As companies look to expand into a new country, there are many factors to consider. Do you set up a business entity, use an Employer of Record (EOR) model, or find a Professional Employer Organization (PEO) to manage your global operations? There are pros and cons to all of the options, with unique challenges, costs, and tax consequences depending on what you choose. So how do you decide if a PEO or a global payroll provider is better for your organization as you expand?
Professional Employer Organization (PEO)
If you are just getting started overseas, it can be daunting to get a business up and running when you don’t know the labor or tax requirements in each country. Many organizations choose a PEO to quickly enter a new market and get the company up and running. Using a PEO helps you by handling the payroll and compliance in each country, as they are managing payroll, tax deductions, benefits, human resources, and legal regulations as the “co-employer”. They act as your payroll and HR team in each country so you don’t need a team to manage payroll or compliance in each country. That all sounds great, right? So, what’s the down side to a PEO?
While PEOs seem convenient and make it easy to get started, there are some drawbacks. Number one is the cost – PEOs are more expensive than managing payroll and compliance in-house or with a global provider. There are limitations with using a PEO model and as your organization expands, your PEO also becomes more expensive. You still need to set up business entities in each country, which differs from the Employer of Record (EOR) model. Using a PEO gives you less control of your payroll and HR processes, because you are following the PEO’s policies, not your own. As you outgrow your PEO services and look for alternatives, there can be gaps in health coverage, hiring, and onboarding new employees as you move away from the PEO model.
Global Payroll Service Provider
If you have employees across multiple countries, a global payroll provider might be what you’re looking for as you expand. Using a global payroll solution that aggregates payroll on one platform across countries can simplify your payroll process and ensure compliance in each country. Real-time reporting, automated updates to in-country regulations, and direct access to in-country experts can help your team support payroll in each country without being experts in each market – your payroll solution does the heavy lifting. You maintain control over your process, and your provider will help to ensure payroll compliance in each country.
Using a global payroll provider is less expensive than using a PEO model, as you have an in-house team running the payroll. With a scalable global payroll solution, you can easily add new employees and new countries as you grow. There are also global HR solutions that can integrate with your global payroll so you have one system of record for your global workforce.
Blue Marble has simplified global payroll and operations with one platform to manage employee payroll across 100+ countries. You can view payroll in real-time across countries and currencies, with automated updates to in-country requirements and direct access to in-country experts when questions come up. We make it easy to expand overseas with our comprehensive global consulting services to help set up business entities and ensure compliance as you grow. Learn more about our global payroll platform and how we can help simplify operations as you expand.