Today, more than 400 million small businesses exist worldwide, representing nearly 90% of all existing companies globally. According to the US Chamber of Commerce, the US alone has over 33.2 million small businesses, equaling 99.9% of all American businesses. Also, one interesting fact is that only one-third of these businesses could survive 10 years down the line.
In today’s cutthroat competition, small businesses constantly need to explore several avenues and business opportunities to stay buoyant in the market. Typically, small businesses are on the lookout for highly skilled talent, cost reduction, and business scalability. So, finding a team of professionals in a country with low labor costs and abundant talent can be a game-changer for small businesses. Through this blog, you’ll learn what employer of record (EOR) services do to help small businesses. In other words, the blog explores the major benefits to small businesses of using EOR services.
Employer of record benefits for small businesses
As a small business owner, you must be facing some dire challenges to stay competitive in the marketplace. Typically, small businesses find two major hurdles that heavily put constraints on their ability to stir business ahead—lack of talent availability and cost management. Let’s explore how EOR services help small businesses achieve maximum benefits in exploring different business opportunities.
- Access to a large talent pool: With EOR assistance, you can easily get access to a large number of highly skilled talent and hire the best candidates that suit your requirements. Hiring top talent with the right skillsets can substantially enhance the overall productivity of your company. EORs help you hire top talents easily with their knowledge and existing networks in the target location.
For instance, you might be aware of resource availability in India. The country has nearly 1.5 million technical students graduating from various technical colleges annually. More than 45% of Indian students with technical backgrounds such as B.Tech, B.E., and MBA were found highly employable for various job opportunities. India is home to more than 265 million English-speaking people.
- Cost reduction: Working with EORs will help small businesses save time and money when hiring remote professionals abroad. Hiring employees from your home country would cost you more than hiring candidates with the same profile in another country with lower labor costs.
For instance, generally, you can hire a software developer in India at a reduced cost of 40-50% compared to the one hired in the US. It means you can save nearly 40% of the employee’s monthly cost per head on average when hiring from India.
- Scalability and business expansion: Using EOR services, small businesses can double up their workforce with the same budget used for keeping a team internally. You can easily scale your business and expand your operations in the target country by taking advantage of your EOR partner’s expertise in the local market. As you gradually gain local knowledge, you can ultimately plan to expand your business in the target country by forming a subsidiary company.
- Access to expertise: Having an EOR partner allows you to get easy access to a range of expertise in legal and financial matters. With the help of experts, small businesses can effectively navigate the legal/financial complexities of a given country. In this way, you can avoid costly complaint risks and manage your remote employees effectively.
What does an employer of record do for small businesses?
An employer of record (EOR) works as a local guide for small businesses by providing major support systems that facilitate the smooth hiring and onboarding of employees. In short, it acts as the legal guardian of your overseas employees by managing payroll, taxes, benefits, and compliance for them. To put it simply, EORs are your global HR partners who handle a diverse range of administrative functions related to your employees. As EOR services take care of your employees’ HR functions, you can easily focus on your core business goals. Using EOR services, you can gain additional service facilities, which are listed below:
- No legal entity requirements: One significant EOR benefit is that you don’t need to set up a legal entity while hiring top talent in a target country. In other words, an EOR itself is a legal entity that has the expertise and authority to execute functions as an employer in a country on your behalf. On record, your EOR partner is a legal guardian of your employees who are working for you. With your partners’ assistance, small businesses can hire full-time employees in the target country or internationally without compliance risks.
- Intellectual property protection: For small businesses, intellectual property (IP) protection is a high priority when entering into a contract. EORs ensure the safeguarding of valuable assets and prevent IP misuse through strict non-disclosure agreements in employment contracts. As EORs hire only full-time professionals and one dedicated team is assigned per business, the chance of misusing IP is reduced to zero.
- Compliance assistance: Minimizing the compliance risks of employing overseas employees is a significant concern for small business organizations. EORs simplify HR complexities and handle payroll processing, withholding tax, and filing income tax returns of your overseas employees promptly to meet regulatory compliance. With the help of EOR expertise, you can easily address compliance requirements and avoid legal complications associated with noncompliance events.
EORs, as a hand-holding guide, help small businesses find the right candidates by accessing a large pool of qualified candidates and hiring them cost-effectively. Your EOR partners take care of all your requirements, from hiring to onboarding new employees in a foreign country, on your behalf.
With EOR services, hiring top remote employees locally and internationally can be effectively handled in a short time and with zero complications. In short, you can streamline your hiring process for top talent in a new country and start your overseas business operations within days.