How an Employer of Record (EOR) Can Help with Tax Compliance in the US
Are you an international recruiter who’s thinking about expanding your business in the US? Hiring in the US is advantageous for many reasons: a broad, skilled talent pool to source from, a huge, profitable market, the potential for higher margins, and the opportunity to expand your offerings to reach more customers in the US.
US expansion provides amazing growth opportunities for a recruitment company, but it can come with various challenges. Some of these challenges include establishing a business entity in the US and complying with local employment laws, that vary state-by-state, throughout the hiring process. Another piece of the compliance puzzle is international taxes. Understanding employment taxes in the US can be complicated, especially for international recruiters who are unfamiliar with how the US tax system works. One of the best ways to mitigate tax risk while hiring internationally is to work with an EOR and local tax professionals. An employer of record (EOR), such as LGWS, can help your recruitment company with all of these challenges and much more.
What is an EOR?
An EOR is a third-party service provider that acts as the legal employer for workers, taking on responsibilities such as payroll, benefits, and compliance. Your recruitment company does not need a local entity to begin hiring in the US with an EOR!
An EOR can help international recruitment companies manage tax risks in the US by taking on the legal responsibilities for employment-related tax obligations, thereby reducing the risks of non-compliance and associated penalties.
How does an EOR help with tax compliance in the US?
Working with an EOR is a simple, cost-effective way to hire in the US with confidence. A trusted EOR will have a team of experts who can help navigate the complex US tax system and ensure complete compliance with all tax laws in the states.
An EOR takes on the legal burden of hiring workers on your behalf. By doing so, the EOR assumes the responsibility of complying with local tax laws. The EOR will ensure that all relevant taxes are paid on time and in accordance with local, state, and federal regulations. This includes withholding and remitting payroll taxes, as well as other employment-related taxes.
Here’s a few things an EOR will take off your plate when hiring in the US:
- Running compliant payroll
- Calculating and withholding taxes
- Document collection and tracking
- Submitting end of year tax filings
- Offering compliant benefits packages to US workers
Interested in working with an EOR? Book a call here
Disclaimer: This post is provided for informational purposes and should not be considered legal advice, the final word on this topic or a political opinion.