written statements of their raises, but you will want a copy in your files as well. This can serve as evidence if the employee lodges a complaint.

Benefits are also a form of compensation, and you’ll want to those records as well.

Be sure to explain to employees what their compensation consists of, and have them sign a form indicating they’ve read and understood the information.

5. Documents about Hiring and Departure Should Be Kept

Your employee file should open with a description of the job, as well as the employee’s resume and application. You should also include your formal offer of employment.

You’ll need to retain records for some time after an employee departs, so be sure to add documents to their file. Other documentation, such as exit interviews and records that clearly state the reasons an employee parted ways with the company, are important to keep on file. As with paperwork mentioned earlier, these items can serve as evidence if a complaint arises.

With these basics in hand, global companies can build better personnel files for their US employees.


Topics: human resources

Should I Hire US Employees or Independent Contractors?

Posted by Anna Mastrandrea


May 1, 2019 9:00:00 AM

Should I Hire US Employees or Independent ContractorsYou know you need talented workers to staff your new US expansion. The question for many international business owners is whether they should hire employees or work with independent contractors.

Download our whitepaper "7 Tips to Help You Hire the Right PEO" today!

There are pros and cons to both options. You’ll need to carefully weigh your options in order to make the right decision for your business. Keep these key factors in mind when you approach this vital assessment.

The Costs of Hiring

The first factor almost any hiring manager or business owner looks at is the cost. You likely weigh the costs of hiring and outsourcing at headquarters as well.

In some ways, hiring an independent contractor looks less expensive on paper. You don’t need to pay taxes for them, and you don’t need to pay them benefits. You don’t need to pay them for vacation days or holidays. You also won’t be responsible for supplying material or a workspace.

The contractor handles all of those costs. If you crunch the numbers, though, the picture becomes a little bit muddier.

Contractors may charge higher per hour rates in order to offset their higher operational costs. They may need to carry their own insurance or pay for equipment, and they’ll often pass those costs along to you.

They might also have control over what materials they purchase, and they might not go with the lowest cost item.

Often, hiring an employee is more affordable.

Quality Control

Another risk of hiring independent contractors is the issue of quality. Some contractors do excellent work and are efficient.

However, you could receive subpar work. The contractor may still charge big bucks for a less-than-quality job. They could also try to cut corners by using less expensive materials.

As an employer, you have more say over the equipment, materials, process, and end result from employees. When you work with contractors, you could be at their mercy.

Control of Schedules and Priorities

When you work with an employee, you can ensure your deadlines are met and your priorities are worked on as you request. You can adjust employees’ schedules to make sure jobs are finished on time or you have enough staff on the floor.

When you work with a contractor, you give up most of this control. Contractors usually have more than one client, and they might not prioritize your project.

That could translate into short-staffing on the floor or missed deadlines for your business.

Keeping Consistency in the Business

As you expand into the US market, you’re hoping to build a brand that Americans identify with. If you work with contractors, this can be harder to do.

One of these issues is that independent contractors might not deliver the consistency you need. They also aren’t as invested in your business’s success, so they may not see delivering great customer service or using the best equipment as a top priority.

By hiring and training your own employees, you can ensure a higher level of consistency. Employees are more likely to be invested in your business, and they may stay with your business longer. This allows you to provide continuity to your customers.

Make Employing People Easier

One reason international employers hesitate to employ true employees is because of concerns around employment law and payroll. They don’t understand the ins and outs of the law, and they might be worried they’ll face fines and penalties. By working with a PEO, you can simplify this situation. The PEO takes over all these tasks and the responsibility and liability of employing workers.

On the other hand, international employers hiring independent contractors often misclassify them, and this misclassification can lead to hefty fines and penalties.

Before you bring on an independent contractor, talk to a PEO. Hiring an employee could be the right choice.


Topics: Business Expansion

The 5 Steps to Take after Hiring Employees Abroad

Posted by Karen McMullen


Apr 29, 2019 9:00:00 AM

The 5 Steps to Take after Hiring Employees AbroadHiring employees abroad can be a challenge for international companies. You need to hire top talent, but you may not have as much insight into the international job market. Cultural differences can make it more difficult to evaluate education, experience, and fit.

