This post is sponsored by Remofirst. All opinions are my own.
Hiring remotely around the world is not only more common today, but the companies that do become more enticing to job seekers.
And when companies are open to global remote work, it also attracts the best talent and improves diversity in the work culture.
It’s a win-win.
Yet one daunting task when hiring employees overseas is that most countries will require you to have a local corporate entity. Without that, you will not be able to run payroll or effectively handle the various tax laws associated with these locations.
That can be not only time-consuming but expensive when setting up these entities in various markets. But it’s why remote-first organizations are turning to Employer of Record Services or EOR as it is abbreviated.
When you finish reading this guide, you’ll have a clear understanding of:
- What an Employer of Record is
- What Employer of Record Services Entail
- The Benefits of an Employer of Record
- Choosing Your Employer of Record
What is an Employer of Record (EOR)?
An employer of record (EOR) is an international employment services provider that ensures your company can legally hire and pay remote workers that live in other countries. An EOR service provider can handle payroll, benefits, taxes, local compliances, and equity.
Without these providers, your company would face complicated and time-consuming tasks of understanding laws and regulations to ensure your remote employees can legally work for your organization.
This can take months of time and can cost your company thousands of dollars to ensure everything is processed correctly. And even then, you can easily make mistakes causing more headaches.
Is an employer of record legal?
Yes, it is legal to hire remote employees in other countries via an Employer of Record. However, you still want to analyze your potential service provider as some of these EORs have more compliance than others.
I’ll get into some further details below about what to look for in your employer of record services. But just note it’s important that they own or work with a local entity and have the expertise to navigate local payroll, benefits, taxes, etc.
What Are Employer of Record (EOR) Services?
An employer record of services will include all the necessary items to be able to hire top talent from around the world. The major services that an EOR does are generally around these categories:
- Payroll and currency exchange
- Employee benefits like health, dental, vision
- Manage taxes and stay compliant
- Handle stock options and equity
- Local country compliance
- Onboarding and termination processes
- Manage international contractors
Pretty much all the services of an EOR will land within human resources or legal. These are the two biggest hurdles for hiring international remote employees currently.
Some employer of record services might also include advice on remote productivity, integrating remote workers into the culture, further defining salaries and compensation plans, or even advising on how to expand into new international markets.
What Are the Benefits of Using an EOR?
Hopefully, you are starting to feel more confident about wanting to hire globally. And this is great, especially when you know providers like Remofirst exist!
But even though you are starting to get the big picture, let’s call out the essential benefits of using an EOR.
1. Time and money saver
Undoubtedly, your company wants to get the new top remote talent onboarded and contributing ASAP. But when you are bogged down by legal and compliance of various countries, that is time and money wasted.
But beyond that, it can cost you serious chunks of change to have physical entities in various countries, as well as to research, file compliance, and have a legal team confirm everything is correct.
And employee misclassifications can happen, which are also costly and cause major headaches for your company. An EOR helps you avoid those accidental mistakes.
2. Easy management of global payroll
Every country operates differently, especially when it comes to the legalities of remote work. Fortunately, many countries outside of the United States offer great working environments, like 4-day workweeks.
But because tax rates vary and laws are being adjusted frequently, it is not easy to manage.
This is where EOR providers become key, as they are constantly staying up to date on regulations and compliance around taxes, pensions, retirement plans, etc.
3. Conserving your company resources
By utilizing an EOR solution, you conserve company resources for other important operations that help your business run and grow.
By tackling these global hiring issues on your own, your HR and legal teams become completely bogged down. Instead, your teams can now focus on other pressing issues, while your EOR service handles the rest.
4. Manage immigration compliance
Although your company might be remote, there will be time for company meet-ups, travel for events, or your company may have offices set up around the world.
And immigration and travel laws can also be challenging to navigate. But understanding any laws or applications needed, it ensures you stay compliant with these host countries.
5. Manage remote employee onboarding
Onboarding new employees can already be challenging in person, but now you factor in working remotely and from different countries – it can be overwhelming.
But you want your company to have a smooth process that gets your hired talent excited, informed, and ready to deliver results. An employer of record service can also set up frameworks and guide results to ensure no mistakes are made during the onboarding period.
6. Easier Growth and expansion
Maybe it’s early in your company’s goal to expand globally. That’s perfectly okay!
But it’s also an ideal time to work with an EOR solution, which can be your guide to expanding the growth of your business internationally.
Again, you are shortening the time it takes to hire and get remote employees settled into their new job. This allows your company to focus on driving growth and expanding much faster and efficiently.
A survey by CFO Research revealed some of the top benefits of an employer of record model, including:
- Legal and HR compliance assurance (51% of respondents).
- Regulatory compliance assurance – (42% of respondents).
- Leveraging the local knowledge (40% of respondents).
- Free finance team resources (38% of respondents)
How Do I Choose an EOR?
So you are interested in leveraging an EOR solution to start hiring global remote employees. Great! But now how do you go about choosing your provider?
It’s a fairly common question, so I put together some checklist questions to ask during your research.
- Is the EOR provider global and do they cover the countries you are active in or want to start hiring in?
- How are your data and the privacy of employees protected?
- Does the employer of record cover the services you specifically need?
- How does the EOR deliver its service? (Online, direct, customized options)
- What other companies trust and use this EOR solution?
- Is the EOR their core service or is it a complementary item?
- How easy is it to cancel your contract with them if the service is not working for your company?
- Are the costs and timelines clear about their various services?
How much does an employer of record cost?
An employer of record solution will vary in cost, but most providers use a flat fee structure.
You may see some use percentage pricing, but your best bet is to stick with those that offer flat fees. It’s more transparent and is more cost-effective.
Remofirst’s EOR services start at $199 per person, per month. There are no additional deposits or hidden fees associated with using their platform and services. And if your company is employing contractors it’s completely free to use and sign up.
Now there are differences between the two plans.
Employer of Record Plan includes:
- Hire with one click in 150+ countries
- Streamline Payroll, tax filings, pensions, and more
- Compliant and localized contract creation
- Onboarding & termination HR guidance
- On-demand expertise in local rules and regulations
- 24/7 support
- Access to benefits and health insurance
- International payment with one click
- IP protection
The Contractor Plan includes:
- Generate and sign contracts
- Automate payment processing
- Simple administration and management
Remofirst works with companies like Mastercard, Labster, Microsoft, Userlytics, and more. Ready to learn more? Get the inside scoop about Remofirst here.
Can you employ global remote employees without an EOR?
You certainly can hire remote employees globally without using an EOR solution. But if you choose this path, your company will be required to open its own legal entity in that country or hire them as contractors.
And this can require hiring a large team of lawyers, benefit and payroll specialists, and more in the HR department. There is more to it than what I’m covering here. But again, this all comes back to time and money.