PEO & Employer Of Record USA
Infotree Global Solutions assists you to streamline your business expansion in USA with the professional employer of record services. Our services help you have your employees on board while saving your time in establishing a new setup. It means that you can kick start your business operations in USA without delay. By becoming your U.S. employer of record, we let you take advantage of our global network and resources to compliantly hire and manage international workers. Our experts handle payroll, hiring & legal formalities on your behalf. With Infotree Global, you can reduce the risk, cost, time, and efforts required for a new setup and stay focused on global business expansion.
Table of Contents
• Hiring Considerations in U.S.
• Setting up Payroll in U.S.
• Payroll and Tax in U.S.
• Employee Entitlements
• Challenges When Expanding Into U.S.
• Employment Contracts In U.S.
• U.S. Visas and Work Permits
• Why Infotree Global Solutions?
Hiring Considerations In U.S.
Employment laws in the U.S. can vary from state, federal, and local sources making it difficult to figure out the suitable ones for employers looking for expansion. For example, federal law recommends a higher minimum wage rate as compared with state law. On the contrary, state law may ask employers to maintain a record for a longer time period, unlike federal law. Due to varying standards of liabilities on the employers, it is recommended to consider the assistance of an employer of record US. Often, there are few areas that are not explicitly outlined in either state or federal law. In such a scenario, the terms will entirely depend upon the employment contract. An employer of record is highly recommended in such a scenario filled with complications. It comes to rescue here by setting out the terms clearly to refrain from implied agreements and thus saves you from legal hassles.
Setting Up Payroll In U.S.
First, the company looking for expansion should determine the state it wants to conduct business operations in the USA. Since the rules vary between different states, it is good to learn the employment and payroll concerns else you may find yourself trapped in non-compliance penalties. Besides state tax, you will require to consider federal tax no matter in which part of the country you are in. The U.S. presents seven federal income tax categories depending on income. The lowest rate of tax is 10%, while the highest one goes to 37%. Being an employer, you can decide to withhold the federal income tax from your workers’ salaries and forward the amount to the government.
The Fair Labor Standards Act or FLSA enforces employers to follow the guidelines while setting up the payroll. There are many states which choose to establish more robust laws for their own benefits and employers must follow them. The FLSA also demands employers to have the information related to their staff working hours and compensation on record which may be asked for later. Considering an employer of record USA helps you in streamlining the process.
Payroll And Tax In United States
Depending on business operations, there are specific rules for payroll and taxation in the USA. The federal and state payroll tax include Medicare costs, social security, sales tax, and corporate tax. For many companies using an employer of record, it is easy to remain compliant with local laws. As a U.S. company, it is vital to register for the payroll tax and acquire an Employer Identification Number (EIN) to adhere to the federal tax rules. Payroll tax is a state-based tax which is crucial. With a local payroll provider or an EOR, you can simplify the process and ensure compliance with local laws.
All U.S. taxpayers are permitted to have health insurance or pay a penalty. As a part of U.S. custom, the employer should provide varied medical insurance plans to cover a part of the cost. The employee’s sharer of the premiums is included in payroll deductions. No other insurance is recommended by law but companies can offer short-term and long-term disability insurance and life insurance.
While setting payroll in the United States one should be aware that there is a flat 35% corporate tax rate on organizations that have annual taxable earnings equal to or above USD 18,333,333. The progressive tax rate is 15% applicable to firms with a taxable income of below USD 18,333,333. Social Security and Medicare tax are components of the payroll tax. Employers and employees both contribute 6.2% towards social security tax and 1.45% towards Medicare tax.
There are a number of aspects that need to be familiarized with to adhere to the employment laws in the USA. It is vital for organizations planning to start an office and HR department. In general, written contracts of employment are not required. However, state and local employment laws may require particular information to be in writing. Legal working hours in the USA are 40 hours with a minimum of 8 hours per day. You can consider taking the assistance of a US employer of record for more accurate details.
There are specific rules on overtime for employees. Any hours crossing 8 hours are considered as overtime. Then employers must pay for overtime which is generally 1.5 times the normal pay rate. For most companies, paid public holidays are only decided as per the company policy. According to the Fair Labor Standards Act (FLSA), employers are not forced to pay workers for the time they have not actively worked in the office. However, as per company policy, holiday pay can be allowed.
Challenges When Expanding Into U.S.
While setting up a subsidiary in the U.S, you need to consider a few aspects. These include business type, products, industry, and nature of business, nationality, license, and trade agreements.