Download our free guide on what US companies need to know about paying  employees in Canada.

Once you’ve hired a new employee, you also need to know which steps to take next. Take a look at this guide. It will help you get your new hires settled in.

1. Adjust Your Onboarding Process for Hiring Employees Abroad

Onboarding technically begins the moment someone contacts you about a job opportunity. How quickly you respond to and how you communicate with them during the hiring process forms the basis of their experience with your business.

Of course, it’s not too late to begin onboarding once you make the job offer. Be sure to adjust your onboarding process to reflect cultural differences in the international market. Everything from how you communicate to who your new employee reports to may need to be tweaked.

You may also need to change the process to accommodate remote workers. A good rule is to introduce the new staff member to other key personnel. If they’re working remotely, try to get everyone together on a video call to say hello and welcome the new hire.

2. Get Them into the Payroll System

You should ensure your new hire is quickly added to the payroll system. There’s nothing more frustrating for a new employee than not getting paid on time because their account wasn’t finalized.

You should ask the employee to forward their details as soon as possible. Be sure those are sent to your payroll team or your professional employer organization, so they can set up and verify the account before the next payday.

Be sure to communicate when the employee can expect to be paid, as well as how you’ll handle any partial pay periods while the account is being created.

3. File the Right Paperwork

One of the challenges with hiring employees abroad is knowing what forms you’ll need to fill out after you’ve hired them. It can be challenging to get this paperwork completed in the designated timeframe. For example, you’ll only have so many days to file Form W-2 with the IRS when you hire an American employee.

Familiarize yourself with the paperwork pertaining to new hires before you bring someone on board. This way, you can hand them the paperwork to fill out before their first day. You won’t have to scramble at the last minute to make sure you have the right forms on file.

If you’re not sure, ask a PEO for help.

4. Set up Benefits

If you offer employee benefits, you’ll need to set them up when you’re hiring employees abroad. You may need to tweak the benefits package you offer in each international market you operate in. For example, health insurance is a bit different in the United States and Canada, since the two countries have very different healthcare systems. Often, offering an HSA is the easiest way to offer benefits to employees while controlling costs.

You’ll also need to file paperwork to get your employee enrolled in your employer-sponsored plan. It’s a good idea to go through the benefits package with new employees, explaining the coverage they have and how claims work.

Again, a PEO can help you find the right benefits package and get it set up for your employees.

5. Establish Expectations

Finally, when you hire employees abroad, be sure to establish clear expectations with them. How often should they communicate with you, and who should they report to on a daily basis?

Streamlining your processes and upgrading your onboarding procedures now will help you create a productive and creative relationship with each employee you hire.

7 Signs It's Time to Outsource Payroll

Topics: Business Expansion

The Wrong Ways to Expand into Canada

Posted by Corinne Camara


Apr 24, 2019 9:00:00 AM

The Wrong Ways to Expand into CanadaLike most business owners, you see growth as a measure of success. Expanding into international markets is certainly an indication of growth.

Download "What Are You Leaving to Chance By Handling Payroll on Your Own" Guide

When you begin moving into other markets, though, you’ll need to take steps to secure your success. This is very true when you plan to expand into Canada. There are right ways and wrong ways to go about managing expansion into the Great White North.

Being aware of some of the wrong ways can help you avoid the missteps others have made before you. Learn about these mistakes as you plan your expansion, and you’ll be better prepared.

Don’t Plan to Expand into Canada Rapidly

Perhaps the best example of this misstep comes from US retailer Target. In 2011, Target bought up a number of locations in Canada and opened 124 stores in the span of less than a year in 2013.

The chain ultimately opened 133 stores before closing up shop in 2015. While there were numerous mistakes made in the Target saga, one of the key factors was rapid expansion. If Target had opened a few stores first, it could have focused on working out issues like supply chain management on a smaller scale.

