They say that having a business is like raising your own child. Like child-rearing, you want your kid to have the best people to help mold their well-being. However, sometimes the right ones are not from your neighborhood – they can be from Canada while you are from the U.S. In a business setup, this may entail special arrangements. This is when an employer of record comes in handy.
What is an Employer of Record?
The Employer of Record (EOR) acts as the middleman between the employer and the employee. Although not concerned with day-to-day work, the EOR carries out regulatory and legal requirements of employment, payment, and payroll. Thus, the EOR allows your business to hire someone from another country, state, or province.
The EOR is only the registered employer on paper, but you’re still in control of your business and make decisions regarding position duties, projects, termination, and compensation.
Without an EOR, businesses cannot employ workers outside of the region they are headquartered. Although larger enterprises may form their own local legal entities, it’s usually expensive and time-consuming. This process adds unnecessary work to the business instead of focusing its efforts on other functions and projects.
What are the Benefits of Having an Employer of Record?
Having an EOR on board helps a lot in the outsourcing needs of your company. It’s an effective solution to minimize hassle on recruitment and hiring. Below are more benefits you may enjoy when you get an EOR to do things for you.
Keep the Focus on Day-to-Day Operations
Running a business means keeping track of many moving parts. You may have to look over marketing efforts, production processes and quality, and customer satisfaction techniques. Partnering with EOR services frees you with the work of recruiting employees and dealing with taxes.
Help with Worker Compliance
The Internal Revenue Service or state and local employment laws require updated data of your employees to remain compliant with the rules. Outsourcing HR services assures you that you have a team focusing on these requirements while you work to keep your business afloat.
Time and Indirect Cost Savings
Hiring an EOR means you won’t have to deal with HR and payroll matters anymore. This, in turn, gives you more hours in your hands to do more significant functions.
Reduced Employee Accountability
The EOR focuses mainly on the welfare of your employees, like payroll processing and insurance coverage, to name a few. These are mandated by the government and health maintenance organizations; thus, missing to meet these standards may mean closure to your business, or if not, could cost hefty cash from your funds.
When to Use an Employer of Record
When your company is thinking of expanding globally, hiring an EOR is the perfect move. An EOR makes sure your company meets your global objectives and requirements. Having so is also cost-effective since you won’t have to spend more money on establishing an entity or a team to perform these tasks for the company. You may just be testing the waters at this point, and spending so much on building your own local entity may not promise growth and return of investments.
Do You Need Help from an Employer of Record?
If you’re thinking of hiring an employer of record to help with administrative tasks and requirements, ClearPath should be on top of your list. We are a leading human resource outsourcing company, providing contractor management and payroll services for 25 years. Contact us today to discuss how we can be a substantial addition to your team.