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What's The Difference Between A Professional Employer Organization And An Employer Of Record?

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2022-11-29 14:45
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Description : What's The Difference Between A Professional Employer Organization And An Employer Of Record?
If you're thinking about outsourcing HR, you'll have to make a few decisions. The first is the distinction between EORs and PEOs, two sorts of third-party providers. There are substantial distinctions between the two, and failing to recognize them might put your business at danger. This article will clear the air and assist you in making a crucial decision regarding the sort of business you require.

Focus Point:

1. The Employer of Record (EOR) system comprises a third-party corporation functioning as a client's legal employer.

2. A Global Employer of Record is responsible for payroll, as well as ensuring that all required deductions and payments are made, as well as other employer compliance responsibilities.

3. Using Employer of Record services to grow globally is often a more cost-effective and compliant option than incorporating a separate company or subsidiary.

Employer Of Record Vs. Professional Employer Organization

EOR stands for "employer of record." These businesses perform all of the functions of a PEO while also serving as the official employer of your employees. This is a significant point of distinction between the two services. A global employer of record service is a legal employer who is responsible for hiring, employing, and firing employees.

A professional employer organization, or PEO, is a business that employs people. Small and mid-sized businesses might benefit from HR services provided by PEOs. Payroll and benefits, HR, tax, and regulatory compliance are all examples of this. PEOs assist roughly 175,000 businesses in the United States each year, according to their national association.

Consider Your Requirements With EOR And PEO


PEOs and employment records have distinct capabilities and are best suited to certain scenarios. A PEO can be the appropriate partner for you if you want to start a new branch office or create a subsidiary to establish a permanent presence.

When you want to maintain control while expanding your HR skills, a PEO is a superior option. They're there to assist you comply with local labor rules and improve company HR capabilities, which might make a PEO a better long-term alternative than a global employer of record service.

An EOR may be the best option for your company if you just need to acquire individuals quickly. When you join a new market, an employment record also decreases your responsibilities. Because they assume the employment connection, the employer of record service is solely able to comply, insurance, and employment contracts, reducing the amount of red tape and regulation you'd have to deal with if you were recruiting globally.

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