In the next 10 years, total employment is predicted to increase to 165.4 million. This means, there will be an excess of companies needing workers for various roles.
Luckily, PEO services can help companies look for reputable employees for their business. And if you’re looking into these business services as well, then you must understand the differences between EOR and PEO. So keep reading to learn more!
What Are PEO Services?
A PEO stands for professional employer organization. These business tools are often used to help in the administrative and compliance-related fields of different organizations.
PEO services differ from a staffing agency, as they provide expert staffing for permanent or temporary job placements. The best PEO services can also create payroll reports and disburse wages.
What Are EOR Services?
EOR stands for an employer of record. This kind of business service can help your company with expansion services.
But not just any kind of expansion, EOR services can help your business expand globally. They can also provide help with labor contracts, payroll, tax laws, and more.
What’s the Main Difference between PEO and EOR Services?
So you may still be wondering what the differences are between PEO and EOR. For starters, a PEO will mostly deal with HR requirements for companies.
In contrast, an EOR will be more involved in the process of managing and expanding a team. For starters, if you don’t have access to another country, you will need an EOR to represent you. They will tackle any laws and regulations when it comes to globally expanding your team.
Without an EOR team, you will need to go through arbitration processes which can take months. Therefore, hiring an EOR service will not only save you time but can also prevent you from breaking employment laws.
Can a PEO Service Expand My Business?
A PEO does not have access to employ workers in different countries. Nevertheless, a PEO can still be helpful to your business as far as human resources go.
But be aware that a PEO service may not be able to offer your legal advice. Most PEO services may not be able to help with any employment contracts.
Therefore, it would still be your responsibility for handling any contracts, wages, and disputes. But luckily, with an EOR service, you can employ workers from around the globe.
Are Payroll Services Necessary for Expanding A Businesses?
The short answer is yes! Many laws vary from state to state. And they become even more complicated when you choose to expand your company globally.
And of course, properly paying employees is a crucial component of running a business. Therefore, it’s always best to leave no room for errors by hiring an EOR service.
You may be thinking that you have the manpower to handle payroll yourself. But the truth is, as you expand, your resources will become limited. And you’ll want to delegate these roles to other entities.
This way, you can avoid making any payroll or businesses taxes mistakes. Overall, it’s always best to leave this to the professionals.
How Many Employees Can I Hire?
Some PEO and EOR services will require you to employ a certain amount of workers. For a small business, this can get expensive, especially if they’re only needing one or two workers.
So when talking to an EOR or PEO service ask them if they have a minimum requirement of workers. If they do, ask them if they have any discounts for small businesses.
Are PEO and EOR Services Regulated?
Most EOR and PEO services are regulated in the United States by state and federal enforcement. The IRS classifies a PEO service as a third-party payer which means they can perform tax needs and contribute to wages.
But before a PEO or EOR service can be compliant they must get an IRS-verified certification. So when hiring these business tools, ensure they have the proper documentation.
Be aware that different states have their laws and regulations. For example, in New York, there is an act that requires all PEO services to file with the Department of Labor before starting their services. Not doing, so can be considered non-compliance which can result in fines.
And you do not want to be a part of a legal despite between your PEO or EOR service and any federal entities. So before partnering with a PEO service ensure that they are following the laws of their state.
How to Know If Your Business Needs a PEO or EOR Service
Now that we know the difference between a PEO and EOR, let’s determine what service is best for your company. For starters, you want to ask yourself what you want to gain from these business tools.
Do wish to expand your company, get all-around support, and follow federal regulations? If so you will want to invest in EOR services. However, if you simply wish to get general HR help, inside of the country, then you’ll want a PEO service.
Overall, both of these services can be very beneficial, depending on what your business needs. So ensure you set your goals and needs, so you can get the best services possible!
Expanding Your Business Has Never Been So Easy
PEO services are a great business tool. And now that you know the differences between a PEO and EOR service, you can better expand your business.
If you enjoy reading about daily business news, then you’ll want to check out the rest of our blog for similar topics!
