Benefits of Using Employer of Record Services for Creating a Global Team

The importance of creating a global workforce is unhidden. You get access to a culturally varying level of employees and diversify your business simultaneously. If you’re looking to create a diversified workforce from scratch, you might consider hiring an EOR or Employer of Record services. 

The EOR service providers offer numerous benefits over staffing agencies. They take care of everything from hiring to location taxation and more. In this article, learn why you should work with an EOR to build a global workforce.

What is an Employer of Record (EOR) Company?

An EOR company is an organization appointed by another company, and it serves as the employer for the employees located in a foreign country. So, if you hire an Employer of Record, it will represent your foreign employees as their employer. The employees will still deliver the work to you but will work under the EOR. Your business will retain control over the entire operation.

The main reason for hiring an Employer of Record Services is for taxation purposes. And they perform many other functions that a regular staffing agency doesn’t. Staffing agencies only recruit and assign employees to the businesses when there’s a skill shortage. But that’s not the case with an EOR. In the subsequent sections, learn about the main benefits.

Taxation and Compliance

As mentioned earlier, the main reason why companies hire an EOR is to take care of local taxation. As a foreign company, you must file taxes for hiring local employees. Every company has its tax structure for multinational companies. For example, in India, companies are expected to pay TDS or Tax Deducted at Source for every employee. Similarly, China has IIT or Individual Income Tax.

The company is responsible for paying the taxes on time. To meet the tax requirements, you should work with an EOR. 

They take care of the payroll end-to-end. They will be using their own Federal Employer Identification Number and state Employer ID number. So, the payroll liabilities remain on their side.

As a foreign entity, you must meet other local laws too. EOR services will help you comply and stay compliant. 

No Business Registration Requirement

If you want to operate in a country legally and hire local staff, you must register as a company. This can be a time-consuming and costly endeavor. You have to pay legal fees and literally be an expert in local laws.

But EORs are already registered as a local business wherever they operate. Some EORs operate across the continents. So you do not have to register your company at that location. Just hire an EOR and get started with leveraging the local workforce.

Background Check and Onboarding of Employees

Pre-employment screening is essential, irrespective of the location in which you’re hiring. It helps you select the right employees with the right background. 

When you work with the EOR services, they screen a local candidate before hiring. They carry out a thorough check both on his criminal records and educational background.

Other than conducting the checks, they also help onboard the local employees. They negotiate salary, reward program, bonuses, and issue employment letters — all under their name.

Insurance Management

Most countries require companies to offer insurance to their workers. It can be challenging for you to set up an insurance program in a foreign land. And that’s when you can use EOR’s service offering. They take care of the employee insurance and manage it at their end.


Most people think that an Employer of Record is the same as a Professional Employer Organization. But there are technical differences you need to know.

The differences lie in liability, insurance, and business registration requirements. PEO is more of a co-employer. You’re still required to sign the employment contracts for the employees they hire. But in the case of EOR, you don’t have to deal with the employees. 

Hiring a PEO doesn’t exempt you from registering your company locally. You’d still have to register. Though, that may not be a requirement with EOR since they’re already registered as a business entity in a specific.

Finally, a PEO doesn’t manage employees’ insurance. That’s something you’d have to figure out. But as already mentioned, PEO includes the employees in their insurance policies.

So these are some of the intrinsic differences between a PEO and EOR.
Ideally, work with an Employer of Record services when you’re new to the foreign market and looking to open a branch office to hire local employees. It will save you hours of work and capital.

Brad Richman