5 Proven Steps to Achieve Payroll Compliance in 2025
- Gegidze • გეგიძე | Marketing
- Mar 28
- 11 min read
Updated: Apr 4
Table of Contents
Introduction
Payroll compliance in 2025 doesn’t have to be a headache.
The real challenge isn’t processing payroll; it’s staying on top of regulations, taxes, and everything in between.
Global payroll strategies are evolving, and getting it wrong can lead to costly mistakes.
But, if you want to ensure smooth payroll operations in 2025, these 5 proven steps will get you on the right track.
Here’s how to do it right.
What is payroll and why does It matter?
First things first: what is payroll?
It’s the process of paying your employees, but it’s more than just writing checks.
You’re managing salaries, taxes, deductions, and keeping everything compliant. Mistakes here can lead to fines and unhappy employees, so it’s important to get it right.
Payroll taxes vs income taxes
These two are often confused.
Payroll taxes are things like Social Security and Medicare in the US, or National Insurance in the UK.
Income tax is what employees pay on what they earn. Understanding the difference is crucial when processing payroll.
Now that we’ve covered the basics of payroll, let’s dive into the five essential steps for ensuring compliance in 2025.
5 key steps to ensure payroll compliance in 2025
Payroll compliance isn’t only paying employees on time.
It’s understanding and navigating the maze of regulations that differ across countries, moreover, if you’re managing payroll in the Caucasus, Turkey, Egypt, and Kazakhstan.
Each region brings its own complexities, and staying compliant means more than just following the law; it requires careful planning, ongoing attention to detail, and staying ahead of regulatory changes.
So, how do you ensure your business is on track for 2025? Here are five proven steps to make payroll compliance seamless, no matter where your employees are located.
1. Understand local payroll tax and employment laws to ensure compliance
The first step in ensuring payroll compliance is understanding the local tax and employment laws for each country you operate in.
Each country has its own payroll requirements that can vary significantly. For example:
Georgia: The corporate tax rate is 15%, but businesses in the Virtual Zone enjoy tax exemptions, which is particularly beneficial for IT companies. They pay no corporate income tax on profits and benefit from a reduced VAT rate. (Here is why top businesses choose Georgia)
Turkey: Employees are subject to income tax, with rates ranging from 15% to 40%, depending on salary levels. Employers must also handle severance pay for employees who leave after a certain time, and social security contributions are required from both employers and employees.
Kazakhstan: Pension contributions are mandatory in Kazakhstan. Employers contribute 10% of employees’ salaries, while employees contribute an additional 10%. Businesses must also comply with income tax and other mandatory social contributions.
Egypt: In Egypt, employers contribute 26-28% of an employee’s salary to social insurance. Employees are responsible for contributing 14%. Businesses must comply with these contributions along with tax filings.
Each country’s tax system has its own nuances, so make sure you're familiar with these regulations or partner with a payroll provider who is.
Pro Tip: Regularly review updates to local tax laws to stay compliant and avoid penalties.
2. Team up with a global payroll service provider with local expertise
Managing payroll across borders can be tricky without local expertise. Each country has its own set of regulations, and staying compliant can be a full-time job.
The best way to stay on top of compliance requirements is to partner with a payroll provider that understands the specific laws and regulations in each country.
Take Kazakhstan as an example, it requires employers to calculate pension contributions carefully, but Turkey mandates severance pay for employees who leave after certain durations of employment.
Your payroll provider should be able to handle all these complexities for you.
Tip: When choosing a payroll provider, make sure they have a solid understanding of the payroll regulations in each country where you operate.
3. Streamline compliance with automated payroll processes
Manual payroll processing can lead to errors, especially when you’re managing employees in multiple countries. Automating your payroll system can reduce the risk of mistakes and save you time.
Payroll automation can handle everything from calculating taxes and deductions to generating payslips and submitting reports.
For example, in Turkey, where tax rates frequently change, automated payroll systems can ensure you’re calculating taxes based on the most up-to-date tax brackets.
In Egypt, where social security contributions can vary depending on salary levels, automation ensures the correct amount is deducted.
Pro Tip: Look for payroll software that integrates with your HR systems and offers customizable reporting features. This will give you valuable insights into your payroll costs and compliance status.
4. Stay updated on regulatory changes to maintain payroll compliance
Tax laws and payroll regulations are constantly evolving, and staying updated on these changes is critical to maintaining compliance. For example, Egypt recently introduced changes to its tax and social insurance laws, which now require businesses to adjust their contribution rates. In 2024, Turkey introduced significant tax reforms, including:
Corporate Tax Rate Increase: The corporate tax rate for earnings obtained within the scope of the build-operate-transfer model was increased to 30%, up from 25%. This change applies to fiscal years beginning from 1 January 2025.