You need to consider the following steps to set up a subsidiary:
Choose a Business Type
Determining the company type is the first step. You should know whether you want the organization to be limited liability or a corporation. Both kinds of entities have their advantages and disadvantages, so choose wisely that goes well with your own system.
Select a State
When it comes to the U.S, there are 50 states. Some of them are more suitable for operating a business than others. Every state has its own set of rules for businesses, so you should be well-aware of what that means for your organization before you set it up.
Set Up a Corporate Bank Account
It is a little harder for international businesses to have a bank account in the country but it becomes easy with a U.S. subsidiary. Holding a U.S. bank account will help you manage payroll for your foreign employees.
As accounting and tax laws abound in complications here, so most international businesses also seek the expert guidance of an Employer of Record during the process of establishing a subsidiary. The EOR Company should file a petition on your behalf addressing the specific details, duties, and dates of employment. It should determine the higher wages to the employees. The next step is to file a Labor Certification Application (LCA) specifying the benefits of employees and after its approval, the company will get a certified copy from the Department of Labor. H1B petition should be filed with the proper USCIS Service office and after processing, the company should get a receipt from the same office. Thus, it involves a crucial and tedious process for which you need to consider taking the employer of record USA services.
Employment Contracts In U.S.
United States law does not obligate any minimum requirements for an employee job contract. It does not emphasize written terms because it considers employment relationship as ‘at will’. Hence, the services are terminable at any time without prior notice. However, it is prohibited for an employee to fire an individual on the basis of race, age, sex, religion or sexual orientations, or handicaps as stated in the USA Equal Opportunity Employment laws. Though it is not mandated yet both parties are free to set the employment terms without violating the country’s regulations.
• Fixed-term Contracts
There are no legal requirements for contracts that fall under the fixed or unlimited term category. According to American law, the duration of such employment is not limited. In the absence of an employment contract, employment relationships are considered as ‘at-will’ and terminable at any point in time.
• Probation Periods
The same goes with a trial period which does not require any legal provision. Depending upon business perspective some employers prefer to have an internal policy on trial periods, which is known as probationary periods. It usually offers a formal way of evaluating an employee’s job performance after 90 days.
• Notice Periods
US employment law does not obligate any formal notice period for terminating the services of an employee except as stated in a job contract or collective barraging contract. Most workers are recruited on ‘at will’ basis and can be terminated by any party. However, employers are required to give 60 days advance notice to the employees as per the Worker Adjustment Retraining Notification Act, known as WARN act.
U.S. Visas and Work Permits
As per U.S. immigration law, international employees are allowed to work after fulfilling visas and work permit requirements. These work permits must be protected for employees and sponsored by an established U.S. entity. If you need to complete the incorporation process, it is better to take the help of an outsourced management company to sponsor the workers for all the essential permits. You need to have a number of documents to obtain a work permit in the USA. These include Form I-129 Nonimmigrant Arrival-Departure Record, copy of electronic Form I-94, and passport and travel document. Besides, you need passport size photos, Form G-28, a copy of the last EAD, and a copy of government-issued identity proof. With the help of Infotree Global as your employer of record USA, you can apply for a suitable visa.
H1B is the most commonly used one. It is the U.S. working visa for special occupation professionals. Since it is a non-immigrant visa, it allows international professionals to travel to the U.S. and stay in the country on a temporary basis. Non-immigrant visas are easy to acquire and enable people to migrate to the country and stay there permanently.
Why Infotree Global Solutions?
Ensuring total compliance with employment laws comes as a major concern for many companies. The complications of laws make it vital to use US Employer of Record services by Infotree Global Solutions. Right from the drafting of local contracts for workers, we take care of the onboarding and fulfill all the legal formalities for the new country.
Our core objective is to ensure that you can make the most of mobility without a legal entity. Focusing on employee satisfaction, we promise to deliver increased productivity, high efficiency, and revenue. Our EOR model is designed in a way that provides you everything you need at every step of your global expansion journey.
Candidates are mobilized in-country quickly, saving you time, energy, and resources. Our dedicated personal support ensures a stress-free transition of employees around the world. Besides, you will also retain complete control over your employees and their day-to-day tasks. That too, without engaging yourself in the administrative hassles because we overcome them for you.
Using Infotree Global Solutions is the fastest way to deploy local and foreign employees in the USA. Know more about outsourced employment through Infotree Global Solutions.