US companies looking to expand their workforce internationally can avoid the complexities of opening local subsidiaries by either working with a Professional Employer Organization (PEO) or a Global Employer Organization (GEO). Successfully expanding your workforce depends on the difficult decision of choosing between these two types of entities.
To help you make this big decision for your company, we have prepared an overview of GEO vs. PEO. We highlight key features of PEOs and GEOs and present some advantages and disadvantages of working with either one.
What Is a Professional Employer Organization (PEO)?
Hiring remote workers can be a daunting endeavor for companies. The complexities of learning payroll and tax laws, setting up a local subsidiary and payroll team, and understanding the talent market can slow your team’s growth. Working with a PEO can help you expand your workforce abroad quickly and compliantly.
A PEO allows international companies to hire local remote workers without setting up a legal subsidiary in a foreign country. They provide services that include payroll processing, onboarding, recruitment, benefits management, and HR solutions. PEOs hire international, remote workers and serve as their “Employer of Record” for insurance and tax purposes while taking on a range of administrative and compliance responsibilities. While they are the employer on paper, these employees still receive their work assignments and instructions from you.
As the administration of your remote workers is taken care of, you can focus on the day-to-day management of your employees. For US companies looking to hire Canadian workers, choosing PEO in Canada is an ideal option.
Pros and Cons
US companies looking to hire Canadian workers can take advantage of the many features that PEOs offer, including:
- No need to set up a local entity: A key benefit of hiring a PEO is that you do not have to set up a local subsidiary or register to pay taxes. PEOs that offer employer of record services become the legal employers of your remote workers and lease them back to you.
- Improved Compliance: PEOs have local experts that stay up to date on business regulations to reduce risk and ensure your company remains compliant.
- HR Administration: Some PEOs will recruit, onboard and administer employee benefits, saving you valuable time.
- Outsourcing Payroll: To avoid costly fines and fees associated with payroll errors, PEOs handle payroll in compliance with local laws ensuring accuracy and efficiency.
- Cost-Cutting: PEOs offer payroll services at low prices, while maintaining exceptional service.
Despite all the advantages of working with PEOs, working with some providers can have its downsides.
- Lacking Best Benefits: Some PEOs won’t offer your employees good options for benefits; they provide predefined plans, and some do not offer benefits at all.
- Lacking Local Experts: Many PEOs that can hire employees from any country have limited local knowledge, in-country staff, and expertise.
- No Account Manager: PEOs with automated processes may not offer your employees the service they deserve.
- Contract Minimums and Termination Fees: Some PEOs have complex fee structures designed around monthly minimums or termination fees.
What Is a Global Employment Organization?
Unlike domestic PEOs, a GEO can hire remote workers from any foreign country. It has become more common for successful enterprises to expand and hire workers overseas and the GEO hiring process provides the structure for organizations to build their workforce from anywhere and everywhere. GEOs offer HR solutions and Payroll services to support a company’s need for global expansion, including global payroll, benefits administration, taxes, risk, and compliance services.
Pros and Cons
If you are looking to expand globally, GEOs offer many advantages to help you hire remote workers from any foreign country. Companies can take advantage of some GEOs’ features, yet they also need to weigh the disadvantages of GEOs.
- No Local Subsidiary, No Problem: The legalities of setting up a local subsidiary can be daunting and complex. Companies turn to GEOs that already have established structures to hire remote employees.
- Global Talent Pool: GEOs have access to international recruitment networks, which your company can benefit from to build an up-skilled workforce.
- Risk & Compliance Mitigation: GEOs are familiar with the risks associated with managing employees in different jurisdictions. Since they have local knowledge in payroll and taxes, their solutions can help mitigate risk by ensuring your company is compliant with local standards.
Working with a GEO offers many benefits, but there are a few negatives to consider as wel.
- Less Local Knowledge: GEOs hire remote workers everywhere; as appealing as this might sound, some GEO’s have limited local labor & tax laws expertise.
- No HR Manager: Most often, GEOs assign local account managers but not local HR managers to your employees, which prevents them from offering the best employee experience.
- Third Party Services: Many GEOs outsource some or all of their non-technical services to local PEOs. This creates uncertainty around service delivery and raises your costs.
- The Downside of Global Payroll: Having all your payroll under one centralized system means that many processes are automated, leading to a less customer-centric approach.
Choosing Between a PEO and GEO
Made it this far and still haven’t decided between PEO vs. GEO? Here are a few more reasons to choose a PEO provider like Canadian Payroll Services.
When scrolling through some GEO websites, you cannot help but notice that their company values rely on offering technology-driven services. This approach is not necessarily a terrible thing. However, employee relations have always been and remain a human experience. At Canadian Payroll Services, we prioritize offering your employee a human experience; that is why we assign certified HR account managers to each of your employees and provide them with a customer-centric, same-day response.
GEOs can hire remote workers from “anywhere” and “everywhere,” but may not have real depth of expertise in over 195 countries. We have more local knowledge as a domestic PEO because we operate in one country and have a local staff. Your employees need an in-house Canadian Payroll Association certified payroll specialist who handles all payroll matters timely while maintaining accuracy, which Canadian Payroll Services offers.
If you are a foreign company looking to hire a Canadian remote worker, Canadian Payroll Services can help you expand your workforce. Contact us to start your journey with us today!