The employer of record market size is supposed to be valued at $6794.50 million by 2028. This means that employer of record (EOR) services will become even more popular.
But what is an EOR, and is it the right model for your business? Keep reading to discover all you need to know about it!
What Is An Employer of Record?
An employer of record (EOR) acts as a legal employer for you to hire employees in another country. An EOR will handle all of the compliance to allow you to hire employees in another country.
The EOR will handle taxes, benefits, employment contracts, and payroll for all of your international employees. The EOR model isn’t new, but many people are now using it since remote work has gotten even more popular.
EORs can help when you’re hiring in different states as well because people have different taxes in each state. The employer has to register for taxes in that state and create a tax return for each employee.
If you’re a small business or a startup, then you may not have the resources to manage all of this. You’ll also want to ensure that you are compliant in each state that you’re employing in, which is where an EOR comes in.
How Does It Work?
An EOR will create a contract with you that consists of three sides.
You’ll have a company that still has a direct relationship with the employee. You’ll assign them tasks for work and manage their own performance.
You’ll also have the EOR, which is responsible for legal employment. They’ll take care of things like the benefits, health insurance, taxes, and payroll. They’ll ensure your business is compliant with all of the employment regulations.
The employee is the third part, and they won’t really know that they’re working with an EOR. For the most part, they’ll deal with your company or whatever EOR employee you designate.
When you have a global EOR, this will make it even easier to handle immigration and taxes. The EOR will ensure that all of the hiring processes are legal in that country since each country has its own unique process.
A global EOR will also help you be compliant if you’re offboarding or terminating an employee.
Benefits of Global Employer of Record
There are many different benefits of an EOR, whether it’s international or local.
For example, you’ll avoid misclassifying employees. Some businesses might avoid hiring staff and just use contractors for their business. However, this is very risky.
If one of the contractors takes you to court, the court might say that you’re actually hiring the employee as a full-time employee. You could face liabilities and penalties.
An EOR will ensure that you’re compliant across the board. They’re experts in compliance, and they understand all of the legal requirements when it comes to hiring employees. This way, you can focus on the important aspects of your business without having to worry about paying any fees for violating these employment rules.
You can also offer competitive insurance packages for your employees since it’ll be through the EOR. This can be great for a small business or a startup since you may not be able to afford a cheaper healthcare plan otherwise. When you have a more competitive benefits package, you can also attract top talent.
If you want to expand into international markets, then you should also hire an EOR. They can help you expand your business and employ international employees. This can help your company be truly remote.
This will help you save money when you’re establishing international sections of your company. With an EOR, you’ll be able to onboard new international employees in just a matter of weeks.
Do You Need an EOR?
If these benefits sound great, then you might need to invest in an EOR. However, before spending money on this solution, it’s important to walk through if it would actually benefit your business.
If you want to sleep peacefully knowing that you’re following all of the employment laws, get an EOR. If you’re hiring in multiple states and countries, it can be even more beneficial for your business.
An EOR will also help you find the best talent. They know the job market inside and out, and they can make your company very desirable to work at.
With the competition for top talent being so challenging, companies have been turning to remote working solutions. However, that comes with the challenges of being compliant, which is where an EOR can help.
Hiring without any location limits can also expand your talent pool and make your company more diverse as well. You can do all of this while also knowing that all of your employees are legally hired.
Lastly, if you’re trying to set up an international entity, then having an EOR can make it easier as well. It’s easier to set up an international entity when you can hire local employees who are familiar with the job market.
The EOR can give you support with hiring and help you finalize all of your hiring requirements.
Learn More About Employer of Record Services
These are only a few things to know about employer of record services, but if you want to hire in multiple states and countries, it can be very helpful.
However, in order to enjoy all of these benefits, you need to ensure that you pick the right EOR.
If you’re interested in finding an EOR who can help you stay compliant while still having great employees, check out our website!