Guide
A Guide to PEO vs EOR [With Comparison Table]
Employer of record
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Key takeaways
- EORs and PEOs handle many HR tasks like payroll, taxes, and benefits. However, there are key differences, especially when considering international hiring, without setting up a local entity and minimizing compliance risks.
- Your choice between using an EOR or PEO should align with your organization’s current and future needs. PEO services are suitable for domestic operations or in countries where you have a legal entity. EOR services are better for expanding globally with enhanced HR, payroll, and employment law compliance support.
- When you partner with an EOR, they become the legal employer for your hires. They take on all legal responsibilities for your employees. When you work with a PEO, you enter into a co-employment agreement. This means you have shared responsibility for any legal or compliance issues that may arise.
Who will benefit from this guide?
- Startup founders looking to plug administrative gaps without adding headcount to streamline HR operations—hiring, onboarding, payroll—or finance management, from financial reports to tax filings
- CEOs hoping to overcome a lack of specialized leadership in legal, HR, or finance. Cut down on the hours spent digging through compliance laws, employment regulations, tax codes, and contracts, minimizing risk and freeing up precious time
- Business owners wanting to boost operational efficiency by outsourcing admin tasks. Simplify your workflow, centralize operations with a single provider or system, and enhance reporting capabilities
This guide includes:
- The differences between an Employer of Record (EOR) and a Profesional Employer Organization (PEO)
- EOR and PEO comparison table
- How to choose a solution to meet your long-term needs
More resources
FAQs
What is an Employer of Record?
EORs offer your business a global employment solution. With an EOR, you can hire employees locally and in locations where you do not have an established legal entity. You can also run payroll, handle HR administrative tasks, and ensure compliance with local labor laws and regulations worldwide.
When you engage with an EOR, they become the legal employer of anyone you hire. Employees sign employment contracts with the EOR, not your business. You still maintain control of determining the employees’ wages and evaluating their performance. The EOR assumes full legal liability for your workers if a legal or compliance mishap occurs.
What is a PEO?
A PEO provides HR services, including payroll, tax filing, and benefits administration, for your domestic workforce in jurisdictions where you have your own legal entities.
With a PEO, you enter into a co-employment relationship, meaning you remain the legal employer of the people you hire. Work with a PEO if you are happy to accept a shared liability if a legal or compliance mishap occurs.
