If you can avoid hiring internationally, you should.
I don’t say that lightly. My company is remote, yet I refuse to hire in-house outside the US because global payroll is a nightmare, no matter how you do it.
Even with the most expensive international payroll solution, it’s always messy.
Independent contractors are a different story. We hire plenty–paying them ourselves is no problem, even as a very small team. As long as they’re classified correctly, it’s almost as easy as paying domestic contractors.
If contractors aren’t an option and you’re still set on international hiring, buckle up.
Want a Quick Answer? These Are My Top Recommendations
Hiring one employee, a handful of people, or testing new markets: RemoFirst and Horizons are the cheapest EORs (employers of record) for small businesses. RemotePass is new, but a close third. Rippling is great if you want to consolidate employee data across HR, IT, and finance–it’s only available in a few countries (jump ahead).
Global expansion into a lot of countries: Rippling does the best job, but only works in a few countries. Papaya Global and Lano are the most affordable, but there are dozens of other options (jump ahead).
There Are Only Two Ways to Hire International Employees
You can use an EOR or set up a local entity. That’s it–those are your options.
Technically you can have domestic staff working abroad without any of the above–you’d use your normal US-based payroll system to pay them.
If you do this, make sure you understand country-specific permanent establishment laws. These vary wildly from one country to the next, so it’s also a good idea to talk to someone (preferably a lawyer) with deep knowledge of these regulations.
For employees who aren’t US citizens working abroad, standard payroll software won’t do.
Hiring One Person, a Few Full-Time Employees, In Multiple Countries, or Testing New Markets? An EOR Is the Way to Go
This is by far the least messy of the two options.
You won’t have to set up a legal entity or handle international compliance. EORs are expensive, but cheaper and easier than setting up an entity.
An EOR partner handles everything from payroll and benefits to compliance, taxes, and HR matters. All you have to do is manage day-to-day work.
RemoFirst, Horizons, and RemotePass are the most affordable options for new businesses. Rippling does an excellent job of bringing employee HR, finance, and IT data together, even for EOR hires. But its EOR plan is only available in a few countries.
These four are great as standalone EOR solutions if that’s all you need, but you’ll be able to add EOR hires with any of the global payroll providers we’ll talk about below. So, if you already have entities set up in a few locations but want to test new markets in others, keep reading.
Setting up a Local Entity Should Be Your Last Resort
This is a very expensive, complicated, and difficult process. I caution against it unless you’re absolutely sure you’re ready. Aside from the work that goes into setting up an entity, it also makes global payroll exponentially messier than using an EOR or hiring contractors.
Once you reach this point, it’s never going to be as seamless or automated as single-country payroll. Will one of these solutions alleviate some of your growing pains? Probably.
Will it eliminate them all? No.
However, you’ll eventually reach a break-even point where it becomes cheaper to set up a local entity compared to paying per employee for an EOR.
It really only makes sense if you hit that breakeven point or are truly going for global expansion.
Once your entities are set up, you have four options (which are what we’ll focus on for the rest of this post):
- Independent in-country payroll providers
- Global payroll platforms
- Payroll outsourcing/PEOs
- Payroll consolidation
If you know which is right for you, click the link above to jump right to it.
Otherwise, keep scrolling to learn more about each option, when to use what, and which providers I recommend.
Independent ICPs Work Well if You’re Only Expanding Into a Few Countries
Just like Gusto is great for US payroll, there are similar companies in every country around the world.
This works well if you want total control, flexibility, and freedom–you can switch to another provider at any time. However, it creates a decentralized payroll system–you’ll need a separate team managing the solution you choose in each country.
Doing this in a few locations is a viable option if you have the resources and in-house knowledge to handle it. But it gets really messy as you move into more than a few countries.
ICPs are country-specific, so I can’t cover all of them. But here are some examples:
Global Payroll Platforms Are Better if You’re Going After Large-Scale Global Expansion
Rather than dealing directly with multiple ICPs, global payroll solutions bring them together into a centralized system with a single point of contact.
It sounds great on paper, but it’s nearly impossible to seamlessly standardize global payroll processing and reporting. I’m not bashing these companies–they try. Just know that it will be messy, no matter what.
Another caveat is that you have to use ICPs within the global payroll provider’s network (in most cases).
There are two types of networks–aggregators and wholly owned. Aggregators partner with third-party ICPs in the countries they service. Wholly owned providers have their own local entities instead of working with third parties.
Neither is necessarily better than the other. They both have their pros and cons.
You’ll have to decide which you prefer.
Rippling Does the Best Job at Bringing Multi-Country Payroll Together–But There’s a Catch
Rippling’s goal is centralizing all employee data, including IT, HR, and financials.
Aside from global payroll, it offers policy management, time tracking, recruiting, resource planning, asset management, expense management, performance management, and more.
