But, becoming a global business isn’t easy. You have big decisions to make and new compliance concerns to manage, all while keeping up with your current operations. On your journey to the world stage, you might need some help from an employer of record.
In this guide, we’ll break down everything you need to know about employer of record services, starting with a complete run-down of their functions. We’ll also explore seven benefits of seeking expert help from an international employer of record like Playroll to help you make the best decisions for the future of your business.
Employer of Record Services: The Basics
Working with a global employer of record could significantly help your business as you grow your presence within the international market. Employers of record perform a few key roles:
- Automated payroll service – One of their many roles, employers of record provide payroll solutions to growing companies looking to automate global HR processes. They calculate wages, deductions and benefits and deliver international employee paychecks via direct deposit—a completely paperless, streamlined process.
- Benefits administration – When you partner with an employer of record, your employees reap the benefits of a massive international benefits network. Employers of record secure excellent group-rate prices for benefits, helping you optimize 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. Importantly, they assume any liability for filing and payment mistakes, taking the burden off of your shoulders.
- Compliance monitoring – You don’t need to be an expert on international labor laws, minimum employee benefits or business regulations to run a worldwide business—that’s what an employer of record is for. Their 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 – Employers of record can help you estimate costs, create short- and long-term plans and budget for future staffing investments. They keep you from hiring staff you can’t afford and optimize the profits available for HR investments.
- Legal entity – In most cases, businesses that hire employees abroad must establish a legal entity within the borders of their employees’ home countries in order to remain in compliance with local laws. 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.
Employers of record cover a lot of ground—their expertise and tools can help you navigate the international market, streamline your HR operations and plan for future growth.
Benefits of Using an Employer of Record
Now that you know the ins and outs of using an employer of record, let’s explore the benefits of using such an employment service to support your growing, global business.
#1 Expanding your workforce efficiently
When you expand into a new country, you’ll likely need to hire additional, local help to work in brick-and-mortar facilities, complete the services your business offers, provide customer support and more.
With help from a global employer of record, you can seamlessly add new staff to your team to quickly and efficiently onboard them into your workforce. How?
- Employers of record provide simple, structured and paperless onboarding and HR data collection.
- Since a partnership with an employer of record exempts you from establishing a legal entity in new employees’ respective home countries, you can begin your talent search and hire new staff without waiting for local governments to approve your legal entity applications.
- Employers of record are international HR compliance experts—thus, you can save time researching the labour and benefits laws in your new employees’ homelands, leaving that burden to the professionals while you build new teams.
#2 Managing compliance with ease
Speaking of compliance, let’s discuss how employers of record make it easier than ever to operate above board when you expand abroad.
Think of all the regulations you must comply with to operate in your home country alone:
- Hiring, labour and termination laws
- Financial reporting requirements
- Minimum mandatory benefits for employees
- Insurance coverage requirements
- Professional license applications and renewals
- Tax filing and payments
When you expand to even just one more country, you suddenly double your compliance workload—unless you partner with an international employer of record, also referred to as globalization partners.
Employers of record can decimate your compliance workload—and anxieties. Not only do they ensure compliance in your operations abroad, but they also take cover compliance monitoring required by your home country.
An employer of record will keep up with changing laws, research regulations abroad and complete mandatory reporting benchmarks related to labour and legal establishment—that gives you more time to focus on innovation, operations and international growth.
#3 Reclaiming operational time
Running a business is time-consuming—especially if you’re a key stakeholder in your company.
Accordingly, company leaders wear many hats:
- They get the final say on product and service developments
- They oversee every department
- They work with legal and financial teams to ensure an above-board operation
- They serve as the face of the company, rubbing elbows and expanding client lists
Key stakeholders like presidents, owners and CEOs have enough on their plates—employers of record can help reduce their workload by automating and streamlining HR, compliance and tax-related tasks, giving them more time to dedicate to their primary role.
