Global Payroll: Taking a Practical Approach
- 1. Welcome to the Global Payroll Association Thank you for joining
- 2. Please feel free to ask us questions during the webinar, we will have 10 minutes at the end to answer these. You can type your questions in the chat box or you can email them to [email protected] Housekeeping
- 3. 3 Global Payroll: Taking a Practical Approach
- 4. Ragu Bhargava, Co-Founder & CEO, Global Upside Ragu and his team at Global Upside help companies tackle accounting, payroll, HR, and compliance challenges in 90+ countries. Ragu goes by the mantra “impossible is not in my vocabulary” and has helped Global Upside clients successfully navigate some of trickiest business environments. In his previous avatars, Ragu was CFO at ActivIdentity (NASDAQ:ACTI) and held leadership positions in several companies including Deloitte and NetIQ (NASDAQ: NTIQ), where he helped the company grow from $20 million to $300 million+ in revenue. 4 Founded 1999 Integrated accounting, payroll, HR, tax, compliance services Consolidated services delivered via single point of contact in your time zone, 24/7 support Serves both startups and established multinationals Clients including A10 Networks, Aruba Networks, 8x8, Enphase Energy, Real Networks, Rhapsody, Zillow, SmugMug and many more. Global Upside Footprint
- 5. Ivan Makarov, VP of Finance, SmugMug Ivan Makarov is the Vice President of Finance at SmugMug, photo sharing and e-commerce platform for photographers, where he’s been there for the last five years. In his capacity at SmugMug, he’s been responsible for a wide range of responsibilities, including leading Finance, Accounting, Treasury and Tax functions at the Company. Prior to SmugMug, Ivan worked with PwC and Ernst & Young, as part of their Tax practice, where he performed various consulting and compliance services for a variety of tech clients. He holds a B.S. and Master degrees in Accounting from Brigham Young University. 5 Over a billion photos Unlimited storage Tools to take your photos to the next level Showcase, share and sell with SmugMug
- 6. Wes Rihani, Multi National Account Sales, ADP 6 Wes Rihani is a Global Business Consultant with ADP with over 25 years of deep domain expertise in Human Capital Management including Payroll & Time/Labor Management. He has worked with mid-size and large multi-national corporations identify total cost of ownership and develop comprehensive HCM solution architecture and process engineering to improve on organizational effectiveness. Most recently, Wes has led a series of speaking engagements across the country on “the Art of Global Payroll Transformation.” Serving more than 650,000 clients in 112 countries ADP Streamline offers multi-country payroll and HR services solutions via a single vendor Average client tenure of about 11 years More than 67% of Fortune 500 companies and more than 80% of Fortune 100 companies use at least one of ADP’s services
- 7. 7 Key Considerations for Global Companies Location Footprint (Small or Large?) Entity Setup / Activities Finding the right talent Hiring and Employment Law Tax and Accounting Support Managing a global operation – centralize? Compliance
- 8. Setup and Strategy 8 Plan for growth? Permanent Establishment (PE) Risks Intellectual Property (IP) Considerations Management Support /Centralization Where to? Start up Activities Representative Office Branch vs. Subsidiary Payroll Setup Money Movement Accounting Setup Tax Considerations
- 9. Company Law Compliance 9 Registered Office Resident Director Substance Over Form (Tax Structure) Data Protection Registration Taxes: Payroll, VAT, Income, Others Statutory Audit Annual Reports
- 10. Global Payroll: Key Consideration, Compliance 10 Not just payment of net payroll Taxes, net pay computation Payment of taxes In-kind benefits: taxable or not? Many reporting requirements besides W-2 or taxable wages e.g. fringe benefits Pay slips: content, format and delivery (snail mail, electronic or both) Coordinating with other functions: HR, talent acquisition, treasury Pay frequency: once, twice, or advance Payment before vacation
- 11. Country Focus: China 11 Unique by jurisdiction (National, Provincial, District, City) Housing provided by employers and regulations vary from region to region Workers who have worked more than one year are entitled to 5 days of leave
