AOR Demystified: Everything You Need to Know About Agent of Record

Mayank Bhutoria

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Key Takeaways

Understanding the fundamentals of AOR services can significantly benefit businesses trying to navigate the complexities of global expansion. If you're in the process of discovering what an agent of record is, you have arrived at the right place. 

This blog explores AOR - its meaning, functions, advantages, selection standards, and the nuances that set it apart.  It provides you with the information you need to make informed decisions regarding global hiring.

Let’s begin!

What is Agent of Record? 

Agent of Record is a third-party service that handles every aspect of hiring and managing independent contractors while providing complete compliance. 

When businesses choose an AOR service to hire contractors, the AOR will take up all the responsibility for managing worker classification, payments, and administration on the business's behalf.

Typically, AORs have extensive experience managing individuals and companies that hire contractors.  By partnering with an Agent of Record, businesses can benefit from a streamlined and secure payment procedure, mitigate the risk of misclassification, and maintain complete compliance with regional labor laws.

Read more: Employer of Record software

The function of an AOR in hiring independent contractors

When businesses are unsure about how to hire and manage independent contractors, choosing an AOR is the best choice. AORs are thoroughly aware of worker classification laws from different states and nations and ensure the hiring of legitimate independent contractors only. Here is how AOR can help your business:

Classification of independent contractors

According to a report, 10–30% of employers nationwide may misclassify workers in the US. However, with an AOR, you can avoid employee misclassification

The professional expertise of an Agent of Record enables businesses to keep ahead of the complexities of worker classification concerning changing laws and regulations in various states and countries. Thus, AORs can help you avoid the penalties of misclassification across countries.

Making contracts and agreements 

AORs play a crucial role in handling contracts, NDAs, and agreements, ensuring all provisions are legally valid. They collect relevant papers, such as personal data, financial data, and tax reference numbers, on your behalf in the onboarding process.

They are aware of the regulations governing the hiring of contractors and the different employment contracts. Additionally, they ensure contractors fully understand and agree with the contract conditions before joining.

Managing international payments

When hiring overseas contractors, it is vital to streamline the payment process. AORs are responsible for processing payments to all your contractors in their home currencies ensureing compliance. 

For example, Gloroots' single-click payroll ensures timely multi-currency payments to your global workforce without hassles. The platform also supports crypto pay-ins and payouts, making it one of the best choices for international hiring. 

Advantages of using AOR services 

The main advantages of partnering with an AOR service provider are:

1. Reduced risk

AORs assist businesses in navigating the intricacies of hiring independent contractors, assuring legal and financial compliance, and reducing risks. The AOR relieves your company of the time-consuming procedures, costs, and risks of hiring contractors globally.

2. Organizational efficiency

Businesses can improve operational efficiency by streamlining administrative work, streamlining procedures, and outsourcing hiring operations to an AOR. Your business's internal staff may concentrate on high-priority and revenue-generating tasks rather than spending their time on lengthy hiring procedures. 

3. Business expansion and control

With the assistance of an Agent of Record, companies can access a larger pool of independent contractors, allowing them to hire specialized skills and enter new markets. 

AOR enables your HR managers to outsource administrative and compliance work while maintaining control over strategic human resources choices.

How to select an Agent of Record?

Selecting the right Agent of Record (AOR) is crucial for any business seeking to streamline its hiring and contractor management processes. Here are essential steps to guide you in making an informed choice:

1. Evaluate the experience and expertise of AORs as per your business need

Evaluate each AOR's level of expertise and understanding. Look for AORs with a track record of effectively managing contractors for companies like yours. 

2. Review all the service offerings

Examine the AOR's range of services. Ensure they cover worker classification, payment management, compliance monitoring, and other administrative tasks. Choose an AOR that provides comprehensive services tailored to your needs.

3. Evaluate technology and tools use:

Ask the AOR about its technology resources and platforms. The efficiency of a system can have a big impact on how well and precisely contractor management runs. Select an AOR that streamlines processes with cutting-edge technology.

4. Verify compliance practices:

Confirm that the AOR has robust compliance processes. Compliance is vital to mitigate risks associated with contractor misclassification. Ensure the AOR's practices align with industry standards and regional labor laws.

Look for case studies to determine if the AOR has compliantly helped its customers hire talents globally. 

5. Consider pricing

Evaluate each AOR's cost structure and fee transparency. Compare pricing models and ensure they fit your budget while providing value for the services offered.

For example, Gloroots offers a transparent pricing structure with no hidden costs. The platform also sends customers monthly reports detailing EOR fee breakdown, employer liabilities, resource usage, FX rates used, and more.

6. Check client reviews and testimonials:

Assess the AOR's performance and suitability for your needs by looking at customer reviews. Look for reviews and testimonials, which can usually be found on the AOR's website. Look at third-party websites, public forums, social media, etc., to get additional insights. 

Differences between AOR and EOR

Agent of Record (AOR) and Employer of Record (EOR) are terms frequently encountered, particularly within the context of hiring and administrative management. While both involve a third-party role, they serve distinct functions. 

Let's look into the key differences between AOR and EOR:

Aspect AOR EOR
Responsibilities & Lagl status Not a legal employer. It handles local compliance and administrative work. EOR acts as the legal employer and handles HR tasks like employment contracts, benefits, and payroll, taxes, and compliance.
Cost Less expensive than EOR due to fewer responsibilities. Involves higher costs as EORs cover more responsibilities and act as the legal employer.
Suitability AORs help hire independent contractors globally. Best-suited for short-term projects. EORs are primarily suitable for long-term employment. However, you can hire both contractors and employees via EOR services.
Best for Companies wanting administrative support for their independent contractors Companies wanting partner to assume legal and financial liability for their workers
Compliance Assists in compliance, but employers retain a higher level of accountability. Ensures 100% adherence to labor laws, tax and hiring regulations, and more.

Read more: EOR vs. AOR vs. GEO

Unleash the power of the global workforce with Gloroots AOR solution 

With Gloroots AOR services, say goodbye to the difficulties of managing independent contractors. 

We can help you find the best talent from across 140+ countries while handling every part, from their onboarding, contract creation, and invoice generation to payouts.

Further, our AOR solution ensures that your worker classification challenges are carefully handled, preventing possible risks and legal issues.

Want to explore our platform and experience the best-in-class benefits? 

Connect with Gloroots right away!

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