Also called an EOR or employer of record, an EOR is a third-party company responsible for hiring and paying one or more people to perform services on behalf of another business. Offering EOR services gives businesses an easy way to hire and operate with employees within a designated country or globally without needing to set up legal entities themselves locally.
This means that the EOR is responsible for adhering to all legal and HR requirements, which include payroll processing, tax compliance (employment contracts), benefits administration, etc. When doing an EOR, you can retain control of your employees’ day-to-day activities and performance. So, what is an EOR? The EOR manages the intricacies of global HR compliance so you can effortlessly and confidently expand into overseas markets.
What is an EOR, and how do they function?
If a startup wants to expand into another country, an Employer of Record (EOR) company can handle all the aspects required for hiring and employing such a team, thereby having its base legally established in that neighboring market.
This includes payroll, taxes, and benefits (and also looking after contracts in some cases) as per local laws. So, what is an EOR? Commonly known as EOR, it is typically in accordance with a legal and administrative necessity of employment.
Business with an Employer of Record
EORs are especially beneficial for staffing startups. Naming the employer of record is a helpful solution for many businesses that do not wish to maintain their own internal back office function. The staffing company has the workers do all of their jobs for you and lets its EOR handle payroll taxes on behalf of the agency regarding deposits, making the EOR payroll process seamless.
How is PEO different from EOR?
Employees are not ‘co-employed’ as with a Professional Employer Organization (PEO) when the EOR provider is used. In general, a PEO takes on some HR tasks, such as the payroll and tax work of an entity.
Under NAPEO guidelines, co-employment is “a relationship between a PEO and its client in which both share or allocate responsibility for employment-related matters.
The PEO and client company are both responsible employers but share responsibility with regard to other responsibilities so that they could be “an” employer, not necessarily “the employer for all purposes; it is an important distinction to consider when comparing the functions of PEO (Professional Employer Organization) and EOR (Employer of Record) in handling employment responsibilities.
Responsibilities of EOR
EORs are especially beneficial for staffing startups. The staffing company has the workers do all of their jobs for you and lets its EOR handle payroll taxes on behalf of the agency regarding deposits, making the EOR payroll process seamless.
How is PEO different from EOR?
Employees are not ‘co-employed’ as with a Professional Employer Organization (PEO) when the EOR provider is used. In general, a PEO takes on some HR tasks, such as the payroll and tax work of an entity. Businesses work with a PEO by signing what’s called a co-employment agreement.
The PEO and client company both have an obligation on employment matters, while the parties share responsibility on other obligations so that they might be “an” employer but not “the” employer for all purposes. This distinction is important when considering the roles of both PEO and EOR in managing employment responsibilities.
Access to global talent
Using an Employer of Record, allows you to access more people and hire anyone, anywhere. The best talent may be on your team already, but you can acquire it from anywhere in the world for less with no set-up, legal requirements, or visas to manage and save money by cutting relocating employees out entirely.
Accelerated global expansion
Getting boots on the ground in strategic regions and testing talent hubs are ways an employer of record can help businesses set up their local presence less than any competitors, which means this approach increases speed to market.
Minimized compliance risk
They are a legal entity with years of experience in the area you hire them for (their own country) and have an established network to cover all aspects concerning employment laws, but handled by their internal experts that eventually take care of everything that falls under this jurisdiction. Finally, should any legal problem arise around your contractor, the Employer of Record ensures that you are protected by assuming liability for non-compliance fines as their legal employer.
Responsibilities of EOR
There are two different sets of responsibilities, one for the business and another from the employer of record. The day-to-day operation is the responsibility of the business where he works, and they oversee that workplace health and safety requirements are being followed. He takes full charge for all employment compliance issues, including payroll and tax complaints.
Description
I will detail what the Employer of Record (EOR) is and how they assist businesses in global expansion by handling all HR compliance, payroll needs, and tax weight off their shoulders. EOR payroll simplifies the complex process of hiring and doing business across multiple countries—all without local legal entity setup!
Utilizing an EOR provider to provide complete employment compliance is the best way for a business to keep its focus on day-to-day operations while reducing the legal exposure of global expansion.
Know about Employer of Record (EOR) services that will help you streamline compliant global hiring, including related HR, payroll, and tax processes to hire internationally if you want to avoid setting up a local entity. Learn how PEO vs. EOR differs and why you need EOR to reduce compliance risks and grow to the point.
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