Two people in a group shaking hands

Companies need new ways to manage their workforce in today’s fast-paced business world. One solution that’s gaining popularity is working with an Employer of Record (EOR). But what exactly does an EOR do, and why are more businesses choosing this option?

What is an employer of record?

An Employer of Record (EOR) is a company that officially hires workers on behalf of another business. This means the EOR takes care of all the legal and administrative tasks related to employment, such as handling payroll, managing benefits, and ensuring everything is done according to the law. However, the client company still manages the employees’ daily work and performance.

Key Responsibilities of an Employer of Record

  • Payroll Administration
    The EOR takes care of paying employees, ensuring that wages are calculated correctly, taxes are withheld, and payments are made on time. This includes calculating wages, managing deductions, and processing payments.

  • Compliance Management
    An EOR ensures that all employment practices follow local, state, and federal laws. This compliance management reduces the risk of legal issues and fines.

  • Benefits Administration
    The EOR handles employee benefits like health insurance and retirement plans. They enroll employees and manage contributions, ensuring everyone gets the necessary benefits. By outsourcing your benefits administration, your company can offer a complete benefits package without the administrative burden.

  • Employee Onboarding and Offboarding
    From hiring to letting employees go, the EOR manages the paperwork and processes involved, including contracts, background checks, and severance packages.

  • Tax Management
    The EOR handles all payroll-related taxes, including withholding and remitting federal, state, and local taxes. This management includes managing tax filings and ensuring that all tax obligations are met on time.

  • Risk Mitigation
    By taking on the legal responsibilities of employment, the EOR helps reduce the risks associated with workforce management. This includes handling workers’ compensation, unemployment claims, and potential legal issues. In essence, the EOR provides a safety net for your business operations.

A group of young professionals sitting at a table having a team meeting with papers on the table

Why Use an EOR?

  • Reduced Risk and Liability
    Employment laws change often, and not following them can lead to significant fines. An EOR stays updated on these laws, ensuring your business is compliant and reducing the risk of penalties.

  • Simplified Expansion
    Understanding local employment laws can be challenging for businesses expanding into new states. An EOR allows companies to hire employees in new locations quickly and legally without setting up a local office, making your expansion process much simpler and less overwhelming.

  • Cost-Effective Staffing
    Managing payroll, benefits, and compliance in-house can be costly. An EOR provides these services at a lower cost, offering a solution to grow your business and keep your finances in check.

  • Focus on Core Business Activities
    By entrusting the administrative tasks of employment to an EOR, businesses can breathe easier and focus on their core activities, such as product development, sales growth, and customer service. This relief from administrative burdens can significantly enhance your team’s focus and productivity.

Who Can Benefit from an EOR?

  • Startups and Small Businesses: Companies that need to hire quickly without the cost of an entire HR department
  • Expanding Enterprises: Businesses entering new markets or regions without setting up a local office
  • Seasonal or Temporary Staffing Needs: Organizations needing a flexible workforce for short-term projects
  • Remote Teams: Companies with employees in different states where employment laws vary

Partnering with an Employer of Record is wise for businesses of all sizes. An EOR provides the expertise and support you need by handling employment’s legal, administrative, and compliance aspects. An EOR like Wage Solutions allows you to focus on what truly matters—growing your business and achieving your goals.

Share