Understanding The Role And Advantages Of An Agent Of Record (AOR)



Does Your Organization Need An Agent Of Record (AOR)?

Remote work and digital nomadism have led to a surge in the number of companies going for international expansion. However, they face numerous challenges, including compliance maintenance throughout the global landscape. This is where the concepts of Employer of Record (EOR) and Agent of Record (AOR) come in. Organizations looking for global expansion are no strangers to these terms.

In this article, we’ll delve into the concept of AOR, learn what it means, how it’s different from EOR, its advantages, and how to choose the best AOR service provider.

What Is An Agent Of Record?

Since organizations face difficulty maintaining compliance in various countries where their employees reside, they usually procure an EOR or AOR service. The Agent of Record service providers handle all the compliance issues of employing a contractor or subcontractor. These service providers represent the employer as the legal entity that hires and manages contractors globally.

An AOR service provider is sometimes also referred to as a Broker of Record. They provide additional advantages like dealing with health insurance, cost-efficiency, etc.

How Is An AOR Different From An EOR?

The primary difference between an EOR and an AOR is that an Employer of Record service handles employees while an AOR service handles contractors. Hence, knowing the differences between employees and contractors is essential to understand how an AOR differs from an EOR.

Both the services provided adequate support to their clients in handling their respective employees or contractors. However, an EOR has to undertake additional responsibilities when compared to an AOR. This is because handling employees means handling their taxes and benefits, while contractors must handle them themselves.

Advantages Of Agent Of Record Services

  • Risk reduction
    Since the service provider acts as the legal employer of the contractor, the legal risk of mishandling is reduced for the client.
  • Production efficiency
    Organizations can see a surge in production since an AOR service streamlines their operations. In most cases, the other employees can focus more on their core objectives rather than worrying about the contractor’s overall performance.
  • Global talent
    An effective AOR service provider assists as an effective partner for global expansion. Acquiring and maintaining international contractors becomes easier.
  • Cost efficiency
    The cost of procuring and maintaining global talent is reduced since the service provider handles most of the activities. In addition, the possibility of penalties and fines also deteriorates.
  • Expert opinions
    Most Agent of Record service providers have extensive experience in their respective fields. Businesses can utilize this experience and knowledge while handling the global talent pool.

How To Choose The Best AOR

Numerous players in the market provide similar services in regards to AOR. However, not all of them are the most suitable ones for you. You might be looking for someone who may charge less or specialize in specific fields. Nonetheless, choosing the most suitable Agent of Record service provider is essential, and here are a few steps you could follow to choose the best one:

  1. Listing all possible platforms
    Look inside the plethora of platforms that provide AOR services. Make a list and evaluate them based on the following factors.
  2. Global experience
    Understand that the greater the experience of an AOR service provider defines its knowledge in the international environment. Service providers who have handled numerous contractors in the past would have an edge over their competitors.
  3. Reviews
    Explore the reviews of the service provider and understand their client base. The provider might be handling more contractors in other fields of work rather than the one you’re providing.
  4. Service offerings
    Delve into the different services that the platforms provide. Some may provide additional services like payroll management, compliance monitoring, etc., while some may lack a few.
  5. Evaluate technology
    Understand how the service provider utilizes technology and the tools they use to perform their tasks. This would give you an idea of whether the provider would be efficient.
  6. Pricing models
    A definite budget for acquiring a global contractor is essential to prevent oneself from going overboard. Compare the pricing models of different platforms to pick out the best for you.

Conclusion

Agent of Record or AOR are third-party services that provide compliance and contractor maintenance solutions for businesses looking for global expansion. They are different from Employers of Record services since they mainly handle contractors and subcontractors while the latter handles employees. An AOR service provides numerous advantages, like handling compliance and reducing overall cost. However, choosing the best service provider is essential since different organizations have different needs.



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