EOR, Payroll, or both: What does your business need?

If you want to hire — and pay — team members in different countries, you may be unsure whether you need to enlist the services of an employer of record (EOR), a payroll provider, or both.

In this article, we’ll clarify which service you need to use depending on your circumstances, and illustrate the exact differences between Remote’s EOR and Payroll services.

What is the difference between an EOR and a payroll provider?

To answer this question, it’s first important to understand how you can hire people in different countries.

There are primarily two ways to do this:

1. Set up your own legal entity in the countries where you want to hire

2. Work with an EOR

Which service you will need depends on which of these options you choose when hiring abroad. If you set up your own entity, you will need to outsource to a payroll provider (or handle it in-house). Conversely, if you opt to partner with an EOR, the EOR will handle everything.

What does a payroll provider do? 

A payroll provider handles all aspects of payroll for your employees, such as payroll runs, withholding, tax calculations, reporting, and payroll tax compliance. Some payroll providers, such as Remote, offer this service for both domestic and international employees..

What does an EOR do?

An EOR handles all aspects of HR for your team members — of which payroll is one. For instance, Remote’s EOR handles compliance, onboarding, benefits, day-to-day HR management, and offboarding. Learn more about what an EOR does.

EOR or payroll: Which one should you use?

Remote provides an EOR service and a payroll service (Payroll). Which one you need ultimately depends on your company’s own legal structure and hiring goals.

If your business has an entity in the country (or countries) you want to hire in:

You will need to use Payroll (or manage payroll yourself, which can be costly and time-consuming). As you already have an entity in the country in question, you don’t need to use an EOR.

If your business does not have an entity in the country (or countries) you want to hire in:

You will need to use our EOR service (or set up your own entity, which again can be significantly costly and time-consuming). The EOR will act as the legal employer of your hire(s) in that country, and handle all HR and compliance requirements.

If your business has entities in one or more countries, but not in others:

You can mix and match accordingly. For instance, you can use Payroll in the countries where you have entities, and use our EOR for the ones that you don’t. To streamline HR operations, some companies in this situation opt to close their entities and use our EOR for all their international hires.

What’s the difference between Remote’s EOR and Payroll?

In terms of payroll capabilities, the exact differences between our EOR service and Payroll are as follows:

EOR

• Remote handles payroll onboarding, as all your employee information is centralized on our platform

• Remote remits taxes to the relevant local tax authorities

• Remote files payroll taxes

• Remote handles payments to your team members

Payroll

• You provide employee information to Remote for payroll onboarding

• Remote provides you with the relevant reports, and you then pay the relevant local tax authorities

• Remote files payroll taxes

• Remote provides the banking file for you to pay your employees

If you have any more questions about the differences between our Payroll and EOR platforms, or if you’re unsure which approach is best for your business, our friendly experts are happy to help.