What are employer of record (EOR) services?
An employer of record (EOR) is a global employment service that allows you to legally recruit international workers without establishing entities in multiple countries.
Partnering with an EOR enables businesses to quickly and easily establish themselves in new markets while ensuring tax compliance with local employment laws.
EOR is increasingly popular among companies seeking to expand their remote teams without administrative burdens - staffing solutions, payroll management, workforce management, etc.
For example, Startups and small businesses benefit from HR outsourcing as they don’t have the time or resources to handle these tasks in-house.
It's worth noting that Employer of Record (EOR) services usually do not involve "co-employment”. The EOR is the sole employer on paper in the country where the employee works.
But, EOR is only responsible for human resources, payroll benefits administration, etc.
Why Use an Employer of Record - benefits of EOR
Avoid regulatory and cost hurdles
Companies face multiple issues when they hire remote workers. One of the biggest challenges is navigating the complex maze of regulatory and cost hurdles.
Local labor laws, tax codes, and other regulations vary from country to country. Therefore, keeping up with these details is complicated.
Independent contractor management comes with administrative tasks - hiring, onboarding, payroll, and benefits. These tasks are time-consuming and costly. Especially, when you manage the business at the same time or don’t have the infrastructure in place to manage them effectively.
It is where Employer of Record (EOR) solutions can be your invaluable asset.
With EOR, you can outsource these tasks to a third-party provider like us. Therefore, you will have free time and resources to focus on your business activities. It can help you avoid costly mistakes and minimize legal risks.
Let’s say you are a startup based in the United States. You want to hire software developers in Georgia. Without EOR, you would navigate the Georgian employment laws, tax codes, etc. It could be heavily time-consuming.
Instead, you can partner with Team Up. We have expertise in Georgian law and regulation. Hence, you can delegate these tasks to us, and rest assured.
More affordable than other HR services
Employer of Record (EOR) services are attractive for companies looking to expand their global workforce. They are affordable and have numerous benefits.
For example, you are a UK-based digital marketing agency that wants to hire designer teams in Turkey. Without an EOR, you should navigate the employment laws, set up a legal entity, and establish a local payroll. It would cost companies a fortune in legal fees, administrative costs, and taxes.
Traditional HR services may charge hourly rates or require long-term contracts. This creates uncertainty in estimating costs. But as a remote work solution, you can pay a flat fee to the EOR provider to budget the expansion and save on overhead costs.
EORs can also help businesses stay compliant with data privacy regulations. It is crucial in today's digital age.
The General Data Protection Regulation (GDPR) in the European Union imposes strict rules on how personal data can be collected, processed, and stored. Employers of record services help ensure that their HR processes are GDPR-compliant.
Also, countries have unique employment laws and regulations, and failure to comply with these regulations can result in severe penalties and legal consequences. It is where Employer of Record (EOR) can be particularly valuable.
An EOR acts as a legal entity that legally hires workers on behalf of another company. It takes responsibility on ensuring employment laws and regulations are on point.
EOR is responsible for everything from registering employees with local authorities to ensuring payroll taxes are deducted and paid.
In addition, using an EOR is often more compliant than working with a recruitment agency. The EOR is fully responsible for ensuring workers are registered and paid according to local law.
Recruitment agencies may not possess the same expertise or resources for compliance issues, exposing companies to potential risks and penalties.
Attract and Retain Top Talent
In today's competitive job market, finding and keeping talented employees is more crucial than ever. That's why companies are exploring all options to attract the best talent. One major factor that makes a job more appealing to potential employees is the ability to work from anywhere.
With an EOR, businesses can quickly and easily hire new employees in new locations without a legal entity in each new jurisdiction. It enables brands to expand their operations and minimize legal and administrative costs.
There are no geographical limitations when hiring talent. You have access to the best professionals from anywhere in the world.
When to use an employer of record?
Employers of record are necessary for specific situations. However, there may be better solutions for some European companies.
For contractors who want to hire foreign nationals for short-term projects, our EOR service can sponsor them for work visas.
For companies that want to do business in the Caucasus. But don't want to go through the hassle of setting up their business entity. Our EOR service can provide a turnkey solution that saves time and resources.
