When you want to expand your business internationally to places like Peru, there are a lot of variables you must consider. For example, you’ll need an entity set up in the foreign country of your choosing. You’ll also need to learn the local labor laws of the country to ensure compliance. Then there are the tasks of recruiting, hiring, and training new employees, processing their payrolls, providing them with benefits, offering them support, handling human resources (HR) tasks, and figuring out how taxes work in a foreign country.
And if you plan on expanding to more than one country, then these tasks can quickly add up in both time and money. That’s where an international professional employer organization (PEO) can come in handy. With a PEO, you won’t need to set up multiple entities because the PEO will already have entities established in several countries and will act as an entity on your behalf.
Still unsure of what an international PEO is and how it can benefit your business? Let’s clarify.
An international PEO, or global PEO, typically enters into a relationship with a domestic, U.S. business. The relationship is known as a co-employment relationship. This relationship enables the PEO to help hire and manage employees on the parent company’s behalf in practically any international market of their choosing. The PEO acts as the company’s Employer of Record, allowing businesses to hire foreign workers without setting up an entity in a foreign country. It allows businesses to expand quickly through international markets, without waiting months for an entity to be created.
International PEOs help organizations with more than just an entity, and companies that use PEO services have more benefits than just quick market expansion. PEOs also help businesses with HR tasks, payroll processing, administering benefits, employee management, tax withholdings, government-required reporting, medical and life insurance, labor laws, and compliance.
While an international PEO service is there to help businesses expand their operations globally, a domestic PEO is a business-to-business service that enables U.S. companies to subcontract specific tasks, primarily HR and administrative roles. A domestic PEO offers many of the same benefits that an international PEO offers, aside from helping businesses expand overseas. Their services include helping U.S businesses with payroll, benefits, worker’s compensation, risk management, and more.
The disadvantages of hiring a domestic PEO over an international PEO are that they can’t help you expand internationally, they often use outdated technology, and they offer fewer health care plans.
International PEO services offer many services, from mundane everyday tasks to ensuring that your company is following international labor laws.
If you’re a business owner, chances are you’ve struggled with trying to hire the right employee to add to your team. You may have posted a job description and had very few bites, or the bites you had did not offer the skills and experience you need.
With an international PEO, you’ll gain access to a large talent pool of international employees who are equipped with the skills and knowledge needed to make sure your company succeeds. Having a diverse skill set at your disposal can help your team problem-solve and make decisions more effectively.
No one wants to handle HR tasks, from handling paperwork to mitigating employee conflicts and concerns. These tasks alone can be time-consuming. Most international PEO services will help with HR tasks, freeing up time for you and your in-house staff to focus on other aspects of your business.
Aside from paperwork and handling employee conflicts and concerns, PEO services can help with HR tasks such as building a good company culture, administering pay raises, evaluating employee performances, and assisting employees who are ready to retire or resign.
Payroll processing is a task that all good international PEO services offer. Payroll processing is more than just ensuring that employees are paid on time. It also consists of keeping track of employees’ working hours, including normal working hours, overtime, and leave, withholding deductions and filing payroll taxes on behalf of the employees, and, of course, delivering payment to employees.
Many international PEO services will have software dedicated to keeping track of payroll. All that needs to be done is entering the employee’s information, and the software will take care of everything else.
Many international PEO providers can offer attractive benefits packages to potential employees. Since they cater to several businesses and handle many employees, they receive discounts toward benefits such as medical insurance, life insurance, dental, and vision.
Other benefits PEOs can offer to your international employees are paid time off, depending on local laws, 401(k), and retirement plans.
Providing good benefits can help attract the best employees, especially if those benefits surpass your competition’s.
International law varies from country to country, and if you’re expanding to more than one country, learning each country’s employment and tax laws can seem intimidating. You also risk making irreversible mistakes and ending up with fines and penalties.
