Though the world is slowly opening up again, there continues to be an upward trend in breaking away from traditional office arrangements and switching to globally distributed workers. Many companies see the benefits of working with virtual professionals based across the globe.

Pay strategy for remote workers

If you do decide to adopt a remote setup, you’ll have to consider how to pay remote employees and contractors. The easiest way is to add them to the company payroll to automate their payouts. While this is a good idea, it’s only applicable in certain situations, countries, and contracts.

When you think about the long-term, you have to think about compliance to local laws and regulations, taxation structures, and many more. Imagine if your team is distributed across three different countries. You’ll have to think about compliance for each of their countries plus where your company is based.

Tips to pay remote workers

There are plenty of business that already employ virtual workers while operating in a different country. They have each established their own payment method for a virtual assistant or worker, and here’s what you may learn from them:

Set up a local legal entity

Generally speaking, an organisation needs to establish an entity in a country if they want to hire any citizens there. This is ideal when you want to handle everything internally but it puts you at risk of legal and taxation issues. Larger companies with experience in international expansion will find this option worthwhile.

Partner with an employer of record

If it’s not possible to open your own entity to pay international employees, work with an employer of record or EOR instead. They serve as the employer and manage the taxes, benefits, and payroll on your behalf. You’re still hiring the people but the EOR is the one taking care of the administrative tasks.

Pay a freelancer or contractor

When you don’t necessarily need a full-time worker, hire someone on a part-time or contractual basis instead. It might be that you want them around for a single project or while one of your regular employees are on maternity leave. It’s easier to think of a payment method for a freelancer than other types of workers.

Calculate their exact salary

Decide how much you want to pay them, depending on their skills, experience, and type of work. You also want to look at their geographical location and the average salary in their country, among other things. Make sure that you’re paying enough for the local cost of living at least.

Establish when to pay them

The schedule of the payroll for remote workers varies for each company and location. Some virtual professionals are fine with being paid at every start of the month while others prefer to be paid per week. Countries like the Philippines require employers to give a 13th-month bonus to regular employees too.

Figure out inclusions and deductions

In thinking of a payment method for remote workers, you must also consider income tax, medical insurance, pension contributions, and so on. Depending on the arrangement, the employer may make the deductions themselves or the employee may file their own tax returns.

Know the laws on local currency

Most of the time, you have to arrange payroll for a virtual assistant in their local currency, which is problematic because of foreign exchange rates. To reduce the risk of currency fluctuations and provide income stability, it’s better to specify salary in their currency in the first place.

Monitor the hours they have worked

If you’re preparing the payroll for a freelancer or contractor, you need to track the number of hours they’ve worked each month to calculate their pay. There are plenty of time tracking tools available online and they are efficient at monitoring hours logged in and work done.

Process their invoices or billing

Based on your contract, remote workers may bill you at the end of each month or week. You’ll verify the amount of work they have accomplished to ensure that you’re paying them the correct amount. Request for invoices that contain contact information, account numbers, payment terms, and other important details.

Choose among different platforms

In making a remote payment, organisations are spoiled for choice in the online payment platforms on the market. There’s PayPal which is one of the first systems to have made this possible, for instance. Be sure to do your homework on the most suitable tool for your specific business.

Help for the pay strategy for a virtual assistant

If there’s one thing you want to make sure of, it’s that the funds you have sent get to the right person or worker. Using a third-party agency when hiring virtual employees is an excellent means of ensuring that payments are secure.

We at Remote Workmate are currently using Wise to pay remote employees and contractors who were hired through us. We have been working with many global companies and workers for years now, so we know our way around online payment platforms.