If an operational measure can save key stakeholders time, it can certainly do the same for other employees. When employees have fewer banal tasks on their plate, they can dedicate their time to innovation, brainstorming and project work.
#4 Reducing overhead costs
In the section above, we discussed reduced time obligations for employees working with an employer of record—and, as the old adage goes, “Time is money.”
When you reduce HR workloads, streamline processes and give employees time to complete the tasks that lead to profits—providing services, building products or communicating with clients, for example—you save money on overhead.
Time spent running a manual or automated payroll, researching compliance regulations or completing any other internal tasks incurs overhead costs—time investments in tasks that spend company money without earning any from customers.
Employers of record help businesses complete the tasks listed in the first section of this guide, giving employees more time. When an employer of record streamlines these processes, employees can use their newfound time to:
- Brainstorm new efficiency measures to further decrease overhead costs
- Develop new internal policies to improve their workplace
- Attend continuing education or professional development sessions
- Contribute positively to the development of the business’s new international markets
#5 Ensuring accurate, on-time payroll processes
When it comes to operating a business, implementing reliable global payroll processes is vital to employee morale and your reputation as a business leader. As such, it’s crucial that business owners:
- Pay employees accurate amounts
- Take the correct deductions from their paychecks
- Pay employees on time and on a regular schedule
- Complete labour compliance reporting
- Administer benefits
Slipping up on any of the above can decrease employees’ trust in company leadership, decrease morale or even motivate employees to look for work elsewhere. In addition, late payments without cause or prior warning—in some cases—are against the law.
Since they provide payroll management services, employers of record ensure that your company is always up-to-date on payroll and payroll tax functions, preventing low morale, employee retention issues or compliance concerns.
And, arguably most importantly, employers of record can complete these tasks without regular input from in-house HR or finance staff once employee onboarding is complete.
#6 Keeping your org chart lean
Your business probably started small, and there are certainly benefits to maintaining a lean staff:
- Reduced overhead costs
- Cross-training, preventing backlogs if an employee calls in sick
- Smaller communication chains
- Lower management workload
Entrusting an employer of record with your HR procedures, regulatory tasks and tax-related obligations can prevent overstaffing—instead of hiring a team of employees to handle each of the three aforementioned tasks, you can assign them all to one entity.
In addition, consider employers of records’ roles in international growth. Establishing a legal entity in a foreign country requires manpower—but, if you partner with an employer of record, you can bypass this step and reduce your staffing needs.
#7 Using cutting-edge HR platforms
Technology changes quickly—investing in software to improve your operational efficiency always comes with a risk of future obsolescence and, thus, reduced ROI.
But, employers of record develop their own platforms instead of relying upon third-party software providers to maintain their tech. This is beneficial for a few reasons:
- Employers of record staff are experts in their field and experts in their own software, so they’re always available to provide high-quality tech support if needed.
- Since their proprietary platforms are a major selling point for clients, employers of record are always working on software improvements behind the scenes, preventing obsolescence.
- Employers of record control the data that they use—instead of risking a security breach with additional third-party software, they keep your confidential company information self-contained.
With employers of record, you get the best of both worlds—cutting-edge tech and seasoned professionals who know how to use it.
Playroll: Your Business’s Ticket to Global Hiring
Knowing the difference between an employer of record and PEO (professional employer organization) can be very beneficial to any business. Employers of record can provide helpful tools and expertise to businesses ready to take the world by storm. Their expertise, streamlining capabilities and high-tech software make it easier than ever to hire and run your business abroad.
When it comes to quality, service and ROI, no one outperforms Playroll. For more than two decades, our teams of HR and compliance experts have been helping worldwide businesses spread their wings, enter new markets and make profits.
Plus, our all-in-one, user-friendly platform can help you monitor compliance efforts, plan future staffing investments, efficiently onboard employees and so much more.
You’re ready to go worldwide, and Playroll is ready to help.