What is an Employer of Record?

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What is a Employer of Record (EOR)?

A Employer of Record is a company that takes on all employer-related responsibilities for small to large enterprise-sized businesses. The Employer of Record handles state-specific onboarding, payroll, taxes, payroll compliance, benefits administration, unemployment claim reporting, and other HR-related tasks.

Some important things to have in mind…

1. Full legal employer: An Employer of Record is liable for all employer-related responsibilities—from benefits and payroll to insurance and taxes. Working with an Employer of Record allows you to focus strictly on day-to-day oversight of your workforce.

2. State registration not required: With an Employer of Record partner, your company can expand its talent pool and compliantly recruit talent in any state—without going through the time-consuming business registration process.

3. Compliant, cost-effective benefits: When you bring on talent in new markets, your Employer of Record partner ensures you provide benefits that adhere to local regulations. An Employer of Record pools your talent with workforces from other companies, so you get access to lower-priced group rates from insurance providers.

What is a Professional Employer Organization (PEO)?

A PEO is a company that partners with small and medium-sized businesses to provide comprehensive HR services, including payroll processing, benefits administration, regulatory compliance, tax filings, and more. A PEO acts as a company’s outsourced HR department so internal teams can focus on their core responsibilities.

Some important things to have in mind…

1. Co-employment: When your company partners with a PEO, you are both legal employers of your workforce. However, you remain responsible for the day-to-day oversight of your talent.

2. State registration typically required: Working with a PEO usually means you must register your business in every state in which you hire.  As a result, it makes the most sense to partner with a PEO when you plan to hire in states where you’ve already registered your business.

3. Boosted benefits packages: A PEO helps small and medium-sized businesses provide the same robust employee benefits plans offered by larger companies. Like an Employer of Record, a PEO partner pools your employees with those from other organizations to qualify for more favorable group rates from insurance companies.

The critical difference between an Employer of Record and a PEO: An Employer of Record is the full legal employer of a company’s distributed workforce, while a PEO remains a co-employer.

If your goal is to quickly and compliantly hire top talent no matter where they’re located, partnering with an Employer of Record gives you the flexibility to easily enter to any country.

Working with an Employer of Record also gives you peace of mind knowing that experts compliantly handle every HR and employer-related responsibility, so your teams can focus on their core responsibilities. As a result, Employer of Record providers reduce the time, hassle, and cost required to build a distributed workforce across the world.

Are you interested in expanding your work team?

Roots EOR brings your company a turn-key solution to allocate staff abroad to be compliant with local labor requirements without forming a local legal structure. Contact Us