An EOR is a service provider that handles HR and employment-related tasks like payroll, tax compliance, benefits administration, and legal compliance for employees working in foreign countries or different regions. It enables companies to legally hire and pay employees in other countries without setting up their own entities.
Companies use EOR services to expand their operations into new regions or countries without establishing their own legal entities. EORs simplify international or multi-state hiring, reduce compliance risks, and allow companies to focus on their core business activities.
An EOR hires employees on behalf of the client company and manages various HR functions. The client retains control over the day-to-day tasks of the employees, while the EOR takes care of payroll, benefits, compliance, and other administrative responsibilities.
- Rapid market entry
- Reduced administrative burden
- Compliance assurance
- Access to global expertise
- Cost savings compared to entity setup
- Challenges for entity creation: Creating entities, such as businesses or subsidiaries, in foreign countries can be a complex and challenging process. Some of the key challenges associated with expanding into foreign markets include Complexity of registration process and need for required documents, Legal, Tax, Labor and Regulatory Compliance, Financial investment for registration and operational cost, variability of timeline for each jurisdiction to complete registration, payroll and bank account implementation, HR and Payroll support, local currency payments, and your investment of your personal time on the project.
- Need for speed to support fast growth: Your team has found great candidate for a key position and want to extend a job offer and hier them quickly. EORs can hire who you want, when you want and where you want within as little as 30 days.
- Temporary or bridge solution: Registration is taking longer than expected, risk losing the candidate or payroll implementation timeline 3-6 months. Employer of Records is the ideal bridge solution to hire the employee and then transition to your local payroll.
Yes, there is a difference. An EOR primarily focuses on international or multi-state employment, while a PEO typically serves domestic clients within the same country or region. PEOs often provide a broader range of HR services, while EORs specialize in global employment compliance.
No, an EOR is not the same as a staffing agency. A staffing agency focuses on recruitment and placement, while an EOR is responsible for the legal and administrative aspects of employment.
It depends on your specific expansion goals and the complexity of the new location’s employment laws and regulations. If you want to minimize legal and compliance risks, using an EOR can be a wise choice.
Yes, you can. With an EOR, you retain control over your employees’ daily tasks and responsibilities, while the EOR handles the administrative and legal aspects of employment.
EORs typically charge a fee for their services, which can be based on factors like the number of employees, location, and the scope of services provided. Fees can be monthly or on a per-employee basis.
An EOR manages payroll by calculating and disbursing employee salaries, withholding taxes, and handling tax reporting. They ensure compliance with local tax laws to avoid penalties.
Yes, EORs often provide supplemental employee benefits such as health insurance, retirement plans, and other perks, depending on the local market and client’s preferences.
Yes, it is often possible to transition from using an EOR to establishing your own legal entity as your business grows and matures. An EOR can help facilitate this transition.
Without an EOR, hiring in foreign markets can lead to delays, legal risks, and penalties. EORs streamline the process, ensuring compliance with local regulations.