Many companies have used the slow expansion model to conquer the Canadian landscape, and it generally works much better. If your brand isn’t as well-recognized as Target, take heed. Even popular brands can fail if they take on too much too soon.

Study the Culture

There are many cases of businesses experiencing culture shock when they expand to an international market. You merely need to look at the example of Mattel marketing Barbie in China. Chinese culture emphasizes educational toys and skill-building, so Barbie didn’t fare well.

In some cases, the differences in culture are much more subtle. This is certainly the case in Canada. Canadians share many cultural similarities with their American cousins, but that doesn’t mean their culture is the same.

Take some time to study Canadian culture before you expand into Canada. Whether you’re looking to connect with your employees or market to consumers, understanding cultural nuances will go a long way to ensuring your success.

You Ignored Market Trends

British supermarket Tesco tried to expand into the US in 2007, in what was a case of poor timing. Tesco’s messaging about fresh food appealed to US consumers, but the economy was on the brink of the worst recession since the 1930s.

It’s not just the economic indicators you’ll want to pay attention to when you decide to expand. You’ll also want to take a look at the competition. If your market is oversaturated, you’ll have an uphill battle to convince clients to switch to your business. If there’s no competition, are you looking at an underserved market or a non-existent one?

Doing your market research is imperative when you want to expand into Canada or any other market. Don’t forget to look at historical trends as well. If the market is shrinking, you want to know before you head across the border.

You Got Caught up in Red Tape

You hired a Canadian employee, but you forgot to file the paperwork. When it came time to let someone go, you fired them on the spot and didn’t pay termination pay. You aren’t sure about the rules regarding tax withholdings, overtime pay, or vacation time.

Legislation can protect you, your business, and your employees. It can also lead to noncompliance as you expand into Canada. Make sure you’re aware of the employment regulations and how they affect your business.

You can avoid all these mistakes and more when you work with an experienced PEO. If you need a helping hand as you expand into Canada, get in touch with an expert team today.

What US Companies Need to Know about Paying Employees in Canada

Topics: Business Expansion

5 US Tax Forms International Companies Employing Workers in the US Need to Be Familiar With

Posted by Ray Gonder


Apr 22, 2019 9:00:00 AM

5_US_Tax_Forms_International_Companies_Employing_Workers_in_the_US_Need_to_Be_Familiar_WithIf you’ve just expanded your business to the United States, you’ve taken a huge step toward growth. Now you want to ensure the success of your expansion. One of the best things you can do is secure the right people.

Download "7 Challenges Companies Face When Expanding into the US" eBook

Another key is making sure you’re following the law, including tax regulations and employment legislation. Whenever you hire a new worker, you’ll want to be sure you’re familiar with the forms you’re legally required to submit.

You’ll need to submit some US tax forms when you first hire an employee. Some will need to be issued on an annual basis, while others will need to be updated from time to time. Here are five forms you should be familiar with if you plan to employ even one worker in the US.

1. Form W-4 Allows You to Withhold Taxes

The first form you’ll have any employee fill out is a W-4. This form authorizes you to collect and withhold income tax from the employee’s wages.

If an employee doesn’t fill it out, you can’t pay them. It’s in their best interests to complete this form and allow you to file it as soon as possible.

2. Form I-9 Verifies Employment Eligibility

Everyone you hire for your business operations in the US should be legally allowed to work. That’s why they must fill out Form I-9, Verification of Eligibility for Employment. If an employee refuses to fill out and file an I-9, they may not be eligible to work.

Hiring workers who aren’t eligible to work in the US can have repercussions on your business. You may be penalized by the IRS or even subject to visits from immigration officers. It can also disrupt tax withholding and payroll, as employees who are not eligible for employment may also not fill out Form W-4 discussed above.

3. Form W-2 Must Be Filed for Income Tax

As an employer, you’ll also need to fill out and remit Form W-2 each tax year. If you pay any employee more than $600 US in a year, you must complete this form and file it with the IRS.

A copy of your filing should also be sent to the employee for their records. Legally, you must send out W-2s before the end of January each year for the previous year. If you know this is going to be a challenge for your business, you may want to outsource payroll.

