If international expansion is on your radar, you’ve probably heard of International PEO as a possible way to add employees in new locations around the world. Let’s get straight to the point: a lot of information about international PEO is incorrect.
This is because the term “International PEO” has become widely adopted to describe a practice which, when applied on a global scale, does not fall within the purview of any professional employer organization or PEO.
So what exactly is the Global Professional Employers Organization? PEO stands for “Professional Employer Organization”, which is a human resources service branch in a company that manages employee payroll. A PEO typically employs experts in legal, tax, human resources, customer service, and accounting.
The only difference between a Global PEO and a PEO is that Global PEO services allow a partner firm to hire employees worldwide without regard to legal boundaries.
How does a Global PEO feature work?
Now that you understand what a global PEO is, it’s time to learn how it works in a company. Since these organizations often support the international expansion of businesses, the services offered by global/international PEOs are often more extensive than those provided by national PEOs.
A professional employers’ organization (PEO) is essentially a company that provides employee and financial management services during processes such as international expansion or mergers and acquisitions (M&A). They help with critical engagements such as:
- Configuration and support for entities
- International migration
- Payroll and administration
- Acquisition of global talent
- Administration of benefits
- Employee Review
- Global Jobs Consultation
PEOs work directly to support and grow a business into new territory and cover the key processes required in those circumstances. For example, you can hire local talent to enlist in local units, eliminating the tedious task of setting up units. It also ensures that in-country payroll, tax, benefits, and insurance requirements are handled by experts in labor and business law.
Benefits of PEO services
1. Reduced labor costs
Managing human resources takes time and money. Especially if you are looking to set up a back office in another country. Grow your business cost-effectively with seamless employment management with Global PEO as you no longer need to set up physical operations, including staff, in the destination country . It also enables the in-house HR team to focus on activities that provide him with a higher ROI (ROI).
2. Employer compliance and risk management
Global PEO can assist and advise on how to prepare compliant employment contracts for employees and to employ employees in accordance with local laws, regulations and customs. This can be a very useful source of information when trying to understand various concepts.
3. Easier Payroll
Managing your payroll with a Global PEO avoids jumping through the bureaucracy of different destination countries and converting currencies for payroll and other payments. Leaving this complex task to the experts of Global PEO reduces the risk of non-compliance when dealing with unfamiliar territories where rules and regulations differ and are difficult to follow.
4. Simple taxation
Aside from payroll, Global PEOs have a high level of experience and understanding to manage all tax requirements in each country you wish to expand. Examples of this are wage tax withholding, calculation, payment and contribution to responsible authorities. PEO makes sure everything is covered and handled properly.