Expanding overseas allows savvy companies to uplevel their workforce and explore emerging markets. While business expansion has a lot to offer, it’s not for the faint of heart. Employing people in foreign jurisdictions brings on a slew of complex HR administration and payroll burdens, and labor laws can vary notably from one place to the next.
Luckily, expansion-minded companies don’t need to go it alone. Professional Employment Organizations (PEOs) and Global Employment Organizations (GEOs) can streamline the process by taking over many of the administrative and compliance burdens. Below, we’ll compare PEO vs GEO so you can ch
oose the partnership that’s right for your business.
What Are PEOs and GEOs?
To start, let’s define these two entities and the roles they play in global business operations.
First, let’s dive into what is a PEO? A professional employer organization is a co-employment entity that provides HR administrative support for expanding companies, such as:
- Global payroll solutions
- Employee benefits management
- Tax calculation and withholding
Partnering with an international PEO service lets you outsource these tasks as you pursue nationwide expansion. Since labor laws can vary from state to state, offloading these tasks to a team of experts can mitigate the burden on your HR department. As a result, you can hire employees from across the country without worrying about the resulting compliance complexities.
PEOs are largely an American phenomenon. They first emerged in the United States to help companies expand across state lines. While some now offer support for international PEO services, their co-employment structure is not viable in all countries. For example, co-employment is illegal in France.
What is a professional employment organization (PEO)?
Do you envision your company expanding across the globe? If so, a Global employment organization may be a better solution. A GEO, also known as an international PEO, is a third-party entity that offers similar HR administrative support as a PEO.
The key difference? The GEO also serves as the employer of record (EOR) for foreign employees. An EOR is a company that serves as the sole legal employer on behalf of another organization. As EORs, GEOs allow companies to expand their workforces abroad without setting up local subsidiaries in each new location.
Like PEOs, GEOs offer administrative HR and international payroll support services for foreign employees, including:
- Recruitment, hiring and onboarding
- Work permit and visa arrangements
- Employee contract development
- Payroll solutions and employee benefits management
- Tax calculation and withholding
- Labor law compliance
What Are the Similarities Between PEOs and GEOs?
As you can see, PEOs and GEOs provide similar solutions. Let’s take a look at 5 of their shared benefits.
1. They can help you tap into new talent pools
A company is only as good as its employees. Nowadays, you’re no longer limited to the talent within your immediate location. You can scour the globe for the very best candidates.
PEOs can help you hire employees domestically, and in certain cases, abroad. On the other hand, GEOs can shatter all location barriers, allowing you to access talent from anywhere in the world. As a result, you can fortify your team with people who:
- Can navigate foreign markets with experience and sophistication
- Speak the language of the people in your emerging market
- Possess specialized job titles that may be less common in your city
Since PEOs and GEOs handle recruiting, hiring and onboarding, you can enjoy all of these perks without putting in the complex administrative leg work yourself.
2. They keep you in compliance
While we’re more connected than ever before, distinct legal jurisdictions still exist. Each location where you want to hire employees may have different tax laws, labor laws, insurance requirements and payroll procedures.
Keeping track of it all could make anyone’s head spin, and it can certainly put an undue strain on your HR department.
Some companies assume that hiring people as independent contractors can solve this problem, but don’t make this mistake. If your independent contractors are determined to be employees by their home countries’ laws, you may be on the line for benefits that you didn’t factor into your budget.
PEOs and GEOs can relieve you of these compliance stressors altogether. Both entities can match you with local experts who are well-versed in the employment regulations of your new locations. With their support, you can sit back and relax, knowing that your company is in compliance.
3. They enable swift expansion
In the business world, timing is everything. Being the first company of your kind to enter an emerging market can give you a competitive edge that serves you for years to come.
Without the help of a PEO or GEO, expanding your workforce abroad can be incredibly difficult and time-consuming. You’ll have to familiarize yourself with the local labour laws and potentially set up a subsidiary. Fast-acting businesses don’t have time for all that.
Partnering with a PEO or GEO can help you expand to strategic locations with speed and precision, giving you a leg up over the competition.
4. They can save you time
As a savvy business person, you know that your time, energy and attention are limited. Knowing when to delegate is crucial if you have dreams of expansion.
By delegating administrative HR and payroll to a PEO or GEO, you can free up your time to focus on your company’s core operations, while scaling simultaneously.
5. You still get to run the show
Outsourcing aspects of your business to another entity may cause concern in regards to losing control, but don’t fret. While PEOs and GEOs manage many critical tasks on your behalf, you remain in charge of your faraway employee’s day-to-day responsibilities.
As a result, you can determine your expanding workforce:
- Job description
- Job duties
- Terms of employment
- Work schedule
What Are the Differences Between PEOs and GEOs?
Despite their many similarities, PEOs and GEOs have several differences you should be aware of. Let’s take a look at how PEOs and GEOs stack up in the following areas:
- Foreign Incorporation Requirements – As we mentioned earlier, the most notable difference between GEOs and PEOs is the need for foreign incorporation.
By eliminating the need to set up a local subsidiary, a GEO can streamline your expansion efforts significantly. A PEO may be able to assist with your incorporation process overseas, but you’ll still have to undertake it if you want to expand into foreign countries.
- Scope of Expansion – When it comes to the scope of expansion, it’s all in the name—GEOs are better suited for international expansion. Due to their global expertise, GEOs can even help you select strategic locations to enter into, based on your business goals.
PEOs may be adequate for domestic expansion, but their support services often end where another country’s borders begin.
- Employment Contract – When you partner with a GEO, employment contracts will exist between the GEO and your foreign employees. You won’t actually have an employment contract with your employees abroad. Instead, your contract will be with your GEO.
With a PEO, you maintain co-employment contracts with all of your employees.
- Liability – The way your employment contracts are set up determines your liability. GEOs assume full liability for your employees, shielding you from any breaches relating to your foreign employment contracts and compliance as you pursue expansion.
Since PEOs are only co-employers, they may share some liability with you, but ultimately, you’ll still be on the line for any breaches of contract or local labor laws.
- Insurance – Since GEOs serve as EORs, they’re responsible for carrying insurance for your employees. GEO insurance typically includes general liability, professional liability and worker’s compensation. GEOs can also make sure that your employees’ health insurance plans comply with local laws.
PEOs may provide some insurance, but it’s often an optional add-on. As a co-employer, you will have to carry your own insurance either way.
Should You Partner With a PEO or GEO?
Now that we’ve compared and contrasted these two entities, you may be wondering which one you should partner with.
While a PEO may be sufficient for domestic growth, a GEO is a superior option if you want to branch out internationally and enjoy more comprehensive liability protection.
No matter which entity you choose to work with, you can rest assured that your HR burdens will be notably reduced, giving your company an edge that can supercharge its expansion.
Playroll: Expand Your Business Globally With Ease
Are you ready to expand your business? If so, Playroll can help you every step of the way. As a GEO with over 25 years of experience, we’re known for our exceptional HR support and convenient payroll management system.
Since we have employer infrastructures in almost every continent across the globe, we can help you upgrade your workforce and broaden your horizons. You won’t need to worry about setting up international subsidiaries or navigating foreign labor laws, due to our EOR status. As you sit back and relax, we’ll handle all of the legal and compliance hurdles that arise along the way.
Want to learn more about our employer of record services? Book your Playroll demo today.