Learn about the advantages of hiring great employees with low costs.
What is an employer of record?
It is a company that administers payroll taxes, workers compensation insurance, and other employee benefits while employees perform work at a different company.
Employer of record companies, also referred to as EOR services, are responsible for managing payroll and taking on many of the responsibilities that an employer traditionally would. This includes ensuring compliance with federal and state labor laws for payroll, workers compensation, and other benefits.
With an EOR, the terms of who is responsible for what are delineated in the contract between the contract employer and the EOR.
1. Focus on Core Business
Partnering with an employer of record lets you focus on your core business. If you don’t have the necessary training in HR, payroll and accounting, regulatory compliance, risk management, insurance or employee benefits programs, work in those areas is better left to the experts.
2. Remain Compliant
Compliance experts stay current on changes to employment and labor laws so you face reduced liability in case an issue arises. As a result, smaller issues typically avoid becoming larger issues.
3. Optimized Back Office
You gain efficiency while having your back-office tasks effectively completed. Back office roles are important because they are essentially the backbone of a company. When back-office operations run smoothly, it sets the company up for success. It also boosts productivity and helps keep costs low. Back office roles are also important because they ensure that all company data and information is secure and maintained. This is helpful to the overall business process, operations and to business owners who want to see how their company is performing. Lastly, back-office roles help to see where improvements can be made for the organization as a whole. This includes being mindful of the allocation of company resources.
Time management has been optimized, and the efforts put into every-day tasks have been lightened. Employee productivity and efforts have been improved, allowing them to place more emphasis on more important things such as precision and creativity.
4. Provide Employee Benefits
Working with an employer of record helps provide your employees with quality benefits. For example, you can provide health and other insurance, a retirement plan and other benefits that otherwise may be too costly for your company. Providing quality benefits helps you attract and retain quality employees.
5. Control Costs
Utilizing an employer of record can help control costs. For example, rather than paying for expensive office space, staff and overhead, you pay only for services used. Also, because the employer of record can provide insurance and other benefits at a lower cost, you free up capital to use in other areas. In addition, because you have compliance support, your company may pay less in legal fees and fines.