In the 21st century, going global is the most popular trend amongst businesses of all
sizes. In certain industries, global expansion can make or break a company. While
going global sounds very intriguing, it may represent its own challenges.
Let us get more precise here, for example; you are U.S. based company interested in
expanding operations overseas and you have identified a U.S. resource to send to a
foreign country to work, for a short time, but do not know how to proceed. There are
many questions going through your mind in-terms of exchange rates, cash flow
management, tax compliance, social contributions so on and so forth.
In special, yet very common situation like the one above, a company must consider two
main factors. First, is how a U.S citizen will be paid in the foreign land, and
second, accommodating the fact that foreign income needs to be reported
to the U.S. government. Most companies tend to shift all liability of domestic, aka
U.S., taxes to the employees. The other option is when the employer agrees that all
earned income, in a foreign land, are done through a shadow payroll for domestic tax
reporting and payment. This obviously happens in the perfect world.
Most companies will find themselves scrambling at the end of the year trying to figure
out how to report domestic/U.S. taxes. If you are a small or midsize business, it is
highly recommended to start with a plan instead of rushing through last minute
cleanup at the year-end. Having proper contracts and/or legal agreements in place with
your employee should simplify all liabilities and contributions.
It is very important to explore all options when signing up for expatriate payrolls, such as
thinking through the best way to manage your global payroll needs, so that employees
and businesses are properly compliant in both home and host countries.
Here at Celergo, we strive to educate and make choices, which best serve, the interests
of our clients, using our country specific knowledge. Please feel free to contact us for
more details on expat payrolls.