Global PEO

When you decide to move into a new market area, the decision comes with a range of new compliance obligations and costs. As a result, many international businesses hire global Professional Employer Organizations (PEO) in order to simplify their market entry. With the help of a global PEO, you can hire workers, manage payroll, offer market-specific benefits, apply for visas, and handle HR administration in the new region.

A global PEO is an international organization that makes hiring and administering workers in another country easier. It is essentially the same as a global EOR because it allows you to hire workers in other nations. The global PEO serves as the employer of record, so you can quickly staff up your new enterprise instead of having to incorporate and handle the administrative processes on your own.

Often, you’ll hear global PEO, international PEO, and global Employer of Record (EOR) used interchangeably. Ultimately, these are all terms for the same thing. In actuality, global PEO isn’t the best term for this type of company. Calling it a global EOR would be a more accurate description, but many people refer to it as a global PEO instead.

Besides serving as the employer of record, the global PEO can handle tax administration, payroll, benefits administration, and HR processes. Many of the best global PEOs also offer visa support and immigration services.

Global PEOs and PEOs have a single, fundamental difference. While a global PEO is going to serve as the employer of record, a PEO is a co-employer. Rather than taking over the duty of being the actual employer, the PEO only handles some of your HR or payroll services.

PEOs are popular with small- and medium-sized businesses that don’t have the money to staff full HR and payroll departments. They help companies scale up or down as their economic fortunes change.

In comparison, a global PEO handles all of the employer responsibilities on your behalf. As the legal Employer of Record, they navigate your payroll, tax compliance, HR, benefits, and other administrative services. Because it is an established foreign company, it can help with talent relocation and immigration services.

A global PEO and a global EOR are different terms for the same concept. When you partner with a global EOR or a global PEO, you get help hiring workers in a foreign country through the global PEO’s business.

It’s important to note that a regular PEO and EOR aren’t synonymous. PEO providers simply serve as co-employers, so they handle all or many of your administrative responsibilities without taking on the obligations of being the worker’s Employer of Record.

While each global PEO is different, they tend to offer a similar range of services. Before you hire a specific global PEO, you should make sure they have the exact services you need.

As the client, you should carefully review the terms of the contract first. Some global PEOs charge early termination fees for the contract or have an opaque structure. These costs can add up, which is why it’s essential to review the services provided and contract terms before working with a specific company. 

In general, most global PEOs offer the following services.

• Payroll and Benefits: Administering payroll and handling benefits is normally a time-intensive job, but it becomes especially difficult when you move into a new area. Even within the same country, you can experience wildly different requirements. While Washington State requires every employer to offer paid leave that is paid for by a worker-supported state fund, other states have no specific leave requirements. Country-by-country differences in benefits and leave requirements are even more significant. Additionally, a global PEO can help you offer better benefits than you would be able to get as a small business.
• Onboarding: There are many different tax forms and employment verification forms that are necessary when an employee begins work. The global PEO can handle their onboarding process, supply them with the employee handbook, and make sure each onboarding compliance step is carefully documented.
• Tax Management: When you work with a global PEO, they can calculate your employer and employee taxes during each payroll cycle. Besides withholding each tax payment, the global PEO can also remit payments and ensure you are in full compliance.
• Contract Design: Each time you hire a worker internationally, the global PEO can create a customized contract that covers their salary, work requirements, benefits, work location, and other important terms.
• Immigration and Visa Support: Often, companies need to relocate their workers as they expand into new areas. As the employer of record, the global PEO would be responsible for sponsoring the worker. The global PEO can help you determine the right visa path so that your workers can easily relocate.
• Local Compliance: Each area has different legal requirements. By working with an expert in the specific country, you can avoid costly penalties.

There are many different reasons why companies use global PEO services. Often, businesses use a global PEO when they want to expand into a new market area and don’t have the expertise or staff required to set up shop. During this time, the global PEO can step in and serve as the company’s payroll, HR, benefits, and tax administrator. As the employer of record, the global PEO can help you expand effortlessly into new territories.

Plus, a global PEO is a low-risk approach to new markets. Rather than set up an entire headquarters and an extensive administrative apparatus, you can just hire one or a handful of employees to drive your initiative. That way, you can minimize your losses if you have to exit the market unexpectedly.

Sometimes, companies try to circumvent employment taxes by working with international contractors. However, there are very specific rules about who does and doesn’t count as an independent contractor. If you misclassify workers, it can lead to expensive fines and a major legal headache.

While independent contractors may have low upfront costs, it’s often not an ideal way to hire top talent. If you want to attract and retain top employees, making them full-time employees and providing comprehensive benefits is often the best option.

By working with a global PEO, you can enjoy a few important benefits.

Simplified Administration

When you work with a global PEO, you don’t have to handle all of your payroll, HR, tax compliance, and immigration paperwork. This removes the hassle and stress for your team, allowing you to focus on what you do best. 

Improved Legal Compliance

While you are likely an expert in your current market areas, each country, province, and state is different. By turning to local experts, you can ensure better legal compliance and avoid unexpected noncompliance penalties. A global PEO can also help you protect sensitive employee data and intellectual property as you move into a new area.

Enhanced Scalability

Normally, companies have to hire additional administrative staff and workers to scale their operations. When you partner with a global PEO, you don’t have to worry about getting additional HR and payroll team members. The global PEO handles these services, so you can effortlessly scale up or down.

Reduced Labor Costs

By using a global PEO, you can lower your labor costs. You don’t have to staff your company with an entire payroll and HR department because the global PEO is handling these tasks for you. This also means that you don’t have to commit to the long-term costs associated with larger departments, such as the cost of paying for a bigger space or added employment expenses. 

Better HR Support

The global PEO exists to ease the process of entering a new market area. They can handle your payroll, benefits, onboarding, and compliance. This ensures easier, faster administration for your distributed workers.

Easier Market Entry

Ultimately, one of the biggest reasons why companies turn to global PEOs is that it simplifies their market entry. You don’t have to set up an entirely new location or hire international workers. Instead of spending months or years planning an expansion, you can enter a new market region in just a few days or weeks.

Better Talent Attraction and Retention

Another key benefit of a global PEO is how it helps with talent attraction and retention. When you can successfully manage top benefits and international payroll, it’s easier to attract top workers. Additionally, many global PEOs offer help with immigration, so you can relocate top workers to your new area and provide them with market-specific benefits.

For businesses, it can be difficult to find the best global PEO service that suits their need. To make sure you find the right partner, look for the following qualities.

• Full Services: Even if you don’t need a full range of services right now, you may eventually need added support. Make sure to find a provider that already has all of the services you need, so you don’t have to worry about switching over in the future.
• Fee Transparency: Some global PEOs aren’t upfront about all of their fees. Carefully read through the contract to see which services are covered and which ones will cost extra.
• Global Coverage: You need a PEO that has experience in the markets you’re moving into. For example, you don’t want a Canada PEO that operates entirely in Ontario if you’re targeting the Quebec market.
• Technology: If you want easy access to payroll and HR information, the global PEO’s HRIS platform and technology stack matter. Good technological solutions and timely communication are especially important if you’re in a different time zone.

Hiring top talent in a new market area is challenging for businesses. Besides the cost and administrative burden, you also have to worry about your company’s legal compliance and tax compliance with a host of additional rules and regulations. By working with top-rated global PEOs, you can get help creating customized contracts, completing visa applications, and setting up new operations in a different market area. Employsome is offering a free and independent comparison tool that lets you compare global PEOs quickly and efficiently.