Do You Need Global Payroll? How to Decide—and How to Get Started

Today, more companies are hiring across borders, turning to global talent hubs like India, Eastern Europe, and the Philippines to move faster and stretch their budgets. Even traditionally office-bound fields like accounting are going global: US companies hired 4 times more overseas accountants between 2022 and 2024.

Remote work has reshaped hiring, far beyond the perks of skipping commutes and swapping suits for sweats.The benefits? More flexibility, more speed, and access to top-notch talent.

But hiring globally also comes with a big question: How do you actually pay people in other countries? That’s where global payroll comes in, helping companies manage the complexity of paying international employees and contractors—while also staying compliant with local laws and tax rules.

This guide is a beginner-friendly overview of when, why, and how to set up global payroll. Whether you're exploring international hiring for the first time or looking to level up your operations, we’ve got you covered.

How to know when global payroll is right for you

You don’t need a global payroll set up for every international hire—but in some cases, it’s vital to ensure compliance and reduce risk. Here’s when you’ll likely need it:

• Hiring full-time employees in other countries: If someone’s officially on your team and working abroad, you’ll need to pay them in a way that complies with local tax and labor laws.
• Expanding into new markets: If you're building teams on the ground—like sales in Europe or support in the Philippines—you’ll need a way to pay those employees legally and in line with local requirements.
• Remote employees who live overseas: Even if your company is remote-first, hiring people based in other countries usually means more than just wiring money—it often triggers local employment requirements.
• Converting contractors to full-time: Starting with a contractor is common, but if the role grows and you want to bring them on full-time, you’ll need an international payroll setup that reflects employee status.
• Short-term vs. long-term plans: Testing a market? An EOR might make sense. Planning to scale a regional office? You’ll likely need a more permanent payroll structure.

If you're doing more than working with international freelancers, chances are you’ll need some version of international payroll management to keep things above board.

Key compliance and planning considerations

Before you dive into global payroll, it’s worth slowing down to look at the bigger picture. Paying people in another country isn’t just a matter of wiring money—it’s about complying with local laws, meeting employee expectations, and setting your company up for sustainable growth.

Here are some of the key factors to keep in mind:

• Regulations and compliance: Every country has its own tax codes, employment rules, and legal requirements, and you’re expected to follow them. That might include employer contributions for Social Security or pensions, limits on working hours, employee termination rules, and more.
• Compensation and benefits: What counts as “competitive pay” in one region might not in another. Do your homework on local salary benchmarks, mandatory benefits, and voluntary perks that help you stand out—think wellness stipends, education allowances, or bonuses tied to local customs.
• Data protection and privacy: Global payroll means handling sensitive personal and financial data across borders. You’ll need to follow rules like GDPR to ensure data is collected, stored, and shared securely and legally.
• Strategic planning: Is this a one-off hire or the beginning of a bigger expansion? A flexible payroll setup like an EOR may be best for testing a market, while setting up a local entity makes sense if you're building a long-term team.

Choosing the right global payroll setup for your team

Once you know where you’re hiring and why, the next step is choosing how you’ll pay your international team. There’s not one right answer here. Your best option depends on your headcount, timeline, budget, and long-term plans.

Here are the main ways companies set up global payroll, along with the pros, cons, and best use cases for each.

Employer of record (EOR)

An EOR acts as the legal employer on paper, handling payroll, taxes, benefits, onboarding, and more. It’s fast, ensures compliance, and reduces overhead—but also limits your control and can be more costly per employee over time.

Consider this route if you’re testing new markets, making temporary hires, or not ready to set up a legal entity.

Professional employer organization (PEO)

In this co-employment model, the PEO shares responsibility for payroll and compliance. The partner takes care of benefits, tax filings, HR support, and payroll, giving you access to better benefits packages and reducing administrative burden.

Unlike an EOR, this option requires you to set up a legal entity in the country you’re hiring in. It’s best reserved for growing, mid-sized companies with limited HR bandwidth.

Setting up a local entity

With this option, you’ll need to register your business, get tax IDs, set up in-country banking, and get familiar with local employment law. Though it requires the most upfront work, setting up an entity offers the most long-term control.

Consider this route if you’re planning for a large-scale, long-term physical presence in a country.

Your global payroll checklist: Systems, setup, and next steps

Before you start paying international employees, make sure your internal setup is ready to support a smooth, compliant experience from day one. That means having the right systems, processes, and partners in place.

Here’s what to line up before you run your first payroll:

• Business registration (if not using an EOR): You’ll need a legal entity in the country where your employee is based if you're managing payroll directly.
• Understanding of local labor laws: Every country has its own rules around wages, working hours, paid leave, termination policies, and employer obligations. Know what’s required before hiring.
• Banking setup for multi-currency payments: Set up international banking or a global payments provider to handle cross-border transfers and currency conversion.
• Payroll schedule and process definition: Decide how often you’ll pay employees, when payroll runs, and how taxes and deductions are calculated.
• Localized employment contracts: Make sure offer letters and employment agreements align with local legal standards and include region-specific benefits and protections.
• Payroll software or provider: Choose a system (or partner) that supports international payroll, automates compliance, and scales with your growth.

For those exploring the EOR route, now’s a great time to research and shortlist potential providers. With the BambooHR EOR launching in June 2025, you’ll soon have an even easier way to manage global payroll, simplify compliance, and streamline hiring across borders!