For businesses expanding globally but lacking the bandwidth to set up entities in each country, our EOR service can be an excellent choice.
For organizations needing to onboard workers quickly but lacking local expertise, our EOR service can provide the necessary support.
For businesses wanting to try out different employees without committing to long-term hire, our EOR service allows them to test the waters and evaluate candidates without any risks associated with hiring international contractors.
Countries we do Employer of Record
We provide the employer of record services in the Caucasus region - Georgia, Turkey, Azerbaijan, and Armenia.
In recent years, the hiring process in the region has become easier due to the elimination of many bureaucratic regulations.
As a result, people in the Caucasus invest more in education and self-development to advance their careers in the global market. The region boasts a highly skilled with almost 90% having at least a secondary education.
Georgia is an absolute gem for businesses to keep costs down and hire top-notch employees.
Georgia's labor market boasts low labor costs and a skilled workforce well-regarded for quality. Compared to other countries in Europe, the hourly wage rate in Georgia is lower. Thus, It is the best choice for companies on a tight budget.
The diversity of Georgia's labor market is another reason why it is such a desirable place to outsource. The talent pool is home to skilled professionals: business experts, language-savvy workers and project managers, and tech and marketing specialists. The country is a hub for in-demand jobs with top-tier candidates.
Also, Georgia's location and time zone are favorable for clients from Western Europe and the U.S.
Employer of Record services helps companies to tap into the pool of diverse talent without the legal and logistical headaches.
With Team Up, you can hire employees from Georgia, attract top talent, and enjoy the flexibility and scalability of such a setup.
With a flourishing economy and a highly skilled workforce, Azerbaijan is an ideal location for hiring remote teams.
One reason to consider hiring in Azerbaijan is the high-tech education offered by multiple universities, especially in the capital city of Baku.
In addition to tech education, Azerbaijan remote workers possess good English proficiency. This means that communication with foreign clients is usually smooth, minimizing the risk of misunderstandings.
Whether you need to hire product owners or content managers in Azerbaijan, Team-Ups Employer of Record services has got you covered.
Turkey's growing economy and large population of over 80 million make it an attractive destination for businesses looking to expand. The labor cost is lower than in other European countries, with an average of $630 per month.
Turkey has a large skilled workforce, favorable tax laws, and advanced infrastructure.
The cultural similarity is another advantage of working with remote workers in Turkey. You can expect a pleasant working process with like-minded people who understand your goals.
Focus on the Western market and an open-minded approach. That is what you can expect from the Turkish market.
However, managing the country's unique labor laws alone can be challenging. Attempting to do so alone can be time-consuming, expensive, and risky. But, no stress! Our employer of record services will help you get the talent you want in a few clicks.
With a large pool of qualified and educated workers, Armenia is an attractive destination for companies looking to establish a presence in the region or outsource work.
One of the significant advantages of Armenia's labor market is its relatively low labor cost compared to other European countries. The average monthly labor cost is around 617.648 USD, making it a cost-effective solution for businesses looking to reduce operational costs.
Armenia's booming tech industry is another reason EOR services in the country are in high demand. With a focus on software development, mobile app development, and artificial intelligence, businesses can access top talent in these fields for dedicated offshore development teams.
Partnering with an EOR service with expertise in Armenian employment laws can help businesses navigate the complexities of local regulations while focusing on growing their operations. An EOR service can handle administrative and legal aspects of employment, including payroll, benefits, taxes, and compliance with local regulations.
With a highly skilled workforce and favorable business environment, Armenia is an excellent location for startups and small and large businesses looking to hire remote teams and expand their global footprint.
How much does an employer of record (EOR) cost?
With Team Up, you can hire employees for just 200 € per month plus a one-time setup fee of 200 € per employee. This cost-effective solution helps you to focus on your core business operations and leave the administrative tasks to the experts.
Therefore, you can avoid the expenses associated with setting up a legal entity, hiring HR, and handling payroll + benefits. Plus, you can rest assured that your employees comply with local labor laws and regulations.
In summary, the EOR service cost of Team Up is much lower than the expenses you would incur if you were to handle all human resources issues alone.