All of these modules sit on top of a powerful automation engine, which is the key piece that makes its global payroll execution stronger than the rest.
The downside is that Rippling’s global payroll solution is only available in a handful of countries.
Plus, its wholly owned model means it’ll be slow to expand its coverage. But if it supports the locations you’re hiring in right now, it’s an excellent choice.
Papaya Global and Lano Are the Most Affordable
Papaya Global ranges from $15 to $25 per employee per month, with volume discounts available once you hit 500 employees. Lano is a flat-rate of $300 per month for up to five employees, but drops to $30 per employee per month with more than five employees.
Compared to other solutions that charge upwards of $50 or $60 per employee per month, they’re both quite affordable.
They’re also both aggregators with proprietary payment processing engines, resulting in lower transaction fees and faster payments–even for those that require a currency exchange.
Lano offers free payments in 28 currencies, which is something I’ve not seen elsewhere.
On top of that, both let you bring ANY payroll provider you want. They have their own partnerships if you’re not sure which ICP to go with, but you can switch to a different one at any time, even if it’s outside their network. I’m not sure how well this works in practice, but it’s something I encourage you to ask them about before making any decisions.
These are the only two I’ve seen that allow this, but it may help negate the major caveat (you have to use an in-network ICP) of global payroll solutions.
The Best of the Rest
Deel owns most of its own entities but uses a few ICPs, Remote owns 100% of its entities, and Multiplier is an aggregator.
Deel and Multiplier both offer stock options plus immigration services–Deel also offers background checks. However, Remote doesn’t require payroll deposits in most cases, while the other two do.
Remote starts at $50 per employee per month. Deel and Multiplier have country-specific pricing.
If you’re looking for an even more powerful HCM or HRIS, the following have multi-country payroll solutions and then some:
- G-P has notoriously complex pricing, but offers flexible expansion modules
- Velocity Global specializes in hands-on consulting and done-for-you services
- Workday focuses on employee wellness, finance, and operations
- Ceridian also focuses on wellness and engagement
Prefer to Offload? Outsource or Use a PEO Provider
I don’t typically recommend PEOs. They’re fine if you’re in a high-risk industry or situation. But you’ll end up losing control over your hiring, onboarding, and payroll processes as the PEO becomes the co-employer of your team.
There’s really no reason to give up that control after you’ve gone through the trouble of setting up your own entity.
Payroll outsourcing is a better middle ground. You remain the sole employer overseeing a third party to manage certain HR and payroll-related tasks for you. It works well if you’re outsourcing to a company you trust.
If you’re interested in an outsourcing arrangement, check out:
As for PEO recommendations, they’re a bit trickier. You’ll need to find a local PEO provider within the country you’re working in.
Payroll Consolidation Truly Centralizes Global HR Data (As Long As You Have Big Pockets and Aren’t in a Hurry)
Integration as a service—or IaaS—can bring all of your data together under one roof. Everything from EOR to ICPs, contractor payments, global payroll, pre-payroll, time-tracking, benefits, and more.
This concept isn’t new. But it wasn’t until recently that IaaS providers started looking into solving the mess that is global payroll.
It sounds great on paper, but the incredibly high cost makes it out of reach for most businesses. Many who can afford it often choose to avoid the months or years-long implementation process until they’re forced to make a change.
If you’re still nodding your head and onboard, Payslip is really the only option right now.
It uses AI data verification paired with robust automation and bi-directional data flows to create a seamless link between any HR tools you need to bring together, ultimately standardizing data and allowing for advanced reporting across your entire workforce.
Payslip also has a partner network of 200 payroll providers, which is useful if you’re venturing into new countries and don’t know where to start.
However, it only works with businesses in at least five countries with over 2,000 employees.
I hope to see IaaS trending upward in the coming years, with more tech-focused companies stepping into the game. This will (hopefully) bring down the price.
But there’s a long way to go until we reach that point.
What Matters Most When Choosing International Payroll Services
If you’re still not sure which service is right for you, I recommend going through the list below and pulling out the features you absolutely have to have. You can also note which ones you’d like to have.
From there, you’ll have a personalized list of requirements you can use when talking to each provider you’re considering.
