When expanding globally, it can be overwhelming to navigate the plethora of acronyms and jargon in the world of international employment. But don’t let technical language hinder your progress. In the interest of simplifying things, we will clarify the most perplexing term – Professional Employer Organization.
The definition of PEO?
A PEO is a company that provides comprehensive human resources services to businesses. These services can include recruitment, payroll processing, benefits management, other administrative tasks, and assistance with local employment laws and tax compliance.
PEO shares the HR responsibilities and liabilities. PEO takes over the entire range of HR functions such as employee benefits, compensation and payroll administration, workers’ compensation, and employment taxes.
This is where the Confusion Arises…
The terms “Professional Employer Organization” (PEO), “Employer of Record” (EOR), “Global Employment Organization” (GEO), and “Global PEO” are often used interchangeably, but there are some variations depending on your location.
In the United States, the term PEO is typically used and refers to a co-employment model where both the client company and the PEO have rights and responsibilities as an employer.
The client company manages the employee’s day-to-day duties, while the PEO handles legal employment and personnel-related functions like payroll. One important distinction to keep in mind is that co-employment requires the client company to be a legally registered entity in the country where the employees are based.
Is a Professional Employer Organization (PEO) the right choice for my business?
PEOs are essential for companies looking to expand internationally, as the process of global expansion involves navigating various administrative, regulatory, and financial challenges, which can be overwhelming.
Navigating the different employment regulations in various countries, regions, or states for non-resident companies can be a significant challenge for international expansion, especially for those unfamiliar with concepts such as 13th-month or 14th-month payments.
A Professional Employer Organization (PEO) can handle all the challenges that come with expanding internationally. Businesses are required to have a legal entity while the PEO handles the entire HR responsibilities, manage benefits such as health insurance, help with recruitment and stay up to date on local regulations, allowing companies to focus on their core business operations.
In addition, companies that work with a PEO tend to experience faster growth, lower employee turnover rates and have a decreased risk of failure in the international business world.
If you want to accelerate your growth plans and hire employees in a different state or country, partnering with a PEO will be a beneficial decision for your global expansion journey. To learn more about our international PEO services, contact us today.
