AOR vs. EOR: A Complete Guide

Hiring has changed entirely for companies. They no longer hire just full-time employees based in a traditional office environment. Teams nowadays comprise freelancers, independent contractors, consultants, and distributed remote employees from across the globe.

Hiring from around the world makes it possible to find skilled talent and save money — but it creates complicated legal and compliance issues. Varying countries have different regulations for hiring, compensation, and classifying employees.

That is where Employer of Record (EOR) and Agent of Record (AOR) services step in. These services allow companies to hire globally without becoming mired in local regulations and HR issues. But they each perform a different function.

Here, we'll explain what EORs and AORs are, how each functions, and how to choose which one is best for your company.

What is an Employer of Record (EOR)?

Employing a full-time worker abroad usually involves creating a local legal entity — a costly and time-consuming undertaking.

An EOR makes it easy by becoming the legal employer of record for your foreign hire. You control their day-to-day work, but the EOR takes care of the compliance and legal aspects — the paperwork, payroll, taxes, and so on.

Consider it a shortcut to world-wide hiring. Rather than dealing with foreign labor law yourself, you have local experts handle staying compliant and bringing on talent fast.

EOR services often include:

• Payroll processing
• Tax filing and compliance
• Benefits and insurance administration
• Expense and timesheet management
• Employee contracts and documentation
• Visa and work permit support
• Onboarding and offboarding
• HR and legal guidance

What is an Agent of Record (AOR)?

When dealing with independent contractors, an AOR is what you require.

An AOR assists you with contracting across borders while keeping them classified correctly, which is important so that legal troubles are avoided. They don’t become the employer, but they deal with paperwork, contracts, and payrolls so that they keep you compliant with local regulations.

For instance, if your business is based in the U.S. and hires a contractor from Argentina, an AOR will keep the agreement compliant with local standards and ensure the worker is paid accurately and on time.

AOR services usually include:

• Contractor classification and onboarding
• Locally compliant contract creation
• International payment processing
• Tax and documentation support
• Currency conversion and invoicing tools

Quick Comparison: AOR vs. EOR

Here’s a quick side-by-side view of what each service offers:
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How Do These Services Actually Work?

AOR Process (with Multiplier as an example):

1. Employee is categorized correctly according to local legislation.
2. You add the contractor's details; a compliant contract is generated.
3. The contractor enrolls, provides necessary documents.
4. After receiving the deposit, the contractor is brought onboard.
5. Contractor issues an invoice.
6. You approve and make the payment; Multiplier pays money to the contractor.

EOR Process:

1. You provide compensation terms and details.
2. Multiplier creates a locally compliant agreement.
3. Employee completes payroll and tax forms using a self-service tool.
4. Multiplier authenticates documents and activates the employee.
5. Your new hire begins work — usually within 4 hours or less.
6. Multiplier manages payroll, benefits, and continuous compliance.

Payment Solutions

Paying Contractors with AOR

An AOR streamlines cross border payments by undertaking currency conversions, tax compliance, and approvals within an invoice. This eliminates delays and ensures that you have costs that are predictable — no surprises from exchange rate volatility or bank transfer charges.

It also scales well. No matter whether you have 5 freelancers or 50, it is all done in a single system — timesheets, invoices, approvals, and payments.

Global Payroll with EOR

An EOR handles all payroll needs. You approve hours, and the EOR handles the taxes, benefits, and distribution of pay.

You can manage both local and international workers from one location using tools such as Multiplier. Your employees receive local-language payslips and self-service capabilities, and you receive complete visibility with built-in HR, invoicing, and reporting systems.

How to Choose Between AOR and EOR

Here are some important things to consider before making a decision:

• Speed: You need to recruit quickly. Multiplier’s AOR and EOR solutions take just hours, not weeks, to implement.
• Simplicity: A unified platform for timesheets, payments, and contracts helps to save time and maintain consistency.
• Cost savings: Bundled services save on the use of several vendors, lowering your overall costs.
• Support: Search for dedicated points of contact and international customer support. Multiplier provides 24/5 support.

Final Thoughts

Both AOR and EOR services enable you to establish a flexible, international workforce but in a different manner. Employ international freelancers or hire international contractors using an AOR when you want to remain compliant with minimal effort. Seek an EOR when recruiting full-time foreign employees and do not want to establish a legal entity. With the proper partner, it is possible to simplify international hiring, remain compliant, and concentrate on business growth.