As your business grows you might be considering moving into new international markets. There are hundreds of businesses that employ foreign specialists to work for their business remotely. There are tons of advantages to using this business model, but it’s not always easy to implement it and get it up and running.
You may be worried about how you’re going to pay your international employees, or how you’re going to comply with the laws and regulations in a specific country that you’re aiming to hire people in. It’s all time-consuming, stressful, and expensive to get through, unless you use an EoR.
An EoR is an Employer of Record, and these organisations have become an essential part of expanding your business internationally. They take all of the stress and hassle out of the complex processes that you need to consider before hiring international candidates, and allow you to focus on running your business to the best of your ability. Keep reading to find out what an EoR is and why your business needs one if you’re going global.
What is an Employer of Record?
An Employer of Record is a third party entity that allows your business to employ people living abroad without having to set up a legal entity in your employees’ home country. This gives you the advantage of being able to hire anyone from anywhere.
But, that’s not all an Employer of Record does. An EoR can provide several other services that take pressure off your business and your employees when it comes to global expansion. Overall, it’s an entity that has become essential to utilise in our modern society.
What Does an Employer of Record do?
An Employer of Record can provide several important services to your business. Here are some of the most important features of an EoR that your business might need:
- Automated payroll service – Employers of record provide payroll solutions to growing companies looking to automate global HR processes. This allows your business to calculate wages, deductions and benefits and deliver international employee paychecks via direct deposit or any other payment option you would prefer in a quick and streamlined process.
- Benefits administration – Partnering with an employer of record means that your employees get the advantage of a massive international benefits network. EoRs secure excellent group-rate prices for benefits, helping you optimise your staffing costs.
- Tax filing and payments – Employers of record file and pay applicable taxes domestically and abroad as a part of their payroll management system — one of the more difficult and time-consuming processes. Importantly, they assume any liability for filing and payment mistakes, taking the burden off of your shoulders.
- Compliance monitoring – Complying with international labour laws is important when growing your business overseas. An EoR is your expert on international labour laws, minimum employee benefits and business regulations. The EoR expert teams ensure that your business is always operating above board, even if you’re not familiar with laws in your new markets.
- Financial planning – An EoR can even help you to estimate your potential costs, create short- and long-term goals and budget for future staffing investments. This will prevent you from overpaying for your staffing needs and free up more capital in your HR department’s budget.
- Legal entity – Businesses that hire employees abroad need to establish a legal entity within the borders of their employees’ home countries in order to remain in compliance with local laws. While this might not be an issue for larger companies, it’s much more difficult for SMEs to achieve. But, when you use an employer of record, you can skip that step—as worldwide entities, their clients are exempt from establishing a legal presence abroad.
Why you Need an Employer of Record
There are many benefits to using an Employer of Record when expanding your business internationally. Below are just a few of the important benefits you can expect to benefit from when partnering with an EoR:
- Efficient expansion of your workforce – With an EoR you can seamlessly add new international staff members to your workforce. This is because you’ll have the benefit of structured and parepless onboarding, the knowledge and experience of international HR compliance experts, and skipping the need to wait for approval from local governments for your legal entity applications.
- Managing compliance in foreign countries – when hiring in a new country your business will need to adapt to the HR compliance requirements of the local country. There are several different needs your business will need to meet before you can even start hiring candidates — massively increasing your compliance workload. Not only do they ensure compliance in your operations abroad, but they also take cover compliance monitoring required by your home country, allowing you to focus on your innovation and growth.
- Reclaiming operational time – The key leaders in your team have enough workload on their shoulders as it is. Having to keep up with the requirements of international expansion is tough, and it can take up a lot of time. Working with an EoR can help to reduce the workload on your entire team by streamlining your HR, compliance and tax-related tasks.
- Reducing overhead costs – As we know, “time is money”. When you streamline your HR workloads you’re buying more time for you time that can lead to generating more productivity and extra profits.
- Accurate and on-time payroll processes – Building your reputation as an excellent international business requires you to build a strong reputation and improve your employee morale. An important part of this is having a reliable global payroll process. Avoid late payments, take the correct deductions, pay accurate amounts, and administer benefits — an EoR can help you to do this consistently.
- Access to cutting-edge HR tools – Investing in new technology is essential for any business, but it’s also risky. You can lose your ROI if the technology becomes redundant in the future. EoRs often create their own platforms without having to rely on third-party technologies, which means that there’s no need to rely on third-party providers to maintain their software.
- Prevent overstaffing – Expanding your business into global markets will require you to hire a multitude of new staff — unless you use an EoR. By partnering with an EoR, you can focus on hiring the staff that will boost your business rather than hiring and training new staff to manage the international side of your business.