Global Minimum Tax: A 15% global minimum tax was introduced for multinational enterprise groups with annual consolidated revenues exceeding €750 million in at least two of the last four accounting periods. This tax applies to 2024 profits.
Keeping up with these updates can be time-consuming, but it’s necessary to avoid penalties.
Your payroll provider should offer real-time updates on changes to local payroll laws. Many providers offer newsletters or alerts that notify you of regulatory changes, so you can adjust your payroll processes accordingly.
Tip: Set aside time every quarter to review the regulations in the countries where you operate to ensure you’re always in the loop.
5. Prioritize data security and privacy in global payroll compliance
When managing payroll in different countries, you handle sensitive employee data, such as salaries, tax details, and bank account information.
It's crucial to protect this data and ensure you're complying with local data protection laws, like GDPR in Europe and local privacy laws in Kazakhstan, Turkey, and Egypt.
A global payroll provider should have strong data security measures in place, including encryption and compliance with international data protection standards. This helps protect your company from costly fines and data breaches.
Pro Tip: If you manage payroll in-house, ensure your team is well-trained on data protection laws and that your payroll software adheres to data privacy standards.
Simple guide for how to do payroll for business owners
Handling payroll isn’t easy, but let’s be real, it’s crucial.
Whether you’re running a small business or managing a growing team, you need to get it right every single time.
But what’s the best way to approach payroll? Do it yourself, or leave it to a payroll provider?
Let’s break it down.
Picking the right payroll system
When it comes to processing payroll, you need the right tools. There are a lot of payroll management systems out there, and choosing the right one depends on your business size and complexity.
For smaller businesses, using in-house payroll software can be a good choice. It’s cost-effective and lets you control the process.
But if your team is growing or you’re managing remote payroll or workforce in different countries, it might be time to consider outsourced payroll services. This will help ensure that payroll is handled correctly, on time, and in compliance with local laws.
When to handle payroll yourself:
Small business with fewer than 10 employees
Simple pay structures (hourly, salaried, or commission-based)
Limited complexity with taxes and benefits
If you're confident in understanding local payroll laws and tax rates
When to use a payroll provider:
Employees across multiple locations or countries (international payroll)
Complex tax regulations and statutory deductions (e.g., health insurance, retirement plans)
Frequent changes in tax laws and compliance requirements
A growing team that requires more time and resources to handle payroll
Tax deductions and withholding
Now let’s talk about payroll tax deductions. These vary by country, but the basic idea is the same: you need to take a percentage of each employee’s earnings for taxes, benefits, and other deductions.
You also need to make sure you're paying your share as an employer.
Example: In the US, you need to withhold federal income tax, Social Security, and Medicare taxes, and in the UK, employers are responsible for National Insurance contributions.
If you're handling payroll in multiple countries, be aware of the percentage employer payroll tax for each location.
Ensure timely payroll runs
A payroll run refers to the process of calculating wages, deducting taxes, and paying employees. You need to set a schedule for this. For example, some companies pay employees on a semi-monthly payroll schedule, while others do weekly or bi-weekly.
When to handle payroll yourself:
If you have a small, dedicated team that is able to focus on payroll tasks
When you have the time and resources to keep up with changing regulations and deadlines
When to use a payroll provider:
When your time is better spent growing your business or focusing on strategic activities
If payroll tasks are taking up too much time and you can’t afford to hire additional staff
The key here is consistency. Whether you do it yourself or use a provider, ensure that you send payroll to employees on time, every time.
Missing payments, or paying late, can lead to frustrated employees and even legal consequences.
Payroll Compliance and Reporting
Finally, after you’ve processed payroll, the work isn’t done. You need to ensure you're complying with payroll tax laws, keeping track of payroll reports, and filing everything with the appropriate authorities.
When to handle payroll yourself:
If you have the knowledge, tools, and resources to stay up-to-date on legal changes and tax regulations
If your payroll is simple and only needs to adhere to local labor laws
When to use a payroll provider:
If your business operates in multiple jurisdictions (e.g., states or countries) with varying payroll and tax laws
When you want to reduce the risk of errors that could lead to fines or compliance issues
If you’re growing and want to ensure smooth payroll processes as your business scales
Payroll tax vs income tax confusion often leads to issues with compliance, so stay on top of changes to tax laws.
