Benefits of using an Employer of Record for your global team
Expanding overseas is an essential scope for organizations. The prospects of having access to new markets, being an industry pioneer in a new country, and access to a wider talent pool are exciting benefits for every organization. But entering new markets is always complex and challenging. Partnering with a Global Employer of Record is the best way to go.
This article will look at what an Employer of Record means and the various benefits of partnering with an Employer of Record.
What is an Employer of Record?
An Employer of Record is a third-party organization that hires, onboards and pays employees on behalf of organizations. By acting as the legal employer of the company, the Employer of Record handles all legal responsibilities shielding the organization from any breach of the law. In addition, using an Employer of Record enables organizations to operate in any country of their choice in compliance with the country’s employment laws and regulations.
What does an Employer of Record do?
Apart from enabling organizations to hire employees, a Global Employer of Record does more. Let’s take a look at some of the responsibilities of an Employer of Record.
- An Employer of Record acts as the legal employer on behalf of the organization, helping them hire contractors and full-time employees in the country of employment.
- An EOR makes visa and works permit arrangements for the organization’s employees.
- An EOR provides a registered entity so the organization can run a compliant payroll in the country.
- The Employer of Record ensures the organization carries out business activities in the country with full compliance with the country’s employment laws and regulations.
- File and process tax and insurance on behalf of the organization.
- The Employer of Record enables the organization to manage payroll compliance.
Benefits of using an Employer of Record
A Global Employer of Record offers many benefits for organizations planning to build a global team or expand into new markets. While entering a new market or building a global team is usually complex and time-consuming, an Employer of Record simplifies the process, ensuring the organization carries out business activities compliantly and with no hassles.
Here are some of the benefits of using an Employer of Record for your global team:
Build a team without setting up a subsidiary
Expanding or building a team without the help of an Employer of Record means the organization is required to set up a local entity. But the process of setting up a local entity is time-consuming, complex, and challenging.
However, an Employer of Record offers a better and easier alternative to building a team in a new country. With a Global Employer of Record, you can hire a remote team, expand, and build a team in any country without setting up a subsidiary or a local entity. The Employer of Record acts as a legal employer on behalf of your organization, handling all legal requirements and shielding you from any breach of laws in the country. A primary activity of an Employer of Record is to ensure full compliance with the country’s employment laws so that the organization can carry out its business with no legal issues.
Elimination of market entry barriers
Hiring abroad can be a complex process. In most countries, organizations are required to have an established entity or subsidiary before hiring or commencing business operations in the country. While this might seem like a simple requirement, visa approvals and business registration in the country takes several months to complete. However, a Global Employer of Record bridges the gap between the country and the organization. In addition, top Employer of Record platforms has a network reach and partners in many countries worldwide. Therefore, when a company plans to enter a new market, the Global Employer of Record hires and handles all employment-related tasks on behalf of the company.
Local laws compliance
Complying with local employment laws and understanding tax regulations is one of the significant challenges organizations face when entering a new market. Because every country has their unique laws and regulations, understanding or being well-versed in the local laws is challenging. For organizations to avoid situations where they are penalized for breaching the law regarding compliance, it is crucial for organizations to partner with a Global Employer of Record. An Employer of Record ensures that the organization remains compliant with the country’s employment laws by undertaking all legal formalities and obligations relating to employment on behalf of the organization in the new country.
While it is complex to manage payroll, managing payroll for a global remote team is more complicated. The organization will have to deal with processing fast payments in multiple currencies, dealing with various countries’ payroll compliance laws, and paying employees in the currency of their choice. With a Global Employer of Record, organizations can seamlessly manage, process, and automate payroll.
Save time, money, and resources
A lot of costs, resources, and time are associated with establishing a subsidiary, such as hiring a team, managing payroll, administering benefits, and establishing a physical office. These processes take time and money and are resource-intensive. Undoubtedly, they are overwhelming for any organization. However, with an Employer of Record, organizations do not have to deal with handling the processes that establishing a local entity requires. As a result, you can scale business operations in any country with the help of a Global Employer of Record without setting up a subsidiary.
An Employer of Record offers numerous benefits for organizations planning to expand or build a team in a new country. When organizations consider the cost and resources required to set up subsidiaries, a Global Employer of Record becomes an attractive option. Additionally, employer of Record platforms like Skuad provide an insulating layer of legal processes ensuring organizations encounter no challenges in their employment endeavors as they build a global team.
Skuad enables organizations to hire contractors and full-time employees in over 160 countries without setting up an entity as an Employer of Record platform. Skuad’s global HR platform also enables the onboarding of talent and payroll management and ensures full compliance with the employment laws.
To know more about Skuad, book a demo today.