How to Choose an Employer of Record?

How to Choose an Employer of Record?

Many SMEs are choosing to adapt employer of record (EOR) solution in order to handle their human resources operations. EOR services are also very important for small businesses seeking to expand into new markets without founding a new legal entity.
When you are hiring remote emoployees or assigning employees abroad, most countries are going to require that you have a local corporate entity to run payroll and comply with all employment and tax laws.

What is an Employer of Record?

An Employer of Record (EOR) serves as a co-employer for the employee and the client company.
Specifically an EOR is often used for an international expansion when a company plans to conduct business activity in a new country without a physical entity.

What Does an Employer of Record Do?

The employer of record takes on the responsibility of typical employment matters and liabilities. This lightens the burden of international legal, financial and HR operations off your shoulders, letting you concentrate on your business.

Why would a company use Employer of Record solutions?

An EOR is often used for international expansion when a company considers to conduct business activity in a new country without a physical entity.
The process of registering a local business office can be expensive and difficult. The company may need to move fast in order to meet the needs of a project or new business venture. Maybe they only require a short term service.
That said, a global Employer of Record can be an efficient way to hire workforce in that country. The EOR will have a legal entity to operate local payroll, employment tasks and other specifics. The EOR will also come as the legal employer for your remote employees in the host country.

When should you use an Employer of Record?

There are several reasons that you would use an EOR when hiring abroad:

  • You are new to the foreign market and not prepared to open a branch office just for employment purposes.
  • The foreign country has complex and unusual employment laws that are unfamiliar to your HR department.
  • One of your strategies for global growth is to outsource the employment and administrative operations.
  • You are hiring remote workers in other countries, but still need a method to operate a local payroll for them.

No matter what your reasons are for using an EOR, selecting the right EOR solution is a very important decision.

What to consider when choosing an employer of record?

  • Background

It pays to choose an employer of record who has experience working in the local field that you want to expand your business to.

  • Influence

You should be selective about the other businesses that you partner with. Before you enter into any kind of formal relationship with another business, you first need to research their reputation and be sure that they are right fit for your business needs.

  • Benefits for the employees

Every employer of record is different. While they all offer the same core service, the additional benefits that they add on top vary from partner to partner. Some employers of record also offer employee benefits that your business does not offer. Many small businesses choose to use an employer of record specifically because it gives their employees access to the kinds of benefits that are generally only available in bigger organizations.

  • The technical solution

Conflicts between the IT systems your business uses and those that your EOR uses can cause headaches all round. You and your EOR are going to be exchanging a lot of data regularly. Critical tech and system conflicts are going to impact the quality of the solution you receive.
On the other hand, if the EOR’s systems integrate easily with your own, you will find it much easier to operate everything you need remotely.

Employers of record provide a vital service for SMEs looking to expand their operations overseas. Take the time to explore them and make sure they are the right fit for your company.

What to seek for in such service

Assessing the right EOR for your business is an essential stage in your global expansion.
Here’s what you should watch out for, according to business leaders who have already worked with an EOR:

  • Watch out if they can’t give you satisfied customer testimonials.
  • If they don’t demonstrate an authentic interest in supporting you impact your company, not just fulfill the bare minimum of their contract, they aren’t a true partner.

Employers of record provide a vital service for SMEs looking to expand their operations abroad. Take the time to explore them and make sure they are the right fit for your company.
The right Employer of Record will properly support you and remove the barriers you consider when expanding globally. Many organizations trusted Horizons Bulgaria as a partner in their HR and EOR services.

Photo credit: Freepik

Cited Sources:

  1. https://nhglobalpartners.com/
  2. https://shieldgeo.com/
  3. https://www.airswift.com/

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