4. Form 1099 Is for Contractors

There may be times when you hire workers who don’t quite fit the bill as “employees.” You may hire them for a special project or for consulting work. These people are contractors, and you’ll need to fill out Form 1099.

Contractors engage with you on a business-to-business case, so you don’t need to withhold taxes from them. They don’t need to fill out Form W-4 to authorize you to withhold taxes since they look after their own taxes. Instead of a Form W-2, you’ll provide them with Form 1099 at the end of each tax year.

Make sure you’re classifying your employees and contractors correctly. Employee misclassification can result in penalties for your business.

5. Form SS-5 Must Be Filled out If an Employee Doesn’t Have a Social Security Number

If you hire a new employee, but they don’t yet have a social security number, then they need to apply for one. Form SS-5 is the form they’ll need to fill out.

You’ll need to be sure the employee obtains a Social Security number before you can proceed with the rest of the forms.

These are only some of the forms you’ll need to look after if you employ workers in the US. If you're having trouble keeping up with all the paperwork, you might want to think about outsourcing to a professional employer organization (PEO).


Topics: Payroll

4 Tips to Compare US Payroll Service Providers

Posted by Karen McMullen


Apr 17, 2019 9:00:00 AM

4 Tips to Compare US Payroll Service ProvidersWhen you’re expanding to the US market, there are many challenges you’ll face. One of the ongoing issues for global companies is employing American workers. From hiring to termination, there are many tasks to be managed, and you’ll need to be familiar with the ins and outs of American employment regulations.

Request a quote for US payroll services today!

One way to make these tasks easier is to work with US payroll service providers or a professional employer organization (PEO). The experts on staff can help you manage payroll, monitor compliance, and more.

The question is, how can you be sure you’re hiring the right company? During the decision-making process, you’ll need to compare and contrast different providers. Use these tips, and selecting the right provider will be easier.

1. Ask about Support from US Payroll Service Providers

The first thing you should do is ask about the kind of support you’ll receive with your payroll service. Will you have a dedicated agent or team of people working on your account? Can you contact them? If there’s a significant time zone difference, and how will they manage this?

You should also ask about support for different systems and programs they use. Will you be required to use their programs to log information?

Support is a key factor in finding the right payroll service provider.

2. Determine Your Needs

When you’re comparing US payroll service providers, it’s easy to get caught up with extras you don’t necessarily need. It can also be tempting to choose a bare-bones plan that doesn’t meet all your needs because it fits your budget.

Always keep your needs in mind. If you’re going to need help with more than just US payroll, it might be a good idea to work with a professional employer organization that offers support for human resources, compliance, legal, and more.

3. Ask How They’ll Grow with You

As a business leader, you need to be forward-thinking, so you should take steps to future-proof your relationship with your payroll provider.

You plan to grow your US operations, so ask how the payroll provider will scale with you. Can they keep conduct payroll for 100 or 10,000 employees? If not, it might be time to consider someone else.

4. Think Beyond Payroll

Payroll is certainly one of the more time-intensive tasks related to the employer-employee relationship in the US. It’s far from the only aspect you need to consider.

As you compare US payroll service providers, you should consider whether you need services that go beyond payroll. Would it be helpful to have assistance with HR compliance? What about delivering training and onboarding?

You may want to consider PEOs over US payroll providers alone. A PEO can help you manage payroll and so much more, which could be key to your success in the US market.


Topics: Payroll

5 Common Mistakes International Companies Make in the US Payroll Process

Posted by Anna Mastrandrea


Apr 15, 2019 9:00:00 AM

5_Common_Mistakes_International_Companies_Make_in_the_US_Payroll_ProcessPayroll becomes more complex when you’re dealing with the payroll rules of another country. International companies may find they struggle with the US payroll process even more than they do with the process at home.

Download "7 Challenges Companies Face When Expanding into the US" eBook

If you’re planning to expand to the US, here are a few of the most common mistakes to watch out for when you complete payroll.

1. Keeping on Top of Deadlines Is a Challenge in the US Payroll Process

Missed deadlines are probably the most common mistakes in the US payroll process for any business, international or otherwise.