What is an employer of record (EOR) in payroll?
An Employer of Record (EOR) is a third party that takes on the legal responsibilities of being an employer for your workers. It means they manage payroll, taxes, and compliance with local labor laws. And you manage your team's daily tasks.
EOR acts as a bridge between you and your remote workers. It handles administrative tasks while you focus on running your business. This can be especially helpful for companies expanding overseas without managing local employment laws and regulations.
Corporate tax is imposed directly on the earnings and profits of corporations and businesses.
Corporate taxes are imposed on businesses and corporations, legally recognized as separate entities from their owners.
For businesses, corporate taxes are crucial. They impact the bottom line of the company. Companies can lower their expenses and improve their profits. It can help them reinvest in their business, hire more employees, and expand their operations.
When operating in a new country or region, companies should navigate through corporate tax laws and regulations. Let’s briefly discuss the corporate tax environment in the Caucasus region.
In Georgia, the corporate tax rate is 15%, which is relatively low compared to other countries.
Armenia has a flat corporate tax rate of 18%
Azerbaijan has a progressive corporate tax system with rates ranging from 0% to 20%.
Turkey has a corporate tax rate of 25%, which is higher than the other three countries.
Individual income tax is applied to the earnings of individuals. It includes wages, salaries, and self-employment income. Employers usually collect it through payroll deductions, but self-employed ones need to pay their taxes on their own.
Employer of Record services assists individuals and businesses when managing their individual income tax obligations. They act as the official employer, handling payroll processing and tax compliance.
EORs can offer tax advisory services to help individuals and companies navigate complicated tax laws and regulations in their respective countries. It includes advice on tax planning and tax optimization.
In Georgia, individuals are taxed on their worldwide income at a flat rate of 20%. There are also social security contributions deducted from employee wages.
In Armenia, the tax rates for individual income tax range from 23% to 36%, depending on income levels. Additionally, social security contributions are cut from employee wages.
In Azerbaijan, individual income tax is also imposed on worldwide income and is levied at a progressive rate ranging from 14% to 25%. There are also social security contributions that are deducted from employee wages.
In Turkey, individual income tax rates range from 15% to 35%, depending on income levels. There are also various deductions and exemptions available to individuals. Social Security contributions are also cut from employee wages.
VAT, GST, and sales tax
When it comes to taxation on goods and services, there are a few different types to keep in mind. VAT (Value Added Tax), GST (Goods and Services Tax), and sales tax are all considered forms of consumption tax.
In the Caucasus region, there is no GST or sales tax, but each country has its own rate of VAT.
In Georgia, the standard VAT rate is 18%. But it has reduced rates of 5% and 0% for certain goods and services.
In Armenia, the standard VAT rate is 20%, with a reduced rate of 10% for specific goods and services.
Meanwhile, Turkey imposes VAT at a standard rate of 18%. Also, it gives reduced rates of 1%, 8%, and 10% for certain goods and services.
Finally, Azerbaijan's standard VAT rate is 18%, with a reduced rate of 10% for certain goods and services.
VAT is charged on the value added to a product or service at each stage of production or distribution. It is commonly used in European countries and is included in the price of the product or service.
As a business owner, it's important to understand your country's VAT rates and regulations.
Finding an employer of record for your remote team
Do you plan to expand your business globally and hire employees from different countries? If so, you should follow a few steps to hire the right people and comply with local labor laws.
Step 1: Determine the countries where you want to hire.
The first step is to determine the countries where you want to hire. Researching the labor laws and market trends of each country to help you make informed decisions. Once you have a list of countries, you can move on to the next step.
Step 2: Research local EORs.
Next, research local Employer of Record (EOR) services in each location. EORs can help you manage your international employees by handling payroll, taxes, and legal compliance. You can do this by searching online or speaking with local professionals experienced in the labor market. Look for companies with local expertise and a good track record of performance.
Step 3: Evaluate EORs to ensure they meet your needs.
Now evaluate them to ensure they meet your needs. Consider factors such as the company's size, experience in the industry, and ability to provide the services you require.
Now it's time to evaluate them to ensure they meet your needs. Consider factors:
The company size
The team experience
The service quality
How to compare employer of record (EOR) services?