Example: In 2024, Turkey’s payroll system changed, increasing tax rates for higher-income earners. If you're managing payroll in Turkey, you need to be aware of these changes to avoid penalties.
Should you do payroll yourself or outsource it?
Managing payroll yourself might sound like a good way to save money, and for some businesses, it works.
But it takes time and expertise. If your payroll is pretty straightforward and you’re comfortable with tax laws, you might be fine handling it in-house.
However, if you have a growing team, multiple locations, or employees working remotely, outsourcing payroll to a professional service is often the best option.
Payroll outsourcing companies will handle compliance, taxes, and reporting, so you can focus on what really matters: growing your business.
Why choose a global payroll provider for international hiring?
When hiring internationally, choosing the right global payroll provider can solve many of the challenges you face.
Here’s why using a global payroll provider is the best choice for your business:
1. Compliance with Global Payroll Laws
Hiring employees across borders doesn’t have to mean more paperwork. A reliable global payroll provider, such as an Employer of Record (EOR), manages the tax, benefits, and social contributions for each country where you hire.
This ensures compliance with local laws while removing the headache of navigating complex global payroll regulations.
2. Expertise in global payroll requirements
Navigating foreign tax laws and social programs can be overwhelming. A global payroll provider brings in-depth knowledge of the payroll requirements in every country where you hire talent.
This expertise helps you avoid costly fines and issues related to non-compliance, ensuring that you remain compliant and efficient.
3. Save time and money with global payroll solutions
Setting up business entities in multiple countries can take months and cost a significant amount. By working with a global payroll provider, you can bypass the lengthy setup process, enabling you to hire international talent quickly.
This saves both time and money, helping your business expand faster.
4. Ensure timely and accurate payroll payments
Making timely payments to employees is crucial for satisfaction and retention. Delays in payroll due to complicated in-house processes can lead to frustration.
A global payroll provider ensures your employees are paid on time and with precision, no matter where they are located.
5. boost efficiency and focus on what matters
Managing payroll details, tax filings, and benefits can drain your HR team’s resources.
By outsourcing to a global payroll provider, you free up valuable time for your HR department to focus on more important tasks, like developing your talent and improving employee satisfaction.
What does a global payroll provider actually do for your business?
If you’re considering outsourcing your payroll, it’s important to know exactly what a global payroll provider brings to the table.
Let’s break down their key responsibilities in a way that makes sense for your business:
1. Keeping you compliant in every country
Let’s face it: keeping track of all the legal requirements in different countries can be overwhelming. A global payroll provider handles it for you.
They make sure your employees have the right contracts, taxes are filed on time, and all statutory benefits, like vacation pay and bonuses, are taken care of.
Staying compliant is key to avoiding costly penalties, and your provider ensures everything is done by the book.
2. Navigating cultural and regional differences
Payroll isn’t just about sending money. It’s about understanding local customs and laws. Here’s where a global payroll provider shines.
They’ll:
Track public holidays in different countries so payroll is always processed on time.
Manage paid time off in line with local laws, whether it’s for sickness, maternity leave, or national holidays.
Take care of time zone differences to make sure your employees get paid when they’re supposed to, no matter where they are.
3. Handling salaries and currencies with ease
Salary structures and currency differences can be tricky when hiring globally. A global payroll provider ensures that your pay scales are competitive and compliant with local regulations.
Plus, they manage multi-currency payments without the headache, so you can focus on running your business instead of worrying about conversion rates.
4. Safeguarding your data and ensuring security
When you hire internationally, you’re responsible for managing sensitive employee data. A global payroll provider makes sure this data is stored securely and handled in compliance with regulations like GDPR (for your European employees).
TeamUp take care of where the data is stored, how it’s transferred, and help protect you from potential fines or security breaches.
Final thoughts: building a global team with confidence
Payroll compliance can be complex, especially if you're managing employees in multiple regions like the Caucasus, Turkey, Egypt, and Kazakhstan.
Outsourcing your payroll to a provider with global payroll services can ensure timely payments, tax compliance, and reduce administrative costs.
However, if your payroll is simple and your business is small, handling it internally could be a viable option.
By understanding the payroll process, staying updated on payroll tax laws, and considering payroll automation, you can ensure smooth and compliant payroll operations as your business grows
Frequently asked questions (FAQs)
What is Payroll?
Payroll is the process of calculating and distributing employee wages, taking into account salaries, taxes, deductions, and other benefits. It involves not only paying employees but also ensuring compliance with tax laws and managing employee-related documentation.