What are the key cost savings of using an employer of record (EOR)?

As your company’s legal employer, an employer of record manages a number of crucial HR responsibilities, including payroll, benefits administration, tax compliance, and compliance with local labour laws. Through the use of EORs, you can access talent worldwide without having to establish legal entities in each country, significantly reducing associated costs and complications.

1. Cutting down on entity setup fees: Establishing legal entities overseas can be a time-consuming and expensive process that includes ongoing maintenance costs, and registration fees, and legal advisors do away with this requirement, saving you a lot of money both upfront and over time.

The upfront costs include:

• Costs for registering the entity.
• Consultation fees for expansion setup.
• Legal fees for incorporation.
• Fees for preparing legal documents.
• Fees for notarization and apostille.
• Courier fees.
• Legal fees for entity establishment.
• Costs for drafting employment agreements.
• Minimum capital requirements.
• Bank account fees.
• Costs for insurance research and setup.
• Fees for employer registration.
• VAT registration costs.
• Fees for bank account setup.
• Capital injection costs.
• Costs for setting up employee benefits.
• Fees for entity structure advice.
• Costs for establishing the entity’s address.
• Fees for tax structuring advice.

2. Reducing the overhead of HR and payroll and overall administration: Managing international HR and payroll requires specialised expertise and resources. You can save a significant amount of money by avoiding the need to purchase complex payroll software or recruit more staff members thanks to the effective handling of these tasks by EORs. Some key tasks include:

• Corporate tax expenses.
• Salaries for payroll managers in each country, including benefits administration costs.
• Fees for director/manager representation.
• Fees for maintaining a mailing address.

3. Reducing the risk of non-compliance: Violating local labor and tax laws can result in costly penalties and legal disputes. EORs can save your business from potential fines by ensuring that it continues to comply with local regulations because they have extensive knowledge.

4. Getting cost-effective benefits: EORs frequently have access to less expensive group benefit plans than individual ones. This enables you to take advantage of the economies of scale provided by your EOR partner and provide competitive benefits to your international staff without going over budget.

5. Optimizing recruitment and onboarding: EORs streamline the recruitment and onboarding process, reducing the time and resources required to bring new employees on board. This translates to faster time-to-productivity and reduced hiring costs.

6. Leveraging vendor discounts: Many EORs have established relationships with local vendors and service providers. They can use these connections to their advantage to get your business better deals on a range of services ranging from health insurance to buying computers and relevant equipment, which will cut down on your total spending even more. This includes costs for mandatory medical examinations and expenses for health and safety training programs.

7. Minimizing misclassification risks: Misclassifying employees can lead to legal disputes and financial liabilities. EORs ensure accurate classification, saving you from potential legal costs and reputational damage.

To maximize cost savings, it’s essential to choose the right EOR partner. Partnering with an experienced employer of record companies can provide the necessary expertise to navigate international employment laws. Look for a provider with a proven track record of compliance, expertise in your target markets, transparent pricing, and a comprehensive range of services tailored to your specific needs.

EOR services can be a strategic investment for your company, offering significant cost savings and allowing you to focus on your core business objectives. By leveraging the expertise and resources of an EOR, you can navigate the complexities of international hiring, mitigate risks, and unlock the full potential of a global workforce.

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