An employer of record is a company that acts as the legal employer for employees working for other businesses. Using an employer of record allows companies to outsource payroll, benefits, human resources compliance, and other aspects of employment. There are many types of businesses and organizations that can benefit from using an employer of record.
Expanding Businesses
Companies planning to hire overseas staff, including international startups or businesses beginning new global expansions, can greatly benefit from using an employer of record. The employer of record handles all legal requirements, payroll systems, benefits packages, and other aspects of becoming a legal employer in the countries where new staff members are located. This allows the business to focus on its core operations. Whether a small shop adds its first international employee or a larger corporation has a growing global workforce, an employer of record simplifies global growth.
Remote Teams
Many modern businesses utilize remote workforces, with employees based in multiple countries and jurisdictions. Managing payroll, taxes, compliance, contracts, and other issues can be extremely difficult. An employer of record can handle the immense administrative burdens associated with remote employees. The employer of record becomes the legal employer, no matter where each employee resides across the globe. This provides considerable savings in time and labor for companies with global remote teams.
Startups and small businesses
Starting a new business involves massive investments of time and work before generating profit and establishing operations. An employer of record allows startups and lean small businesses to begin hiring staff right away without tackling the many complex legal, tax, and compliance hurdles for each new country where employees are based. By utilizing an employer of record, early-stage startups can deploy key team members quickly across all jurisdictions. The employer of record handles all of the immense legal and administrative burdens modern companies face when hiring worldwide talent. This allows small businesses to focus on customers and product development.
Contingent Workforces
Many companies depend on contingent workforces, mixing part-time, hourly, and per-project workers with traditional full-time roles. Contingent workers operate remotely around the globe, complicating payroll, tax liabilities, and employment compliance. An employer of record becomes the legal employer for all workers classified as 1099 contractors, direct contract employees, or contingent employees. By utilizing one employer as a record supplier, companies can quickly deploy agile workforces without taking on additional risk or legal burdens.
Transitioning Organizations
Companies transitioning to new structures, including spin-offs, subsidiaries, and mergers and acquisitions, can also greatly benefit from employer-provided record solutions during the restructuring process. An employer of record allows the transitioning business to retain vital talent before new corporate entities are legally formed to directly employ staff. The employer of record takes over all payroll and compliance for staff during transitional periods, allowing companies to finalize complicated restructures smoothly.
Conclusion
Employers of record services provide immense value for a diverse range of modern companies, especially SMEs and startups expanding into new global markets. By leveraging an employer-record supplier, organizations can deploy talent with maximum flexibility and efficiency across borders. This allows companies to focus on delivering value to customers rather than wrestling with the growing administrative burdens of global employers. Any business model that utilizes permanent remote employees or contingent workforces can benefit from using an employer of record for simplified employment.
