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The Benefits of Having an EOR for Subcontractors


It is usually necessary to conduct EOR when expanding to foreign territories, hiring employees from other countries, or deploying independent contractors around the world. How can an EOR be used to manage subcontractors effectively? Read on.

What is an EOR?

Third-party companies provide EOR services, which are employer-of- record services. It allows you to hire people in other countries by acting as their legal employer. All legal and compliance obligations are handled by the EOR, but you retain day-to-day contact with the team member. Additionally, EORs can serve domestically in addition to this purpose. Depending on the state or province (like the US, Canada, and Australia), different taxes and employment requirements apply. The purpose of partnering with an EOR in situations like this is to simplify the HR processes of a local employer. Typically, EORs handle HR administration, payroll, benefits, and tax compliance. EORs serve as the employing entity, so you don’t need to establish a legal entity in the country where your hire is located when you partner with an EOR. As well as saving time, money, and resources, there is no need to build the necessary knowledge in-house. You are guided through every step, with a local expert on hand and strict guidelines to ensure compliance. When you partner with a reliable EOR payroll services provider, you can hire and pay workers around the world quickly and safely.

Compliance with local laws and regulations

Employers need to comply with local laws even if they hire independent contractors as independent contractors. As you run your business, imagine learning and implementing local regulations of each country where you do business.

This is when EOR comes into play. It eases your efforts to manage employment matters with the employer of Record. EOR will provide information regarding the laws and regulations in every country you hire from, which will automatically apply to the freelancer. In addition, the EOR includes provisions to update country labor laws in a timely manner despite frequent changes.

Complying with territorial tax laws

Employers have responsibilities when it comes to taxes, and independent contractors have to pay taxes on their income. Depending on the local laws in each country, these regulations differ. As an example, independent contractors in the United States must fill out the form W-9, and freelancers must be provided with Form 1099-MISC if an employer pays more than a certain amount.

By using an EOR, employers can easily and efficiently handle these forms and tax regulations. An EOR ensures that the necessary tax forms are completed and submitted on time.

Managing payroll smoothly

Independent contractor payroll software can make freelancer management easier. Growing businesses may employ freelancers with different payday dates. With an EOR, employers can accurately track freelancer payments and prevent the disarray often associated with freelancer payments.

Managing overseas independent contractors

Technology has enabled talent to be employed anywhere and at any time! It is quite easy to manage and pay a foreign contractor with the EOR. You can easily keep track of their work submission, due date, and payment date with EOR.

Add-on benefits

Companies sometimes pay their freelancers’ commissions and bonuses, as well as reimburse them for expenses related to their work. In the absence of a template, the benefits may be confusing and inconsistent. Employers can avoid this issue by following a uniform template for all benefits and expenses provided across all countries using an appropriate EOR.

Manage freelancers cost-effectively

Aside from all the advantages listed above, choosing an EOR can also be economical. It is possible to simplify the process with EOR at a simple rate instead of paying insane penalties and workforce efforts.

Employers can benefit from EOR

Having gained a better understanding of EOR’s advantages, let’s look at its long-term benefits.

  • Manage freelancers cost-effectively
  • Streamlined onboarding of freelancers
  • HRs can save time and effort
  • It becomes easier to scale up a business
  • Laws and regulations can be easily managed
  • Experience enhancement for freelancers

EOR for Employees vs. EOR for Independent Contractors

The advantages and benefits of EOR as a solution for freelancers have already been discussed. This leads to the question of how managing an employee differs from managing an employee on a regular basis. An enterprise’s human resources functions as a link between its employees and freelancers. Employees and freelancers are onboarded differently by an EOR due to their different benefits. While full-time workers are entitled to employee benefits, such as health insurance, freelancers are not. There is a significant difference between an employee and a freelancer that an EOR puts up. There are EORs that can customize such benefits if an employer wishes to provide them to freelancers. Then there are the essentials for working and the laptop. It is possible to provide these supplementary employee benefits to employees with the right EOR, making it easier for companies to handle them. However, freelancers do not have access to this feature either. Freelancers and contractors perform particular tasks for clients independently. Employers work under the organization, whereas employees work for themselves. In addition to helping to onboard and manage employees and freelancers, EOR also provides benefits to each according to their rights.