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Brazilian labor laws provide strong protections to workers, so guaranteeing compliance with all aspects of them is crucial to avoiding unwanted legal complications or financial penalties.
For local and international companies, working with a provider of payroll outsourcing in Brazil is a great way of assuring that employees are paid in accordance with local laws, thereby eliminating risks associated with non-compliance.
Brazil’s regulatory regime is known for its complexities, with legislation created and implemented at multiple governmental levels. That includes intricate tax and benefits systems, with various federal, state, and municipal taxes and contributions that must be calculated and applied accurately.
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By partnering with an experienced local payroll provider in Brazil, you can manage team members in the country safe in the knowledge that they will be paid in a timely and proper manner, keeping those professionals happy and your operations running smoothly, while also freeing you up to focus in-house resources on other aspects of the business.
Such a provider can be a dedicated payroll outsourcing firm, or could be a company offering a broader set of services, such as an employer of record in Brazil.
Below some key benefits of payroll outsourcing in Brazil are considered, as are some of the benefits of working with a provider that offers a wider set of services, while some of the key taxes that must be taken into consideration are also outlined.
Contact us if you are looking for a provider of payroll outsourcing in Brazil.
6 key considerations related to payroll outsourcing in Brazil
If you are looking to hire Brazilian professionals or already operating in the country and considering whether payroll outsourcing in Brazil could be a good choice, some important benefits to take into account include:
1) Guaranteed compliance
Brazil’s payroll regulations are complex and subject to changes, making compliance a challenging task for businesses — especially those less familiar with doing business in the country. By working with a provider of payroll outsourcing in Brazil, companies can ensure adherence to all legal requirements related to salary and statutory bonust payments, tax compliance, and the proper implementation of vacation allowances and other benefits.
2) No surprises
A good provider of payroll outsourcing in Brazil will anticipate and warn you in good time about less regular financial requirements, such as the payment of statutory bonuses or periodic reporting that must be done to authorities. That means you can plan accordingly without facing any unexpected costs, or risking a non-compliance issue arising through lack of understanding of the country’s regulatory regime. That in turn will also guarantee that your workforce in Brazil remains happy.
3) Employee satisfaction
Guaranteeng that your payroll operations are well run and everyone is paid on time and provided with the benefits and paid time off they are due also offers the advantage of helping to keep your team members in Brazil happy. That in turn prevents your business from being affected by slowdowns, high employee churn rates and other issues that can develop when such a critical part of operations is subject to disruptions.
4) Flexible operations
Outsourcing payroll operations through an established provider offers the flexibility of being able to scale services up or down according to any ebbs and flows that your operations experience. That could be anticipated shifts due to the natural cycle of your business, or increases and reductions based on your shifting requirements. This flexibility means that you are able to keep payroll operations lean, which contributes to the cost-effectiveness of payroll services.
5) Cost-effectiveness
Outsourcing payroll services in Brazil can offer significant cost savings, because a seasoned provider will have a staff of experienced professionals able to absorb your payroll operations as part of its wider workload. That offers a greater level of efficiency than maintaining your own payroll team, allowing the provider to offer its services at an often very competitive rate compared top the costs involved in handling payroll in-house.
6) Time-saving
The efficiency offered by payroll outsourcing in Brazil translates into significant time savings, with a seasoned provider accustomed to overseeing calculations and deductions for large or complex teams and therefore able to undertake the work in the shortest feasible time. It is worth noting that guaranteeing a rapid process will also require your timely submission of any documentation required to support the process.
Outsourcing payroll in Brazil through a global hiring expert
While payroll outsourcing in Brazil can be provided by a dedicated local accounting firm, working with a provider with a broader portfolio of related services can be beneficial.
Because such a provider can also offer some of those services, either as part of a package, or later down the line as your needs develop. Such offerings may include recruitment process outsourcing (RPO services), support with independent contractor hiring, or employer of record (EOR services).
In the event you are seeking payroll outsourcing in Brazil to support your established operations there, when your company needs to hire new talent, RPO services can help you quickly source outstanding candidates for any roles you need to fill.
Should your business at some stage require the support of skilled professionals on a short-term basis, or to participate on the completion of a particular project, your provider can help you with hiring independent contractors in Brazil.
In the event you looking at payroll outsourcing as a way of taking care of a complicated aspect of establishing operations in the country, you may find that working with an employer of record in Brazil is a strong option. Because an EOR in Brazil will hire professionals on your behalf, as well as take care of their payroll.
That means you can have people in place in the country without needing to go through the time consuming and complex process of setting up your own entity. It also means that you can rely on that provider to offer outstanding payroll services, because it is a key element of their other services.
All of these services will come at an additional fee, but that will generally work out to be much more cost-effective than working with multiple providers for different services, while also providing you with the agility to scale your services agreement up and down over time, according to your needs.
Payroll outsourcing in Brazil: contributions a provider will oversee
Outsourcing payroll services in Brazil hands over responsibility for dealing with a significant part of the country’s complex and multi-level taxation regime to a seasoned provider. Some of the most significant taxes and contributions that a payroll outsourcing company in Brazil will handle include:
1) INSS (Instituto Nacional do Seguro Social)
The INSS tax is Brazil’s social security contribution, which goes to the country’s national security fund to support people who are retired, unwell, or disabled. The employer contribution rate is usually around 20%, although some companies in specific sectors may have an obligation to pay an additional 1% or 2% to that rate. Your provider of payroll outsourcing in Brazil will be able to advise you on if your business falls into one of the higher rate categories.
2) FGTS (Fundo de Garantia do Tempo de Serviço)
The FGTS fund is an obligatory contribution that provides severance payments to employees who have been terminated without just cause. In the event of such a dismissal, 40% of the FGTS funds are disbursed to the employee upon their departure from the company.
3) RAT (Riscos Ambientais do Trabalho)
RAT is another employer-only contribution, which forms the funding for work accident insurance. It provides financial support for individuals who have been injured or gotten ill due to a workplace accident or event. The employer contribution rate usually ranges from 1% to 3%, depending on the risk level.
4) Employee income taxes
Employers are required to subtract and transmit income taxes from their employees’ gross earnings. In Brazil, there is a progressive income tax system ranging from 0% to 27.5% for all taxable employees. These taxes support essential public services such as road maintenance, fire protection, and education.
Serviap Global offers payroll outsourcing in Brazil
At Serviap Global, we offer a range of solutions related to international hiring, including payroll outsourcing in Brazil and Mexico.
Our portfolio of services also includes EOR services, assistance with contractor hiring, and RPO services.
Having started out in Mexico in 2010, we have since grown throughout Latin America and expanded beyond the region, so that today we are able to assist companies with hiring in over 140 countries worldwide.
Contact us to find out more.