9 Tips on Managing Payroll in Small Remote Teams in 2022

Years after the worst lockdowns, remote work continues to claim a significant chunk of the global workforce. It’s 2022, and there’s no sign that organizations are slowing down their plans to implement their work-from-home arrangements.

According to researchers from Ladders, 25% of North American professional jobs will be remote by next year. Another report from Buffer stated that 97% of workers would prefer to continue working from home and would recommend it to other employees.

There are many reasons remote work continues to gain momentum. For employers, its cost-reduction and improved productivity and profits. For employees, it’s flexible working hours, escape from the tiring office commute, and improved performance.

However, remote work is not without challenges. Companies transitioning to the work model still have some things to figure out, and one of them is payroll.

Your organization may not be able to afford the fallout that comes from payroll inconsistencies and delays in a remote work environment.

This article will show you the best ways to manage a small remote team’s payroll in 2022.

The Need for an Optimized Payroll System in a Remote Work Environment

Most remote teams consist of workers scattered across different time zones. This setting makes things complicated and a bit tricky.

For example, it will be difficult to figure out taxes for workers in multiple different jurisdictions. You’ll also have to figure out things like currencies and payment methods.

That said, the real need to figure out payroll is employee engagement. Workers are more satisfied when they get paid on time. And according to a study, employees will consider leaving a job after experiencing two payroll issues.

You’ll also be preventing payroll miscalculation that could hurt your budget when you implement a sound system. What’s more, failure to comply with regulations can also cost you in legal fees, fines and reputational damage.

How to Properly Manage Payroll in Your Small Remote Team – 9 Tips

The payroll management practices that follow will help you implement the right system to keep your remote employees’ paychecks punctual and accurate.

Base Your Payroll System on Effective Policies and Procedures

Establishing defined procedures and policies is how you get the ball rolling on payroll management for your remote team.

These policies should cover every aspect of your organization’s payroll system, including things like timesheet creation and submission, invoice generation, overtime payments, bonuses and add-ons, and contract settlements.

While you may be currently dealing with a small work-from-home team, you still have to develop a system that can scale. That means it should be easy to add more people to the payroll and handover to a more robust management team.

Use Reliable Payroll Software

Payroll solutions are accounting platforms built for managing employee payroll and reducing the burden of accountants and HR managers.

The software programs are designed to automate basic payroll processes and streamline complex ones.

They help with tax rules and regulations and other jurisdictional compliance. This way, you won’t have to deal with ever-changing tax policies and will be able to meet deadlines and avoid penalties.

The automated function of payroll management systems also ensures employers can reduce errors and maintain consistent pay dates.

Thankfully, there are payroll solutions specifically designed for remote work situations with all the features to help you manage the salaries of your WFH team.

So, make sure you include plans of switching to an appropriate payroll management system once you decide to go remote or hire WFH employees.

Accurately Calculate Billable Hours

If your remote workers are paid by the hour, you must ensure you have a system that accurately captures every working hour.

That means going for software solutions that will unify your records and that of your employees.

Time tracking software applications are designed to calculate billable hours and create automated, accurate timesheets. Some can even automatically create invoices for employees.

You should go for a solution that provides the right data that can be plugged into the payroll management system. It would also be good to use programs that allow you to manually change records in case mistakes occur.

For example, an employee might forget to turn on the time tracking application while completing critical tasks. This way, you’re able to add the estimated number of hours – agreed with the employee – which will be reflected in the monthly timesheet.

Streamline Pay Dates

Every company’s payment schedule can be different. Some pay workers weekly, monthly, and even daily. But it can be hard for salaries to hit every remote team member’s account at the same time, especially if they work from different continents.

But that doesn’t mean you should pay some workers daily and others monthly. While it may be necessary in some cases, it can cause serious complications and stress for your accounting team.

So, explain to your workers that you have to use a consolidated payment frequency to reduce costly complications and eliminate errors.

And since employees like to reach out about payments, it would be effective to use the same pay date across the board.

Employee Classification is Crucial

If you’re running a small business, you’re likely outsourcing different aspects of your work while keeping a number of in-house staff. The tricky thing is that all your workers can still work remotely.

This employment structure requires a functional payroll system that accurately classifies your employees.

If you handle things like taxes for your workers, it’s important to file payroll information for different classes of workers separately. That’s because you may have to submit details of contractor training, schedule, and performance evaluation to tax authorities.

Failure to classify your remote workers correctly can result in costly fines in some legal jurisdictions. It can also cost you in terms of miscalculated salaries and remunerations.

Adhere to Jurisdictional Employee Regulations

Hiring workers around the world means you have to deal with regulations in different jurisdictions, especially when it comes to payroll.

If you’re hiring independent contractors, you may tell them to bear the responsibility of tax payments and adherence to other employees’ rules.

But in the case where you hire full-time workers, you may have to bear that responsibility.

Even if you restrict your hiring to a specific area, you must comply with rules and regulations governing employment.

You may end up spending hefty sums on legal fees and fines that come with failing to file payroll tax or making mistakes.

So, you must follow updated government policies and regulations or hire a lawyer to help you work through things.

Establish controls within your organization to identify your priorities and satisfy local and international regulations. Then ensure you get your employees to stay updated with statutory regulations and provide training if you can.

Make Sure Your Teams Can Work Together

The point of centralizing your payroll system is making sure you can consolidate pay dates, reduce errors, improve transparency, and maintain accuracy.

For that to work, make sure you’re facilitating collaboration across every team involved in the payroll process. That means your HR, finance, and payroll team should be able to collaborate without fuss.

So how do you do that? These tips will help:

Set up a slack channel or group chat on other platforms for the involved departments. This communication hub will enable them to resolve issues and establish better policies.
Train every team member involved in the payroll process about different aspects of the job so that workers can cover for each other and the process won’t stall when one person is not available.
Erase information boundaries between these departments so they have instant access to all the data they need.

Deadlines Are Critical

You also have to set up a way to manage deadlines to avoid regulatory penalties and maintain consistency. The best way to do that is to set up deadline alerts for each step in the payroll process.

You can automate your payroll management systems and time tracker to send out reminders to workers and HR managers. This way, everyone is able to turn in information needed to update the payroll before the cheques start going out.

To enforce compliance within your remote team, clearly communicate the consequences of turning in data like timesheets late.

Payroll Outsourcing is an Option

Indeed, payroll management for small remote teams is not necessarily complex and tasking. However, things can be complicated when you have to deal with different jurisdictions.

You may have to consider outsourcing your payroll to an independent contractor. The benefits of outsourcing this aspect of your business include:

Avoiding the cost of an in-house payroll team and expensive payroll management system.
Sticking to payment schedules.
Avoiding legal and fiscal complexities.
Minimizing errors and boosting payroll accuracy and consistencies.

Implement a Solid Payroll System for Your Remote Team Today

One of the factors affecting a smooth remote work transition remains your payroll system. If you’re building your business from scratch with a small remote team, make sure you establish the right policies suited to your work model.

Many things depend on a working payroll system, from productivity and job satisfaction to budget reconciliation and regulatory compliance.