What Is an Employer of Record

What Is an Employer of Record?

The average cost of hiring a new employee in the US is about $4000. This means you’re planning to hire around ten employees, prepared to part with about $40,000. The cost is even higher when expanding to an international frontier

Recruitment is costly, time-consuming, and comes with a load of follow-up responsibilities. These responsibilities include task assignment, costs, and employee liabilities. It’s no wonder smart businesses outsource all employee-related operations to an employer of record or EOR.

If you have no clue what an EOR is, worry not; we’re here to help. Join us today as we look at what an EOR is and how it can help your business.

What Is an EOR?

An employer of record or an EOR is a third-party company that helps bridge the gap between businesses and employees. An EOR will employ and pay employees on behalf of another business. The EOR takes charge of employee tasks like recruitment, payroll, and compliance.

This can help ease a business owner’s HR burden so they can focus on growth and profitability. EORs also help businesses with overseas workers in another country. The employers of records ensure that all recruitment and employment protocols align with employment laws and regulations.

What Is the Role of an Employer of Record?

As mentioned, earlier an EOR bridges the gap between an employer and potential employees. The EOR will serve as the employer for compliance and tax reasons. However, the employee will work at a totally different company.

Although the EOR takes care of legal requirements, it’s not responsible for the employees’ day-to-day activities. The business seeking EOR services will still handle all supervisory and managerial roles. That said, here are a couple of roles that EOR companies play:

  • Filing and depositing taxes to the IRS
  • Furnishing employees with form W-2s
  • Recruiting new employees
  • Ensuring Validity of the Certificate of Insurance
  • Performing drug tests and background checks on employees
  • Remitting salaries and processing payroll
  • Developing employment contracts
  • Providing employee benefits

These are just some of the many roles an EOR company takes over after hiring one. It’s worth noting that management and supervisory responsibilities still fall on the business.

Is Hiring an EOR Worth It?

If you have a well-developed recruitment and HR process, is hiring an EOR company really worth your time and money? Well, whether hiring an EOR is worth it depends on your unique situation. Most companies hire EOR companies to sidestep regulatory hurdles when hiring overseas employees.

Keep in mind, having an international workforce introduces diverse perspectives and enriches your work culture. It also saves a lot of money and helps fill up positions much faster. Some companies have to hire international employees when expanding to foreign countries.

Given that every country has unique work requirements, meeting these requirements is a huge challenge for most businesses. By hiring an EOR company, businesses can delegate registration, incorporation, and local payroll compliance to an EOR company.

What Are the Pros of Using an EOR Company?

An EOR is mutually beneficial to both the employer and employees. It ensures full compliance with local employment laws and allows employees to work with high-paying companies. That said, here are a couple of benefits of an EOR company.

Eliminate the Need for Local Incorporation

Incorporation is necessary for businesses to legally operate in a given country. However, the incorporation and registration process can be expensive and time-consuming. Hiring an EOR company is one way to get around the incorporation process,

When you opt for an EOR, it means you no longer have to incorporate or register your company. That’s because the EOR already has a legal body in place. The EOR will oversee all legal requirements in the host country.

Allows Business Growth via Placement Capabilities

An EOR service is crucial for taking your company to an international frontier. EOR organizations can create and maintain international contracts to attract international employees. This increases the chances of succeeding in your international ventures; setting the pace for further growth.

Help Observe Local Payroll Policies

Foreign countries require that you administer payroll according to their stipulated standards. This means companies have to change their protocols and payroll processes to align with local requirements. This can be time-consuming and very expensive.

An EOR company ensures that all payroll processes are in line with local laws. This means maintaining everything from deductions, pension, and taxation is up to standard. That way, you can avoid any disputes with local authorities and ensure your employees get their dues.

They Ensure Contract Workers Receive Payment on Time

Failing to pay your contract workers on time can make them down their tools. This is extremely disruptive to normal work activities, and you could potentially lose clients. An EOR company can prevent this from happening by ensuring timely contractor payments.

Remember, the EOR provider is responsible for collecting and processing timesheets. They ensure all your workers get paid what they deserve and on time. You don’t have to worry about anyone downing their tools because of lack of payment.

EOR companies like bradfordjacobs.com have extensive funding options to ensure all employees get their dues. With all payroll processes in check, you can focus on running your business.

Ensures Ultimate Compliance

With ever-changing compliance laws, it can be hard for businesses to stay fully compliant with local regulations. This is especially true for immigration policies that are hard to follow. An EOR company will already have established itself in the country and followed all regulations.

Hiring an EOR service ensures your company remains completely compliant with all taxation and employment regulations.

You May Read This Also: 5 Essential Questions About Benefits to Ask Your Potential Employer

Hire an EOR today

Consider hiring one of the top employer of record companies to handle your overseas employment responsibilities. Worrying yourselves with questions like, “how much does an employer of record cost?’” is wasting time. Contact an EOR company today, and work out the math later on.

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