Expanding your business operations to the United States can be a daunting prospect, especially when it comes to navigating the complex legal and regulatory environment of the country. One option that businesses can consider when expanding to the US is using a Global Professional Employer Organization (PEO). In this article, we will explore how a Global PEO can help you to expand to the USA, the advantages of using a PEO, and the differences between an EOR and a PEO.
Global PEO USA: what it is?
A Global PEO is a third-party company that provides a range of services related to employment, including hiring, payroll, benefits administration, and compliance. When a company uses a Global PEO, the PEO becomes the employer of record for the company’s employees, meaning that the PEO is responsible for all aspects of employment. This can include hiring, onboarding, payroll, taxes, benefits administration, and compliance with local employment laws and regulations.
Why hire in the USA and the history of PEO
The United States is the world’s largest economy, with a diverse and highly-skilled workforce. It is home to many of the world’s leading companies, across a wide range of industries. Hiring employees in the US can provide businesses with access to this talent pool, enabling them to expand their operations and reach new customers.
Professional Employer Organizations (PEOs) have been around since the 1980s and were initially created to provide a solution for small businesses that struggled to manage their own HR functions. PEOs quickly became popular due to the cost savings and administrative efficiencies they offered, allowing businesses to focus on their core operations rather than administrative tasks.
Differences between an EOR and a PEO
While both an EOR and a PEO can provide support for hiring and managing employees, there are some key differences between the two:
- Legal Structure: An EOR will establish a legal relationship with the employee directly, while a PEO will establish a legal relationship with the client company, and then co-employ the employees. This means that the PEO is responsible for payroll, benefits, and compliance, while the client company retains control over day-to-day management of the employees.
- Compliance: An EOR will take on full legal responsibility for compliance with employment laws and regulations, while a PEO will share legal responsibility with the client company.
- Recruitment: While both an EOR and a PEO can provide support for recruitment and hiring, a PEO may offer more extensive recruitment services, such as access to a larger candidate pool, and support with job descriptions and interviews.
Why you should use a Global PEO instead of incorporating your company
When expanding your business operations to the United States, there are several options available for setting up your company, including incorporating a new legal entity in the US. However, this can be a complex and time-consuming process, requiring significant resources and expertise. Alternatively, using a Global Professional Employer Organization (PEO) can offer several advantages over incorporating your own company in the US. Here are some reasons why you should consider using a Global PEO instead of incorporating your company:
- Faster Time to Market: Incorporating a new legal entity in the US can take several months, and may involve significant legal, administrative, and financial complexities. On the other hand, using a Global PEO can provide a faster time to market, enabling you to start hiring and expanding your business operations in the US more quickly.
- Cost Savings: Incorporating a new legal entity in the US can be expensive, and may involve significant ongoing costs related to compliance, taxes, and administrative functions. Using a Global PEO can provide cost savings by leveraging the PEO’s existing infrastructure and resources, which can help you avoid the need to set up your own operations from scratch.
- Reduced Risk: Incorporating a new legal entity in the US can involve significant risk, including legal and financial liabilities, compliance issues, and operational risks. Using a Global PEO can help reduce these risks by providing expert guidance and support on compliance and regulatory issues, and by sharing the legal and financial responsibilities of employment.
- Flexibility: Using a Global PEO can provide greater flexibility when it comes to hiring and managing employees in the US. For example, a PEO can provide support for short-term projects, or for testing the waters in a new market before committing to establishing a legal entity. This can provide greater flexibility and agility in responding to changing market conditions and business needs.
Overall, using a Global PEO can provide significant advantages when expanding your business operations to the US, enabling you to navigate the complexities of the US regulatory environment, and providing cost savings, reduced risk, and greater flexibility in managing your workforce.
In conclusion, using a Global Professional Employer Organization (PEO) in US can offer several advantages over incorporating your own company in the US when expanding your business operations to the United States. The PEO model allows you to leverage the PEO’s existing infrastructure and resources, providing a faster time to market, cost savings, reduced risk, and greater flexibility in managing your workforce.
By partnering with a Global PEO, you can focus on growing your business while leaving the complex administrative and regulatory functions to the PEO. This can help you avoid the significant legal, administrative, and financial complexities of setting up your own operations from scratch, and allow you to respond more quickly to changing market conditions and business needs.
Overall, using a Global PEO can be a highly effective way to expand your business operations to the US, enabling you to take advantage of the vast opportunities available in this dynamic market while minimizing risk and maximizing flexibility.