Once you've narrowed your options, consider these factors when selecting an EOR partner.
Firstly, you should find a provider with transparent pricing so that you can stay within your distributed workforce budget. You should choose the service within your budget. So, inquire about any setup fees, monthly or annual fees, and any additional costs you may incur.
You also want to check that they are accurate about employer burden costs and have deep expertise and knowledge of the markets you are engaging talent in.
What services does the provider offer? Do they include payroll, benefits administration, tax filing, and stock options?
In addition, you should choose a responsive and supportive partner with an assigned client account manager who can quickly respond to your team’s needs.
Consider a partner identified as an industry leader by relevant and credible third-party sources. Check out customer testimonials and feedback on their social media pages or website. It will give you an insight into the provider's performance and help you make an informed decision.
How long has the provider been in business? A provider with a proven track record can give you peace of mind that they know what they're doing.
Ease of use
Consider factors such as their quality of service, customer support, and ease of use. It will give you an idea of what to expect when working with the provider.
Is employer of record (EOR) legal?
Yes, employer of record services are legal and can be beneficial for businesses looking to expand their workforce.
These services are rapidly gaining popularity as they provide companies with a way to ensure compliance with local laws, reduce risks, and focus on growing their business.
By partnering with an EOR service, companies can access local expertise, handle employment-related paperwork and compliance, and manage payroll and benefits, among other things. Overall, EOR can help businesses streamline their global expansion efforts while maintaining legal compliance.
What does employer of record mean?
An Employer of Record (EOR) service is like having your personal HR department. They take care of all the administrative tasks - employing people, such as payroll, taxes, and benefits.
You can outsource your HR functions to them and free up your time for tasks. Essentially, the EOR becomes the official employer of your workers while you maintain control over their day-to-day tasks. It's a smart way to meet legal requirements and manage your employees without handling all the paperwork yourself.
What is the example of an employer of record service?
Let’s say a US-based company wants to grow its business in the Caucasus region and needs to hire employees in one of these countries. But they don't have the resources to set up a legal entity in the country, manage payroll and benefits, and follow local employment laws. That's where an employer of record (EOR) can be a lifesaver.
For example, a US company wants to hire remote product owners in Georgia. They could team up with an EOR provider based in Georgia Team Up, who would become the official employer of the product owners. The EOR would handle all the legal and administrative tasks, like onboarding, payroll management, taxes, and benefits, and follow Georgian employment laws.
What is the Difference Between an EOR and PEO?
EOs (Employee Ownership Plans) are tax-advantaged qualified retirement plans that allow employees to become partial or full owners of the company they work for.
PEOs (Professional Employer Organizations) are companies that provide outsourced HR services, including payroll and benefits, to small businesses. There are several important distinctions between an EOR and PEO. The first is that a PEO provides a more comprehensive HR and payroll solution than an EOR.
This includes services like workers' compensation, health insurance, and tax filing. A PEO can also help with local payroll and registration steps that would be difficult for smaller companies to accomplish on their own. While both EORs and PEOs offer similar benefits, they are not the same thing. In co-employment, both the organization and the PEO share legal responsibility for employees. An EO is a more basic type of employment arrangement as opposed to a PEO, which handles HR and payroll administration.
Another key difference is that a global PEO is a type of service that outsources the employer-employee relationship with an international worker. An outsource service like a global employer of record means the burden for entity establishment and legal responsibility falls solely on the EOR.
How do I get my record of employment?
The first step is to reach out to your employer. They are legally obligated to provide you with an ROE within a certain period after your employment ends or if there is any interruption of earnings.
Contact the HR or payroll department of your employer and ask for your ROE. Depending on their policies, you may receive a paper copy or an electronic version.
How much does an employer of record cost?
Employer of record (EOR) services come with a cost that can differ depending on various factors. Factors like the company size, the services needed, and the location of the EOR all play a part.
With TeamUp, you get a straightforward flat rate of 200 € per month and a one-time setup fee of 200 € per employee. It covers everything you need to be compliant with local employment laws, such as payroll management, tax and social security contributions, and benefits administration.