- 12. Country Focus: Brazil 12 13th Month (Remember to accrue) Electronic reporting - new requirement in the last 12 months Union dues - deductions of one day of compensation for members
- 13. Country Focus: Russia 13 Employers required to maintain detailed working hours records Must be paid twice a month Bi-lingual employment contracts
- 14. Country Focus: France 14 Highly regulated working hours requirements Payroll registrations take time (matriculation of entity) Complex pay slips: over 40 data fields
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- 16. 16 Global Payroll Challenges SmugMug is an internet-based business A good portion of our workforce is remote Need to be on top of all tax and legal challenges that come with our kind of setup We also have to look for employees abroad, as we often hire from our customers It’s challenging to keep up with the new developments and changing laws overseas Outsourcing/working with a vendor was a good option It has helped us stay on track
- 17. 17 Plan Ahead Educate your staff about the basic challenges of having a world wide human capital Proactively identify and implement strategies to minimize risk Discuss all issues with hiring managers
- 18. 18 Payroll Accounting : “Tips and Tricks” How SmugMug setup payroll in Korea? Understand all issues up front Have a good handle on costs of living and what you should be paying your employees Be upfront about the challenges of relocating to a new jurisdiction
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- 20. 20 Focus on Compliance Thompson Reuters Top Compliance Trends 2016
- 21. 21 Latin America Payroll: Main Challenges Compliance requirements • Can be complex and difficult to interpret, with frequent changes • Brazil, complex tax structure subject to frequent changes as governments respond to developing economy Detailed paper-based record keeping • Colombia, forms for new starters physically have to be taken to the authorities to be stamped and signed, and copies sent to payroll • Argentina, employers register all employment relationships in a payroll book which is inspected periodically by the Ministry of Labor • Mexico, employees must sign their pay slips and organizations are obliged to keep receipts for a minimum of five years as evidence that payments have been made
- 22. 22 Many HR administrative requirements have an effect on payroll • Onboarding, separation processing, time and leave processing and records management • Requirement to sign pay slips, complex rules around hiring and firing in some countries • In Mexico, for example, some organizations choose to make final/severance payments (“finiquito”) in front of a judge to avoid the risk of future claims from departing employees
- 23. Copyright © 2016 ADP, LLC. Proprietary and Confidential. 23 ADP Research Institute 2016 * Data reflects the first 6 months of 2016 Number of Legislative Updates by Country Country 2013 2014 2015 2016* Brazil 3 10 48 15 Canada 5 7 76 47 Mexico 1 76 52 United States 22 14 48 15 Total 30 32 248 129 Americas
- 24. 24 Global Funding Governance Model should help determine funding options Registrations sometimes require local bank accounts • E.g. Australia • Statutory laws sometimes require only the employer to move funds • Laws against money laundering • Lodgment Services in APAC – Social Benefits in China Leverage an In Country Provider • Access to client’s account • Trust account Global Money Movement Platforms • Major Banking institutions
- 25. 25 Critical Business Issue Multiple HR Systems - Increased Business Agility PAYROLL SYSTEMS 33 HR SYSTEMS 31 GLOBAL HCM DECISION MAKERS SURVEY 2015 The average number of payroll and HR systems /vendors and used worldwide has increased ~ 50% from 2014-2015 Global SOR Talent TLM Compliance Comp & Benefits Payroll
- 26. 26 Employee record flow Integration Payroll Data Employee Master Data Compensation Data Variable Data Time & Expenses Global HR System of Record Global or Local Payroll Engines and Partner Network Technology Considerations Data Translation Validation Mapping Localization
- 27. 27 Q&A Ivan Makarov, VP of Finance, SmugMug Wes Rihani, Multi National Account Sales, ADP Ragu Bhargava, Co-Founder and CEO, Global Upside If you have any questions for our panelists that we are not able to address in the Q&A please call +1 (408) 913-9130 or email us at [email protected]
- 28. 28 Thank You