5 reasons for startups to hire via an EOR 

Creating a company takes work and time, from having a business idea to getting the capital to start operating. In the process, you must analyze the market to know if the concept fits, decide on the brand name, register the organization to ensure ownership of the intellectual property of your products or services, and find the right people to achieve the goals set.

One of the characteristics of a startup is that they tend to have small teams, especially right at the start. But what happens when a business grows and seeks an international presence? You may need employees in other countries, and this presents some complicated issues.

Managing human resources when you have few employees may not be a significant problem, but how do you deal with payroll, taxes, compliance with the law, health insurance, accounting, and everything else that comes with having an internationally distributed workforce? In this case, you can work with an EOR and focus on what matters most: growing the business.

Think of some successful startups or unicorn companies like ByteDance, Canva, Shein, or even SpaceX. Did they manage to be valued at more than 1 billion USD on their own? No. The key to their growth is not only due to the excellent business idea that brought them to life but also that they have added the right allies that helped them —then and now— to expand globally.

Essentially, an employer of record (EOR) assumes full responsibility for the financial and legal procedures necessary to expand a startup’s overseas operations. It also handles payroll, employee benefits administration, and taxes on behalf of its client.

Working with these organizations not only saves the new businesses from spending time and resources on setting up an entity or branch in the target territory but also involves more benefits. So here are five reasons why you should hire an EOR when growing a startup.

  1. Save time and grow faster

When working with an EOR, startups not only receive the benefits of medium and large companies in their global expansion —such as employing remote workers— but also reduce the administrative workload.

Letting someone else handle payroll, employee benefits, insurance, withholding, and tax payments, and do so in compliance with the law, means less distraction and more focus on growing the business faster.

As the number of startups with employees in other territories increases, it is becoming easier to find an EOR that fits the needs of the expanding company, as these types of organizations have diversified and expanded their services over the years.

Having an EOR as an ally helps make better use of time, such as developing a product or service and exploring new markets where to take the business. 

  1. Reduce cost of HR management

If local talent acquisition can take weeks or even months, imagine what that means for international recruitment. People say time is money and money is time, so the longer it takes a startup to find the perfect candidate, the more resources it will invest.

In this regard, hiring an EOR will also save the startup company money on human resources. These organizations help enterprises recruit and hire the best global talent in a matter of weeks. The startup will still retain control over the employees’ work. EORs have extensive talent networks in each territory, allowing them to recruit efficiently.

It is essential for the startup to fully communicate what its needs are before beginning the hiring process through the EOR, such as whether its employees will be working from home, in an office, or both.

Then, the startup will review with the EOR the salary and benefits package offered to new hires. A fee will be set for each employee hired, although this is typically less than what a startup would invest in self-managing its human resources.

  1. Keep your startup in compliance

One of the advantages of working with an EOR is that these organizations have experience in dealing with federal and local regulations, in addition to payroll and tax management. With local knowledge, they will make sure that laws aren’t broken. 

To facilitate its clients’ entry into a new market, an EOR has compliance specialists who also help protect its clients from misunderstanding the ever-changing labor and tax laws. These individuals will understand not only local law but also international treaties that may apply.

An EOR also provides its clients with consulting and legal assistance regarding immigration and visa procedures that their overseas prospects need to complete to join their workforce. This is often a major source of stress for overseas workers.

Being experienced in the market, an EOR will be aware of the common pitfalls encountered during recruitment and be able to avoid them as much as possible.

  1. Compete for and retain the best talent

During the first waves of COVID-19, a considerable number of people left their jobs voluntarily. This worldwide phenomenon was called the Great Resignation, and many experts believed that, as a direct effect of the chaos and uncertainty of the health crisis, the staff drain would end as the pandemic did.

However, the reality is that, during 2023, many people are still leaving their jobs. As many remain in an ongoing search for better job opportunities and more flexible schedules, retaining the best talent is becoming more complicated every day.

The scenario becomes more worrying for startups with more limited resources than medium and large companies. This reality places them as David versus Goliath in the fight for global talent retention. David had a slingshot, and small start-ups have EORs to help in their fight.

When a startup hires the services of an EOR, it can offer its employees and prospects the same benefits as large or long-established companies, such as competitive salaries, vacations, insurance, and schedules that allow them to have a work-life balance.

  1. Increase your chance of survival

In a challenging economy, more than any other type of business, startups can experience losses. The market changes and currencies become unstable, yet an EOR also helps its clients stay alive and even profit in times of crisis.

As professional organizations, an EOR can help startups to plan effective strategies to make the most of its available resources, save on some expenses and retain staff. After all, these companies have seen similar situations before and can advise on smart courses of action.

Even when budgets are tight, during tough times, new businesses can still offer excellent employee benefits, not just keep them on promises. By building morale and showing positive signs for the future, businesses can keep employees happy.

For a startup to thrive, it is necessary to communicate its needs, objectives, and budget to its trusted EOR from the beginning. The key is to have previously prepared action plans; this will help the ship not to sink when the waters get rough.