International PEOs have highly trained experts who specialize in international compliance laws. These experts will keep up to date on any changes in laws and ensure that your company remains compliant.
Most international PEO services will manage your international employees so that you don’t have to. Employee management includes recruiting, hiring, training, and onboarding new employees, assigning roles and duties, monitoring progress and employee performance, ensuring that employees are enrolled in the proper benefit plans, and more.
You may consider leaving financial forecasting on the back burner, but it’s an important part of building a business. Financial forecasting can help you set accurate budgets and make business decisions that align with your business goals to help you succeed.
However, financial forecasting in a foreign country can be difficult. You have to worry about currency exchange rates, international banking regulations, and more. International PEOs have experts who can handle these issues and help you create accurate budgets.
Using a domestic PEO service has some benefits, such as outsourcing tedious tasks that you don’t want to handle. However, hiring an international PEO has many more benefits and may be vital to you expanding and operating your business in a foreign country.
Some additional benefits include:
While there are certainly plenty of benefits to using an international PEO to expand your business, there are also some challenges that come with using these services.
For example, PEOs are unable to obtain physical assets. So, if you’re looking to acquire physical assets, you won’t be able to rely on your PEO provider. In fact, obtaining these assets will require you to have an entity.
Another challenge that you may face when using a PEO provider is that you won’t have a permanent establishment in the foreign country you’ve expanded to. Some countries may require you to have an entity, which means you won’t be able to use a PEO service in its place.
One final challenge worth mentioning is that, by hiring a PEO service to manage your employees, you may miss out on forming important employee relationships. The employees may not respect you as much as they would if working directly for you.
If you plan on expanding your company’s operations to Peru, then you may want to consider hiring an international PEO service to handle your international business.
Using an international PEO in Peru works similarly to other countries. Once you’ve hired a PEO service provider, they will help you in expanding to Peru and in hiring the best Peruvian employees. They’ll also handle Peru’s employee and tax laws, ensuring that your company follows compliance while operating in Peru, and handle HR tasks and employee management issues.
Choosing the right PEO for your company can be difficult. There are several things that you need to consider to ensure you make the right choice.
The most important factor in choosing a good international PEO is determining your company’s needs. Consider how your business operates and what tasks you want to delegate to your PEO. For instance, if you want a PEO service that provides employee management services, then you’ll need to check with any potential PEOs to ensure that this is a service they offer.
Assess their human resource and risk management services and ensure that they meet your company’s needs. Also, meet and interact with the PEO providers. Meeting them can help you get a feel for their personality.
Research goes beyond just looking at reviews on Google, though it couldn’t hurt to do that, too. However, when it comes to researching, you’ll need to investigate the company thoroughly. Ask for past and current references and follow up with them. Additionally, investigate the company’s credentials. Are they recognized by the IRS? Are their financial statements audited by a CPA? Are they a member of NAPEO? Do they have the proper certificates and experience in their field? Do they have adequate administrative and management competence?
Additionally, you’ll want to check into their employee benefits. Find out how they’re funded; if they’re fully insured or partially insured. Find out who their third-party administrator is. Also, ensure that the benefits fit your needs and will appeal to your employees.
Aside from doing your own investigation, another way to determine the credibility of an international PEO service is to ask for recommendations. You can get recommendations from your family, friends, coworkers, or other business owners.
When you ask for recommendations, ask about what they like and don’t like about the PEO service they recommend. Ask them about a time that the PEO service was able to effectively handle a problem that their company faced.
Before signing any contract or agreement, you should take extra care to thoroughly review all written agreements. You’ll want to ensure all responsibilities and liabilities are addressed and stated clearly in the agreements.
If you don’t know where to start on your search for an international PEO, Revelo can help. We have access to a huge talent pool of Latin American workers from all Latin American countries. Enterprises and startups have used our services to help build their engineering teams, and we’re confident that you will get the same benefit from our services.
Contact us today for more information.
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We can provide professional employer organization services for all these countries in Latin America.