Tag: employer of record

What Can an Employer of Record Do for Your Business?

What if someone could help with the trickiest paperwork associated with your business?

Having an employer of record can be a real game-changer for businesses around the world. Unfortunately, most of the workers who would benefit from this the most don’t know anything about it.

So, what is an employer of record? What can it do for your business, and how can you get started? Keep reading to discover the answers!

What Is An Employer of Record?

Our guide is going to walk you through all the benefits of using an employer of record. First, though, we need to answer the obvious question: what is an employer of record?

Simply put, an EOR an employer for the tax purposes of different employees. Put another way, the EOR serves as an important intermediary between an employee and that employee’s client company.

An EOR is not right for every business. But in certain situations, it may be the best choice for the success of your career or organization.

An Alternative To Human Resources

Still unclear about what an employer of record does? A good way to think of an EOR is that it functions as an alternative to a traditional human resources department.

An EOR handles many of the things that HR would traditionally handle (more on this later). So, why would anyone rely on an EOR instead of their own HR department?

In some cases, this decision helps save money. Small businesses, and especially new businesses, may have an easier time paying for a third-party EOR rather than hiring a full HR staff and paying their full salaries and wages.

An EOR also makes sense for employers that wish to create a fully remote workspace. Since CEOs and managers will already be coordinating with employees remotely, coordinating traditional HR responsibilities remotely makes sense and, as we noted before, can save the organization money.

What Can An EOR Do?

We have noted how an employer of record offers an alternative to traditional human resources. But what, exactly, can an EOR do for you or your business?

Traditional, EORs process payroll, file taxes, deal with employee contracts, conduct background checks, and onboard new employees. Your EOR can also handle timesheets, unemployment compensation, certificates of insurance, employee benefits, and so much more.

Again, these are the kinds of responsibilities most businesses would use their internal Human Resources departments for. But in our dynamic and increasingly-global work environment, an EOR simply makes more sense for many businesses across the world.

Is This the Same As a Professional Employer Organization?

If you have previously explored alternatives to HR, then some of what an employer of record can do may sound very similar to what a professional employer organization can do. With that in mind, is an EOR the same thing as a PEO?

The short answer to this question is “no.” While a PEO also handles many of the responsibilities of an EOR, traditional PEOs are also responsible for managing employees. This has made PEOs a very popular choice within the United States for businesses who need assistance in helping and handling their workers on a day-to-day business.

An EOR can handle all of the responsibilities that we outlined before and so much more. But beyond that, an EOR will leave it up to the client company to manage their own employees. This relationship often works better for employees because it removes the perception that an outsider is telling them what they can and can’t do (which happens often with a PEO).

Promoting International Business

Earlier, we mentioned that EORs are a popular choice for entrepreneurs that want to either start a new international business or expand an existing business into a new country. But what makes EORs such a good choice for employers who want to go global?

When you use an EOR, it’s a lot easier to hire local talent in a new country. For that matter, a good EOR can help you find and recruit the best employees. This is a great option for small businesses that may lack the time or other resources necessary to research potential hires.

EORs are also experts in subjects like labor laws and other regulations in countries all around the world. When you rely on the services of an EOR, you greatly reduce the odds of committing any compliance violations.

Hitting the Ground Running In a New Country

Perhaps the biggest benefit of using an EOR is how much time they can save. And this is often very crucial to businesses hoping to hit the ground running in a new country.

For example, everything that we outlined before could be handled internally by your own company. You could conduct your own extensive research into labor laws and compliance regulations of various countries. Similarly, you could conduct your own in-depth research of potential employees to hire around the world.

Your business may very well have the financial resources and expert personnel necessary to get the job done. But ask yourself: how much time is this going to take? And how much better could that time be spent helping build your brand?

When it comes to business opportunities, there are few things quite as important as being able to strike while the iron is hot. And with an EOR handling much of the paperwork and legwork, your own business can get a jumpstart on the competition as you expand your business to its full potential.

Your Next Move

Now you know more about what an employer of record is and what it can do for your business. But do you know where you can find an EOR that you can trust with your business?

Here at Bradford Jacobs, we specialize in helping businesses just like yours achieve maximum success all around the world. To see what we can do for you and your business, all you have to do is contact us today!

What is an umbrella company – and are they the best option?

Umbrella companies have been an increasingly popular method for payroll outsourcing in the UK for contractors or hiring contractors, especially during the time leading up to the implementation of the IR35 legislation.

It is seen as a good option for handling the administration of hiring independent contractors or temporary workers. However, is it the best option out there?

