A complete guide to the difference between PEO and EOR

Introduction

The PEO and EOR are different terms with different meanings. A PEO or professional employer organization, is a full-service co-employment human resource outsourcing structure. The PEO handles a variety of employee administrative duties on behalf of a company, including payroll and benefits management. The employer of record can help your business grow internationally. You can hire global employees easily with their help. This article will help you know more about the difference between PEO and EOR.

What is professional employer organization (PEO)?

A professional Employer Organization (PEO) is a company that enters into a joint-employment relationship with another company by leasing employees to the company, allowing the PEO to share and manage many employee-related responsibilities and liabilities. Employers can outsource human resource functions such as employee benefits, compensation and payroll administration, workers’ compensation, and employment taxes as a result of this.

PEOs (Professional Employer Organizations) typically act as a professional employers for the employees of their clients. Employee liability is transferred to the PEO when the client company reports its wages using the PEO’s federal employer identification number (FEIN). Employers benefit from economies of scale by offering more benefit options, often at lower rates.

What is Employer of Record (EOR)?

A company that acts as the employee’s employer for tax reasons even while they are working for a separate business is known as an employer of record (EOR). Traditional employment responsibilities and liabilities are undertaken by the EOR.

What is the difference between PEO and EOR?

Conclusion

PEOs generally offer the majority of the same human resources services as EORs, such as payroll and benefits administration. Additionally, PEO businesses might not have the same level of legal expertise as EOR providers. In conclusion, EOR and PEO each have their own benefits and drawbacks. In order to help your expanding global strategy, you should start to list what you want from HR outsourcing companies.