The IRS sets out a schedule of remittances, which is usually based on how often you complete payroll. If you pay your employees every two weeks, you’ll need to make sure you’re remitting the tax withholdings to the IRS within so many days of completion.

There are other deadlines as well, such as the deadline for sending in information for new hires and the deadline for sending out certain income tax forms.

2. Worker Misclassification Is Common

Worker misclassification has become an important topic in the last ten years or so. The IRS now offers guidelines on how to classify your workers, and they’ll also review cases to determine whether misclassification took place. Some states have introduced their own penalties for misclassifying workers.

Accidental worker misclassification is easier and more common than you might realize. You may think you’ve hired a contractor, but if you have control over all aspects of the job, it’s likely you’ve hired an employee.

Your responsibilities as an employer are different when you work with a contractor. This can affect the US payroll process, so you’ll want to be sure you classify your people correctly.

3. Poor Record-Keeping

Many countries set standards for record-keeping, and they’ll also lay out regulations regarding how long you need to keep those records for. The rules surrounding records in the US payroll process are different from those you encounter at home, so you’ll want to read the fine print.

Poor record-keeping is common in the US, particularly with regard to data entry. You may want to check you’re not only keeping the right records but keeping accurate records as well.

Finally, be sure to verify both state and federal law about how long you need to keep records on hand. Different types of payroll records need to be kept for different amounts of time. The rules may even change depending on the job or the industry you’re in.

4. Paying the Wrong Tax Rates

The US has a graded system of taxes, which means the more an employee earns, the more they pay in tax. These tax brackets are always changing, so you need to be sure you’re using the right taxation rate. If you don’t, you or the employee could end up owing the IRS at the end of the year.

There are other taxes you’ll need to withhold as well, including withholding for Social Security and Medicare.

5. Miscalculating Overtime

Another common error for international businesses is paying overtime incorrectly. Be sure to check the rate, as well as whether there are any exemptions.

The US payroll process can be challenging, which is why it’s never a bad idea to get a helping hand. Get in touch with a professional employer organization (PEO) and make your US payroll easier than ever.


Topics: Payroll

International Companies FAQ: Who Pays Payroll Taxes in the US?

Posted by Corinne Camara


Apr 10, 2019 9:00:00 AM

international-companies-faq-who-pays-payroll-taxes-in-the-usAs you expand your business operations across international borders, you have to familiarize yourself with new regulations. Employment law is one major area of concern. Health and safety might be another. Most international companies are also concerned with business structure and tax programs.

Download "7 Challenges Companies Face When Expanding into the US" eBook

Another worry you likely have is US payroll. Most international companies deal with payroll, and most people have questions about how to handle tasks like calculating overtime and paying payroll taxes.

You may even ask, “Who pays payroll taxes in the US?” The answer is a bit more complicated than you might expect.

Who Pays Payroll Taxes in the US?

Several entities may be called on to pay payroll taxes in the US. The most likely scenario is that you as the employer will need to handle payroll taxes for your employees.

As the employer, you’re in charge of paying your employees. You know they’ll need to pay a certain portion of their income to the IRS at the end of the year. If they don’t, you could end up on the hook for their missing payments.

Employers are thus mandated to hold back a portion of an employee’s paycheck and submit that money to the IRS. This is a form of “safe keeping.” Individuals are less likely to save on their own, so this makes it easier for your employees to know they won’t owe the IRS large lump-sum payments.

It also means the IRS won’t turn to your company to find the money your employees aren’t paying them.

The IRS requires employers to remit their payroll taxes on a regular basis.

Contractors Pay Payroll Taxes in the US

There’s another group that comes to mind when you ask, “Who pays payroll taxes in the US?” Contractors are responsible for their own payroll taxes.

Independent contractors, or 1099 employees as they’re sometimes known, act as independent businesses. They’re more like partners than employees. You might hire them to deliver certain services or to produce a product.

Since they’re operating as their own business entities, you’re not responsible for collecting and paying payroll tax for them. These self-employed entrepreneurs will be responsible for remitting their own taxes.

