PEO stands for Professional Employer Organization, while EOR stands for Employer of Record. Both PEO and EOR services are designed to help companies manage their HR and administrative tasks, but they differ in some important ways.

A PEO is a company that provides outsourced HR and administrative services to other businesses. To work with a PEO, you must have or set up a legal entity in the country where the employees would be located. If you consider partnering with a PEO, you will enter into a co-employment relationship. Whilst you would retain control over day-to-day operations and management decisions, you would offload many of the time-consuming HR responsibilities to the PEO. One thing to keep in mind is that in the US, the standard PEOs model is geared toward American-owned businesses and leaves gaps for businesses unfamiliar with the nuances of the US market. Because of this, we have created our PEO+ service, to bridge the gap between traditional PEOs and international client needs. Our PEO+ service includes everything standard PEO services offer, plus the Cross-Border Support™ international companies need. To find out more about PEO+ Cross-Border Support^TM, please click here.

An EOR, on the other hand, is a service provider that takes on full legal responsibility for employing workers on behalf of another company. This hiring option is ideal for companies that do not have an entity in the country where their employees would be located. As the EOR becomes the legal employer, they would handle all aspects of employment, including payroll, taxes, benefits, compliance, and more. The client company remains responsible for managing its employees’ day-to-day work but does not have to worry about any of the legal or administrative aspects of employment.

In summary, both PEO and EOR services can be valuable for businesses looking to streamline their HR processes and reduce administrative burdens. However, they differ in terms of the level of responsibility each takes on, whether or not the client has an entity in the country where the employees are located, and the degree of control retained by the client company.

The responsibilities of an employer of record (EOR) can vary depending on the specific arrangement, but generally, an EOR is responsible for handling the administrative tasks associated with employing workers, such as payroll processing, tax withholding and reporting, benefits administration, and compliance with employment laws and regulations. Some specific responsibilities of an EOR may include:

1. Onboarding new employees and managing paperwork related to employment.

2. Processing payroll and ensuring timely payment of wages.

3. Withholding and reporting taxes to the appropriate authorities.

4. Administering employee benefits, such as health insurance and retirement plans.

5. Maintaining compliance with relevant employment laws and regulations.

6. Handling employee relations issues, such as grievances or disputes.

By outsourcing these administrative tasks to an EOR, businesses can focus on their core operations while still ensuring that their employees are properly compensated and supported. However, it is important for businesses to carefully evaluate potential EORs to ensure that they have the necessary expertise and resources to meet their needs.

If you decide to expand to the US via our Employer of Record Service, Foothold America will hire your US assigned personnel and will manage payroll, medical benefits, retirement, income tax deductions, expenses, leave tracking, workers compensation, unemployment for your employee compliantly in whichever state they live.

Whilst we will hire your US assigned personnel, you lead your assigned personnel’s training or day-to-day relationship. You are free to plan professional development and training for your employee. When it comes to state-mandated training, for harassment prevention, for example, Foothold America takes responsibility for ensuring employees complete the required training. We aid our clients in keeping a remote workforce engaged with innovative tools that resonate with US workers. 

If you have decided to expand your business to the US via our Employer of Record Service, Foothold America can further support you by helping you find the best US talent for your company via our Exclusive Talent Acquisition Service. If you already have a candidate in mind, then this is great as well. Once the candidate is selected, we will offer a comprehensive benefits package and extend the hiring offer to your US assigned personnel. Once the offer is signed, the employee can begin in as little as one week. Our onboarding team will ensure the employee’s right to work in the US, will conduct background checks, set appropriate income tax and employer tax deductions and will guide your employee through the online employee portal to enroll in benefits. If things are not working out well with your US assigned personnel, and you would like to terminate your employment relationship with your US worker or implement a Performance Improvement Plan, when recommended, Foothold America will provide support and assistance to do so compliantly. 

Employer of record (EOR) for tax purposes is a service offered by certain companies that allows businesses to outsource the responsibility of payroll, tax, and insurance compliance. The EOR assumes the legal responsibility of being the employer and handles all employee-related transactions such as hiring, onboarding, payroll, benefits, and taxes. This service simplifies the process of managing employees and eliminates the need for employers to be familiar with local regulations or file taxes in multiple jurisdictions. Employers benefit from this service by saving time and money on administrative tasks while ensuring they remain compliant with local labor laws.

At-will employment means the employee or the employer may terminate their work relationship at any time without the need to provide prior notice, as long as the termination is not discriminatory or for another illegal reason. It is also important to know that most states in the US are considered at-will employment states. To find out more about at-will employment and the doe’s and don’ts of terminating an at-will US employee, click here.  

We understand that sometimes, our clients decide to cease US operations. 

If you would like to discontinue using our Employer of Record Service, you would need to give us a one month notice. With our one month notice period, we alleviate the stress of a long term commitment and ensure that the US assigned personnel is terminated compliantly. 

A US Employer of Record can provide many benefits to companies that want to establish or expand their business in the US market. The main benefit is that it enables companies to have personnel in the US, without having to establish a US subsidiary. Besides, EORs help companies reduce their administrative burden and minimise risks associated with local employment laws, taxes, and compliance requirements. It can also provide access to local expertise and networks and allows for flexibility in hiring employees, where companies can quickly onboard employees as per their needs.

Any non-US company looking to establish a presence or expand their business in the United States can benefit from using a US Employer of Record Service. Because EORs eliminate the need for costly and time-consuming processes associated with setting up a US subsidiary, this hiring option is particularly useful for small and medium-sized businesses that cannot afford or do not want to establish a local legal entity but want to hire employees and operate in the United States. This hiring option can also benefit companies that prefer a quicker and more efficient entry into the US market. Because setting up a US subsidiary takes time and effort, many companies value the flexibility that comes with not having a physical presence in the US and choose to partner with EORs. Besides, many companies choose to partner with EORs to mitigate risks, as well as other tax obligations that come with having a subsidiary.