Many companies and entrepreneurs decide to enter markets in other countries to scale their business and increase profits. In this case, expanding markets for goods or services is possible by increasing the customer base. When running a global company, you must resolve several organizational issues, including employing employees and maintaining accounting and tax records. Many foreign companies decide to enter into an agreement with an outsourcing employer to optimize time and labor costs.
One of the reasons why EOR services is becoming increasingly popular is the power to save time at the initial stage. When getting an outsourcing company, you are not required to register a legal entity, which takes time. This speeds up recruiting workers and executing projects since new personnel can start performing their primary duties within 2 to 3 days. At the same time, legal provisions are observed.
What is EOR?
Employer Of Record is a company that officially operates staffers of another employer.
The EOR becomes the legal employer for employees performing for another organization and assumes all risks and responsibilities for primary and day-to-day employment aspects and other ancillary tasks, such as processing payroll into local bank accounts.
What are the benefits of using EOR?
Given the wide range of EOR services, it is easy to see the benefits of choosing this option to speed up and simplify international employment.
Here’s a detailed overview of the benefits of using EOR:
- There is no need to create multiple legal entities to hire employees from all over the world.
If you plan to hire employees in multiple countries or don’t want to set up your own company in a specific country, EOR allows you to hire employees quickly and easily. This makes attracting global talent and exploring new business opportunities much more accessible.
- Access to local experts on tax laws and regulations.
With local EOR expertise, your company can focus on its core business functions without worrying about compliance and administration. The EOR’s job is to navigate all the complex and unfamiliar tax and employment landscapes, not yours.
- Complete understanding of local legal benefits.
With EOR, your business won’t have to worry about meeting its benefit obligations, such as paid time off, health care, and pension contributions. EOR handles everything.
- Fast adaptation of new employees.
EORs facilitate the rapid onboarding of new employees by handling administrative tasks such as employment contracts and payroll. Your company can hire new talent quickly and efficiently, even in unfamiliar markets.
When should you use EOR?
There are several situations when it makes sense to work with EOR:
- If you do not want to create a new legal entity.
Setting up a local legal entity can be costly and time-consuming. In some countries, this can take several months (or longer) and cost over $100,000. If it doesn’t make financial sense for your business, EOR is a simple and cost-effective solution for hiring foreign workers quickly and easily. You can hire employees ready to work within days for a simple flat fee per employee.
- You need to hire foreign workers to work without a contract.
Although international contractors can be used, not all work can be classified as contract work. Incorrectly classifying employees as contractors can have serious consequences, such as fines and penalties. In these cases, EOR is an excellent choice.
- When an existing employee moves.
As remote work becomes more common, employees are less tied to one physical location. Today, workers can move freely worldwide without giving up their jobs. EOR is a quick and easy way to retain employees who decide to relocate. With EOR, you can even hire digital nomads moving from country to country.
