No matter if big or small, many businesses can benefit from hiring an Employer of Record and adding it to their operation, it’s for sure be beneficial. But first, let’s understand what is an Employer of Record.
What is an Employer of Record?
An Employer of Record (EOR) is a company that handles all your office support tasks concerning remote workers, many of which can be complicated and too demanding for smaller firms.
While EOR can be very beneficial, many businesses are not familiar with these services, especially regarding all the benefits they can bring. Therefore, here’s a highlight of just some of the many advantages you can enjoy when using an Employer of Record.
What are The Benefits of using an Employer of Record?
Easily expand your business to foreign markets
One of the first and biggest benefits your business will notice after hiring EOR services is your ability to tap into foreign markets. With EOR, you can easily hire a remote workforce from all over the world without any subsidiary registration—this move will greatly accelerate the growth of your business. The fact above makes Employers of Record great partners to small businesses looking to expand. But bigger companies can also benefit from EOR, especially if they want to find a local workforce with experience working in the local market.
If you’re an owner of a small business, you might want to put off hiring a full-time HR team as long as you can, at least until your business starts growing. EOR can step in and allow you to use their HR professionals at a lower cost, so EORs are actually very cost-effective when it comes to hiring new employees.
Keep the focus on operations.
Running a business involves hundreds of tasks every day, and you must focus on operational functions and many back-office tasks that are equally important for a growing business. Luckily, an Employer of Record can handle everything from finding you workers to solving tax riddles to focusing on critical tasks necessary for success.
No need for local incorporation
Your company can choose to hire foreign employees alone, but this requires setting up a local entity, AKA registering incorporation. Of course, this process can take up a lot of your time and money, plus the costs of hiring professionals to handle your legal and accounting tasks so that everything is legal.
Some companies can actually benefit from setting up a foreign subsidiary, but hiring local Employer of Record services can be a much cheaper and easier alternative for smaller businesses. Your chosen EOR is already a legal entity that can handle the nuances of local legislation worldwide to ensure perfect brand protection and prevention of rising costs. Your EOR can handle payroll, employment, and immigration issues you might encounter in the host country and serve as a mediator between your company and employees.
Guaranteed local compliance
If you decide to hire an EOR, you can stop worrying about employment and labor laws in the host country. Thanks to EOR services making sure you comply with local laws, you can choose who you want to hire and help you grow your business. Your Employer of Record will handle employee benefits (healthcare, maternity leave, paid vacation…), workers’ compensation, and insurance.
Today, immigration policies are changing daily and getting harsher as foreign governments push harder regarding working permits, visas, and business activity. For multinational companies, compliance with immigration laws and immigration violations are two huge challenges that can forever change their companies.
Risking non-compliance with immigration agencies and laws can leave lasting consequences on your business, so it’s best to hire a local EOR. This move can eliminate the issues with remote payroll, business visa abuse, and multiple entries into the host country. Your GEO’s local partner will handle permits and visas and help you avoid any conflict with immigration authorities.
No additional payroll taxes
When you hire people through an Employer of Record, you don’t need to pay any additional taxes because all the taxes that need to be provided are incorporated in the price of hiring an EOR. This fact will save you some money, and the time you would otherwise waste on processing and submitting taxes. And if you happen to miss or misfile any tax reports, you might also expect fines and penalties.
No co-employment arrangements
Co-employment isn’t automatically a bad thing, but business owners tend to avoid it due to legal challenges that are, in most cases, unnecessary. Professional Employer Organizations want to be in a co-employment relationship with your business, and an EOR aims for a simple relationship. They are a legal employer on your behalf and take care of all the legal compliance issues.
Stable working environment
Thanks to an Employer of Record, it’s possible to provide workers with a more effective work environment. When hiring, they still listen to your needs and wishes, but they also want to make employing as easy and smooth for the workers as possible. EORs are used to working with people from their area, and they understand the working culture of locals, which can help you with proper integration.
For any small or medium business owner looking to hire international talent or expand their business, having an Employer of Record on their side might be a great idea.