How an Employer of Record Saves Small Businesses Money
Small businesses often struggle with managing payroll, benefits, and compliance as they focus on growing their business. This is where an Employer of Record (EOR) comes in.
An EOR is a third-party entity that takes on the responsibility of being the employer for a company's workers, contingent workers, or independent contractors. EORs are in charge of handling Human Resources (HR) services, payroll, benefits, taxes, and compliance. If you’re a small business trying to save some money, this article was made for you!
1. Reduced Labor Costs
Working with an Employer of Record (EOR) is an effective strategy for small and medium-sized businesses to reduce their labor costs in various ways. One significant way that EORs can help in this regard is by managing worker benefits such as health insurance, 401(k), and workers' compensation insurance. These benefits can be quite costly and complicated for small businesses to administer, especially if they don’t have the necessary resources and expertise. EORs usually have established relationships with insurance providers and can negotiate better rates for their clients, which ultimately reduces the overall cost of these benefits.
Another perk of working with an EOR is that they can assist small businesses with their recruiting efforts and enable them to hire remote workers or international workers. This can be a particularly useful service for companies that lack the resources to recruit, screen, and onboard workers in-house. By leveraging an EOR's expertise and resources, small businesses can save both time and money in their recruitment efforts. EORs have access to a wider pool of talent and employ a more efficient recruiting process, enabling them to find the right candidates quickly, even if you need to hire international workers.
Not only will the EOR help you manage worker benefits and recruitment, they can also handle other important tasks related to pre-employment screening. This includes conducting background checks and drug testing, which can be time-consuming and expensive for small businesses. By outsourcing these tasks to an EOR, small businesses can streamline their hiring process, reduce costs, and ensure that they're complying with all relevant legal requirements.
2. Reduced Compliance Costs
Small businesses are often faced with the challenge of keeping up with the rapidly changing regulations and labor laws, which can be a daunting task. Compliance with local labor laws and global employment laws is crucial, as failure to comply can result in hefty fines and legal battles, which can have a devastating impact on small businesses. To alleviate this burden, an Employer of Record (EOR) can take on the responsibility of ensuring compliance with all relevant labor laws and regulations, saving small businesses money on legal fees and penalties.
One of the primary advantages of engaging an EOR is their ability to provide expertise on the latest labor laws and regulations. EORs usually have a team of legal experts who stay up to date with the latest laws and regulations. At TCWGlobal, we have 1099 compliance that will help you ensure that your workforce is compliant. EORs can provide guidance on issues such as overtime, minimum wage, and worker classification, which can be particularly complicated for small businesses to navigate. With an EOR's help, small businesses can ensure that they are complying with all the relevant laws and avoid any legal repercussions.
When it comes to labor laws, employer of record services can also help small businesses with tax-related compliance. They can handle payroll tax and unemployment insurance, which can be complex and time-consuming for small businesses. By outsourcing these tasks to an EOR, small businesses can reduce the risk of errors and penalties and ensure that they are fully compliant with all tax laws and regulations.
Furthermore, EORs can help small businesses with compliance when expanding their operations beyond their home country. This can be a complex process that involves complying with a range of local laws and regulations. EORs can provide guidance and support in this regard, ensuring that small businesses are operating in compliance with all relevant laws and regulations.
3. Streamlined Payroll Processing
Payroll processing is a time-consuming and tedious task that can distract small businesses from their core operations. As the legal employer for your workforce, an EOR can handle payroll processing, ensuring that your workers are paid accurately and on time. EORs usually have an automated payroll system that is efficient and accurate, reducing the likelihood of errors and delays.
By outsourcing payroll processing to an EOR, small businesses can save time and resources that would have been spent on managing the payroll process. They can also avoid the cost of purchasing and maintaining payroll software and equipment (it’s a dream come true).
4. Improved Risk Management
Small businesses face a myriad of risks that can potentially harm their operations. Managing these risks can be challenging for small businesses, especially when it comes to implementing comprehensive risk management strategies. An Employer of Record (EOR) can help small businesses manage these risks by providing tailored risk management services that cater to their specific needs.
EORs can conduct background checks and drug testing during the hiring process, ensuring that workers meet our clients’ background requirements and are less likely to engage in fraudulent activities.
In addition to these risk management services, EORs can also help small businesses manage legal risks. For instance, they can provide guidance on compliance with labor laws, reducing the risk of legal disputes that could lead to significant fines and legal fees. They can also provide legal advice and support in case of any legal disputes, potentially reducing the overall legal costs for small businesses.
An Employer of Record can save small businesses money by reducing labor costs, compliance costs, and streamlining payroll processing. Additionally, an EOR can provide comprehensive risk management services, reducing the risk of workplace accidents, worker theft, and legal disputes. By engaging an EOR, small businesses can focus on their core operations, enabling them to grow and achieve their business objectives.
If you’re looking for an EOR, look no further, TCWGlobal can help you. With a team of 150+, we payroll in over 150 countries, and we offer turn-key solutions for managing all things contingent workforce. Our dedication to excellence and focus on our clients’ needs enable us to effectively achieve their workforce goals. We provide our clients one main point of contact for all countries we do business in and manage the relationship with our local teams to ensure that we can communicate their needs and culture internationally.