Employer of Record (EOR) services have become a game-changer for both employers and employees. EORs offer a host of advantages that can streamline operations, enhance compliance, and make your global expansion simple. So, let’s dive into the top 5 employer of record benefits.
What is an Employer of Record (EOR)?
Expanding your business globally can be exciting and challenging. Just as it sounds, establishing a legal entity in a foreign country can be time-consuming and costly, often requiring a deep understanding of local laws and regulations.
This is when an employer of record steps in. So what is an employer of record? An EOR is a third-party organisation that becomes the legal employer of those you hire using the EOR. They’re responsible for paying your employees and handling the administrative and legal tasks associated with employment, allowing you to prioritise business activities and supervision over your employees’ work. This eliminates the need to establish a local presence or navigate intricate legal systems, enabling your business to expand into new markets swiftly and efficiently.
In a nutshell, an EOR works by managing the intricacies of international employment, so your organisation can focus on managing your global workforce and achieving your goals.
The Employer of Record benefits for employers
Hiring someone using an EOR can be more cost effective than setting up a legal entity and employing them directly. That’s because the cost of an EOR is typically less than normal employment costs, but only to a certain extent—using an EOR service is only cost-effective if you’re employing five or less employees in a certain location. Above that and the costs start to become unfavourable compared to other methods of global employment!
When you need to hire a large number of employees in a foreign location, the costs associated with EOR services, including their fees and markups, can become a burden. In these cases, it might be better to establish a legal entity.
And because your EOR takes responsibility for payroll, they’ll be calculating wages, withholding and remitting taxes, and distributing pay. They’ve got the expertise to make sure this is all fully accurate and compliant—reducing the risk of costly payroll errors and fines.
Streamlined compliance management
When it comes to hiring internationally, a big challenge is keeping everything in line with local labour laws, which can be quite a puzzle in different countries. Making sure you play by the rules is important because slip-ups can lead to costly fines, penalties, and a not-so-great dent in your company’s reputation.
EORs will make sure your company follows the rules in different countries, saving you from the headache of penalties and legal troubles.
For instance, failing to withhold and remit the correct amount of taxes for your employees can result in fines, legal disputes and damage to your reputation. But EORs ensure your company complies with local regulations, handles tax matters correctly, so you can keep your business on the right side of the law and avoid unnecessary financial and legal hiccups.
Flexibility and scalability
EORs offer a level of workforce flexibility that traditional employment cannot match. EOR services provide employers with the flexibility to adapt to changing market conditions, project demands, or seasonal variations without the administrative burden associated with traditional hiring and layoffs.
They’re a good solution for ‘trialling’ expansion into a new location, as you can very quickly start employing in another territory with an EOR—and just as quickly withdraw from that location if things don’t go as planned.
Easy onboarding and offboarding
In the employee onboarding phase, EORs take the wheel, making sure all the paperwork is in order to set up new team members in their roles. When it’s time to say goodbye, EORs then handle everything, from settling accounts to making sure all the local rules are followed.
By enlisting the help of an EOR, you can ensure that your international hires get the full support they need throughout their entire journey with your company.
Employment-related risks, such as worker misclassification, wage and hour disputes, and employee claims, are significant liabilities in global employment. When you work with an EOR, they absorb many of these risks, acting as the legal employer of your employees. This not only protects your business, but also ensures a fair and reliable payroll process, fostering trust and satisfaction among your employees.
International payroll expertise
For organisations with a global presence or remote workforce, international payroll can be a complex and challenging process. An EOR with international capabilities can simplify the task by handling your payroll processes for employees hired by the EOR, covering payroll compliance, currency conversions, and other complexities—making it easier to manage a diverse and geographically dispersed workforce.
Working with an Employer of Record enables you to benefit from:
- Precise calculations for payroll and compliance, thanks to their proven methods
- Processing and funding payroll
- Depositing and filing taxes
- Managing unemployment and workers’ compensation
- Issuing Forms W-2
Access to advanced payroll technology
EORs will often us advanced payroll software and technologies to ensure accuracy, timeliness, and transparency in payroll processing. This often includes self-service portals for employees, enabling them to access their pay stubs, tax information, and other payroll-related documents easily.
Should you consider working with an Employer of Record?
Partnering with an Employer of Record offers a range of benefits when it comes to accurate and efficient payroll processing. By offloading the administrative burden, ensuring compliance, and providing scalability, EORs enable you to focus on your core operations while maintaining employee satisfaction and reducing the risk of legal issues!
When you begin your search for finding the perfect Employer of Record provider, you need someone who is experienced and reliable. So, roll up your sleeves and start your EOR search by doing some research. Seek out providers who are known for their seamless operations in the countries you are targeting an ensure they are experts at playing by the local rules and navigating some tricky tax codes.
Now, let us introduce Just Payroll Services! We’re passionate about helping businesses go global, and we’ve got the knowledge and expertise to make your EOR journey painless. We’ll work with you to map out the best route for your unique business and set you on the path to successful international expansion. Ready to begin this adventure together?