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EOR vs Payroll Solutions: What’s the Difference?

Employment of Record services and payroll solutions address similar issues around staffing, but do so in very different ways. Understanding the differences between these two concepts is key to choosing which approach you should use for your business. Here's a guide to help you learn more about both of these essential parts of running a human resources team: 

What is Employment of Record?

 Employment of record service, also known as an EOR or professional employer organization (PEO), puts the employer in charge but relieves them of many responsibilities by offering comprehensive HR services including payroll processing, benefits management, employee onboarding, compliance and risk management. This model simplifies compliance with local labor laws while giving employers access to a full HR team without having to make additional hires themselves. 

What are Payroll Solutions?

Payroll solutions are services used by companies that have already hired their own employees and just need assistance with payroll. Such solutions can be purchased from payroll vendors or software companies that provide cloud-based HRMS software for managing all kinds of employee information and analytics. 

How Are They Different?

The main difference between employment of record service and payroll solutions is that one focuses on administrative responsibilities such as processing paychecks on time whereas the other handles the entire suite of human resources processes for both employers and employees. With an employment-of-record solution, employers are freed from tasks such as managing employee registrations, tracking attendance and filing taxes; whereas with a payroll solution, they're only provided support at the most basic level – issuing payments every month. Additionally, EORs also offer additional value by providing access to employee benefits plans like retirement savings accounts or health insurance plans that would otherwise be difficult to acquire independently.

Overall, an employment-of-record provider can function as an outsource HR department in addition to its benefits package while a payroll solution simplifies back office administration tasks associated with paying employees but doesn't offer broader insight into workplace operations or strategic decision-making capabilities needed by larger organizations. The scope and approach taken will depend upon how much control over their operations businesses want to retain or outsource altogether.

Transform Your Business with EOR and Payroll Solutions

Sonya Kapoor

Sonya Kapoor is a content writer who work with N2S's Texas office. During the day, she is an author, and in the evening, she is an avid reader. She shies away from conversing about herself in the third individual, but can be cajoled to do so sometimes.