You want to be sure you’re filing the proper paperwork on 1099 contractors. Use the IRS’s assessment to determine whether someone is a contractor or an employee to avoid misclassification. Then have the contractor sign the right forms to release you from withholding obligations.

A PEO Handles Payroll Tax on Your Behalf

There’s another type of entity that can pay payroll taxes in the US. That’s the professional employer organization, or PEO.

Many international companies hire PEOs to help them conduct payroll activities in the US. Generally, the international company pays a fee to the PEO that helps them cover salaries, benefits, and other costs associated with employees.

The PEO would be responsible for paying payroll taxes. Since they’re handling your payroll, they’ll calculate not only what employees should be paid but also what needs to be held back and remitted to the IRS. Although you’re ultimately paying the tax, the PEO handles the calculation, paperwork, and remittance.

So, who pays payroll tax in the US? Several different entities may be responsible. If you need a hand with your payroll, talk to a PEO and discover how they can help.


Topics: Payroll

US Payroll Considerations to Keep in Mind before Expanding

Posted by Shannon Dowdall


Apr 8, 2019 9:00:00 AM

US Payroll Considerations to Keep in Mind before ExpandingIf you’re planning to expand your business to the United States, you have plenty to learn about your new market. Some of it will be cultural, while other challenges will appear in logistics, supply chain management, and employment.

Request a quote for US payroll services today!

There will also be rules and regulations you have to familiarize yourself with. Some of those will be associated with US payroll. If you plan to hire and pay American workers, you’ll want to keep these considerations in mind.

US Payroll May Have to Be Conducted at Certain Intervals

There is no federal regulation dictating when you have to pay your employees in the US. If you want to pay them once a month or once a year, that’s absolutely legal according to federal law.

Individual states may have different rules on the matter, so you’ll want to check the legal fine print wherever you choose to set up shop. If you’ll be operating in two or more states, keep in mind that the regulations may differ.

The IRS Schedules Remittance Payments

Once you’ve established a schedule for conducting payroll, you’ll need to consult with the IRS to determine when your payroll remittances will be due.

The IRS collects federal income tax withholdings, which can range from around 10 to almost 40 percent of an employee’s wages. This is tied to how much they make.

The tax you withhold from your employees must be remitted to the IRS within a specified period. If you don’t submit on time, you’ll be subject to penalties for late payment. You’ll also need to get the proper paperwork submitted.

Tax Isn’t the Only Withholding

Income tax is the biggest portion of US payroll withholdings, but you will also have to hold back funds for programs like Social Security and Medicare. These withholdings are assessed as a percentage of wages.

As the employer, you’ll be required to supply a match for what you hold back from your employees. Keep in mind that portions of some employees’ salaries may be exempt if they make above a certain amount.

Misclassification Is an Easy Mistake

In recent years, the IRS and several states have become more concerned with employee misclassification. This situation usually arises when an employee is misclassified as a contractor.

You may know that, in US payroll, you don’t need to hold back income tax or payments to social programs like Medicare from 1099 contractors. If an employee has been misclassified, however, you may need to pay.

It’s a good idea to monitor worker classification to ensure compliance.

Minimum Wages and Overtime

Other aspects of US payroll you’ll want to keep in mind are regulations about minimum wages and overtime. The US federal minimum wage is $7.25 per hour.

Individual states are allowed to set minimums higher than the federal wage. Some states do not set their own minimum. Most do, and some of them have wages that are substantially higher than others.

Overtime is another key concern for employers. Some employees are exempt from overtime requirements, but many are paid time and a half if they exceed full-time work hours. The number of hours that count as “full time” can vary by industry and even by position, so you’ll need to pay careful attention to this aspect of your payroll activities.

Help Is Close at Hand

Perhaps the most important matter to keep in mind when it comes to US payroll is that you don’t have to go it alone. A professional employer organization can help you navigate the waters and conduct payroll correctly and on time.


Topics: Payroll

Subscribe to Email Updates

Recent Posts


Posts by Topic

see all