When engaging contractors or temporary workers, the intermediary companies you work with must have the right infrastructure in mind for your business goals and compliance.

Information about umbrella companies and their structure will be explored in further detail below.

What is an umbrella company?

An umbrella company acts as a medium to employ agency contractors that work on temporary or fixed-term contract projects.

It is also known as a PAYE umbrella company, as it acts as an intermediary between the contractor and the agency, or the end client. The contractor’s payroll is handled by the umbrella company through the PAYE system. This system processes the contractor’s timesheets and invoices, as well as deducts all taxes and social security contributions from the salary before it reaches the contractor.

The most common sectors that umbrella companies work with in the UK include employment agencies, business support services and consultancies.

Umbrella companies have flourished in the past decade in the UK, as they can offer a hassle-free business structure for contractors to operate in. However, using an umbrella company does come with some risk.

It is vital that the umbrella company you work with is compliant with tax obligations. One needs to be sure that they are also using a legitimate service with an umbrella company.

How does an umbrella company work?

When signing up to an umbrella company, contracts must be signed with both the recruitment agency/end-client and the umbrella company itself. Since the umbrella company must act as an intermediary, the agency/client must also have their own agreement with the client.

Umbrella companies typically charge either a weekly or monthly fee, which may also be removed from the contractor’s salary or paid by the end client, as written into the agreements when first engaging the umbrella company’s services.

The payment process with an umbrella company involves a few steps, which typically include:

  1. Submitting the timesheet and pass it on to the recruitment agency or client and the umbrella company, showing how many hours you worked in the week/month
  2. The umbrella company invoicing the recruitment agency or end-client for the necessary payments
  3. Once the umbrella company receives the payment, preparing your payroll and deduct the following before paying the contractor’s salary and reimbursing pre-agreed business expenses:

    – employment taxes
    – the pre-agreed umbrella fee/margin
    – personal taxes
    – pension contributions
  4. The contractor being issued a pay slip that details all of the deductions and net take-home pay

What does the new legislation (IR35) mean for umbrella companies?

In recent years, there have been raised concerns by the UK government that “disguised employees”, mainly contractors acting under a limited company, were not being legally classified as an employee for tax purposes.

In order to restructure the contracting industry, as well as ensure tax compliance and compliant employee classification, the new IR35 legislation was introduced, and the new rules were set in place in April 2021.

All large and medium-sized businesses are now responsible for classifying the employment status of contractors with Personal Service Companies (normally meaning their own limited company), following a new set of administrative procedures to ensure compliance.

In order to avoid these new procedures, many contractors have sought out umbrella companies instead.

However, the rise in popularity for umbrella companies does come with some risks – ensuring their accreditation and compliance is vital before engaging with their services. Failure to do so can result in tax complications with the local authorities or illegal deductions to their wages.

A better option – use an Employer of Record with Bradford Jacobs

However, there is a safer and more compliant option for both employees and their employers, through the use of an Employer of Record.

With over 20 years of experience, Bradford Jacobs uses its global infrastructure and network as an Employer of Record to obtain the right employees, issue local employment contracts (with a competitive benefits package) and put them on compliant payroll.

Bradford Jacobs will take on the legal responsibilities as the employer, whilst the employee works full-time for the client.

An Employer of Record allows you to place employees anywhere in the world, without the need to set up your own entity, or the risk of not meeting the national laws and regulations.

EOR vs. Umbrella Companies – What’s the difference?

Whilst both an Employer of Record and Umbrella Company are used as intermediaries or links between employees and employers, their structure is different.

Umbrella companies are seen as a traditionally hassle-free way for contractors to take care of their payroll, invoicing, and administration. These providers are usually small establishments, who must make networks with other agencies or providers to increase their reach.

Due to this, umbrella companies are not built to scale and have a high risk of not knowing the international legal, tax and HR know-how, leading to outsourcing onboarding international employees and its global legal infrastructure third parties.

An Employer of Record, however, is one company that owns the whole employment infrastructure in each country where it is present, with all the know-how and expertise in legal, payroll and tax required. Recruitment is also done through its own entities.

The Employer of Record also works closely with both the employer and employee to ensure that the employment relationship is working well and that both sides remain happy with the arrangement. Global flexibility for employees is also guaranteed.

Want To Know More?

You can find more details about how an Employer of Record can work for you – both as a contractor and as an employer, by contacting us or checking out or Employer of Record page for more information.

If you want to know more about the services Bradford Jacobs can do according to the country, check out our Countries We Serve page.