- Tax calculations, withholding, filing, and remit — The payroll provider stays up to date with all tax laws in each jurisdiction, calculates them for you, withholds them, and remits them to the appropriate entities automatically. They should also file tax forms on your behalf. There’s absolutely no reason to do this stuff on your own
- Compliance and local expertise — The provider stays on top of local labor laws in each country so you don’t have to. They should also help ensure you’re always in compliance, even if the laws change. This is particularly important if you’re paying hourly workers and need to abide by break and overtime laws
- International services — What types of international payroll services are offered by the provider? I’m referring to EOR, AOR, PEO, outsourcing, contractor payments, and global payroll. If you only need one thing, you can ignore the rest. But if you need multiple ways to pay international employees, it’s best to get everything from a single platform (and even better if you have the option to bring in US-based employees, too)
- Aggregator vs. wholly-owned — Some global payroll providers and EORs work with local ICPs in specific countries while others have in-house staff in these locations. Each route has its pros and cons, so you’ll have to decide which you prefer
- Payroll deposits and deadlines — Find out if you can make changes if you notice mistakes and how far in advance you need to approve each pay run. Inflexible providers may mean you can’t pay employees on different schedules, which could be a dealbreaker. Some providers also force you to pay a hefty deposit before they run payroll for you
- Fees — International payroll is notorious for having setup fees, onboarding fees, payment processing fees, currency exchange fees, and more. Make sure you understand and compare all of them before making your decision
- Localized contracts — Assess whether the provider can produce localized contracts in the locations you’re hiring in, whether you can edit them if needed, and where contracts fit in the onboarding process. You may also want to find out if they can create these contracts in different languages
- Onboarding and document collection — Contractors and employees get guided through an automated onboarding process where they fill out the necessary forms and compliance documents on day one. The best providers will also include identity verification and make it easy to import any existing employees or contractors
- A self-service portal — Employees can login and manage their personal information, including payroll, time off, tax forms, benefits, etc. It’s a bonus if they get lifetime access. Managers should also be able to see the status of their employees and contractors in a centralized location
- Depth of benefits administration — Are the benefits plans standardized or hyper-localized with a ton of specific plans? Consider things like health, 401(k)s, dental, vision, commuter, FSA, HSA, and any other localized benefits you may want to offer
- PTO management — A comprehensive tool for managing employee paid time off
- Time tracking — If you have hourly workers, look for built-in time-tracking or deep time-tracking integrations, including automated rules for breaks and overtime
- Payment options — This includes currencies in which employers can issue payments, as well as currencies in which employees and contractors can receive payments. It also covers the different ways that payments can be received, such as direct deposits, crypto, prepaid debit cards, etc.
- Easy contractor payments — You should be able to onboard and pay contractors as easily and smoothly as you would for an employee, including compliance support and localized contracts
- Built-in invoicing — Some providers give contractors the ability to create and submit invoices directly in the platform. Ideally, these should also have an approval flow with the option to download the invoices as PDFs for your records. Many providers have a payment request system for contractors, but this is not the same as actual invoicing
- Reporting — Reporting is a common challenge with global payroll because each country is unique and produces data in different formats. Rather than relying on screenshot demos, I strongly encourage you to ask the provider to show you real reports inside the platform
- HR experts and consultants — The ability to ask detailed questions and get expert advice on what to do or how to handle specific situations. This is critical if you’re unfamiliar with local customs, local culture, and country-specific regulations
- Additional services — Do you need anything else beyond the scope of payroll and HR? I’m referring to things like equipment provision, immigration and visa services, IP protection, employee classification assistance, or something else. If so, make sure your payroll provider can handle your needs
- Integrations — Make sure you can seamlessly sync information between any third-party tools you’re using for time-tracking, benefits administration, vendor management, HCMS, and accounting software
Aside from those, there are a few other things to consider, including the UX and UI, customer service, price, recent growth, and future outlook.
All of these can vary wildly from one provider to the next.
However, they’re more personal preference–there’s no right or wrong. I recommend using them to make your final decision once you’ve narrowed it down to those that do everything you need.
Methodology + Why You Can Trust HRAdvice
I don’t have any international employees for a reason. Once I realized how messy it is, I decided it wasn’t a viable option.
However, it took me far too long to come to this realization. I could have saved hundreds of hours if someone had flat out told me how complicated it was going to be.
There’s a lot of conflicting information out there and nobody seems to be telling the full story (likely because they don’t understand it themselves or they’re just trying to get you to click so they make a few hundred bucks).
Every recommendation I found for my situation turned out to be bad advice. Despite all the digging, I couldn’t find a clear answer on how it works, how to do it, or what software to use. I had to figure it all out on my own.
I wrote this guide to share everything I learned so you don’t have to go through the same thing.
Despite being an HR leader for over a decade, I still learn something new every day. Have I discovered everything there is to know? No.
But this guide is a living resource–one I’m not going to set and forget. My team and I are deeply embedded in all things HR, constantly learning new things, pushing boundaries, and trying to make sense of a complex industry.
When we prove our claims right (or wrong), we update our content.
We’re not perfect, but we’re doing what we can to publish the most honest, well-researched recommendations you’ll find.
What About Affiliate Partnerships?
I have affiliate partners–it allows me to keep doing what I do and pay my team well.
But the amount these partners pay me has zero impact on what I write. Brand placements aren’t sold to the highest bidder. Period.