EOR vs. software platforms: What’s best for your business?

Remote work has opened up a wider world of possibilities, giving companies a far deeper pool of international talent to draw on. Hiring that talent, however, comes with its fair share of complexities.

That begs the question: What’s the most straightforward (and cost effective) way to hire talent in countries where you don’t have a legal entity?

Is your best option a traditional Canadian employer of record (EOR), or could any software platform that handles payroll and HR tasks suit your needs?

Here, we’ll explain why a software platform can’t come close to offering the same benefits as an EOR. We’ll also cover why you should choose an EOR for your cross-border workforce.

First - let’s establish what and EOR is and what it does

An EOR is the legal, government-recognized entity (and employer) for your talent in Canada. In other words, they are the ones who sign employees’ pay cheques.

EORs assume all the risks and responsibilities associated with being a Canadian employer – including compliance with health and safety regulations, employment and tax laws (on a federal and provincial level), paid leaves and more.

EORs can also perform HR-related tasks, including payroll and benefits administration, as well as employee offers and contracts.

Want to dig deeper into Canadian Employer of Record Services?

Find out everything you need to know in this ultimate guide.

Read EOR Ultimate Guide

Now, what do we mean by “software platform?”

Software platforms – also known as digital employment solutions – often come in two flavours:

  • The first is a “standalone payroll platform,” which – as the name suggests – allows you to administer payroll for your Canadian or international employees and file corporate taxes. Examples of some of the most popular platforms include Rippling, Rise and QuickBooks.
  • The second is “HR-centric payroll platforms,” like Deel and Oyster HR. With these tools, you get payroll-processing capabilities along with some basic HR services, like local benefits administration, vacation tracking and employee performance management.

With both types of platforms, companies typically pay a monthly subscription fee.

Why might a business consider choosing software over an EOR?

We get it: On the surface, software platforms can seem appealing. From our experience, three of the biggest driving factors are:

  • A perception that software comes at a lower cost versus the flat fee or percentage of employee salary charged by traditional EORs.

  • A desire to keep your operation as “lean and mean” as possible, as well as a reluctance to bring other partners or entities into the fold.

  • The business may feel that they can “get by” with a barebones or basic level of support if there’s only a few Canadian or international hires.

Three advantages of traditional EOR services over software

Advantage 1: Software platforms can’t replace the deep expertise an EOR provides.

Both HR-centric and standalone payroll platforms tend to offer a very basic level of HR support and advice.

In contrast, EORs have a deep understanding of the complex and constantly-evolving employment and tax law – and they can reduce or mitigate the risks of international hiring. EORs can also provide specially tailored advice on things like terminations (with and without cause), proper compensation, paid leaves – and more – for your cross-border workforce.

Practical example: Deciding between an EOR or a software platform is like choosing to work with a highly experienced accountant, or buying a copy of TurboTax.

Yes, TurboTax provides a simple online platform for basic tax filing, but it can’t come close to offering the deep, nuanced and personal advice you get from a good accountant.

What’s more – an accountant can work with you to help find savings and deductions you may have never considered or known about.

Advantage 2: EORs help insulate your business from risk.

EORs are experts in compliance – be it nuanced employment law, paid leaves or taxes – all so you don’t have to be. An EOR assumes all the responsibility for maintaining compliance so that your company is protected from any unwanted legal surprises.

While a software platform can provide some general guidance on tax rules or general HR compliance, it’s far from comprehensive and definitely not customized for your unique needs.

Plus – a software platform can’t advise or protect you in the event of legal issues – such as an employee lawsuit resulting from a termination.

Advantage 3: Software won’t necessarily reduce your workload.

Here, we come to the bigger question: Do you really want to do all of this yourself? By “this,” we mean tasks like payroll and tax filing.

Keep in mind: Software isn’t completely automated and requires a dedicated person (or people) to run and administer the platform.

When you choose to work with a Canadian employer of record, all you need to worry about is enabling your talent to grow and thrive within your company. EORs also free you up to play to your business’ core strengths and remain focused on what actually generates profit.

Practical example: Payroll typically takes up to five hours each pay period, or the equivalent of 21 days each year. Plus - around 40% of small business owners say that taxes and bookkeeping are by far two of the most time-consuming tasks.

Sure - you could try to tackle payroll and tax filing yourself, or with a software program. But if you don’t fully understand the complex web of rules and regulations in Canada, you’re looking at needless work, frustration and stress.

Hiring an experienced accountant, on the other hand, ensures that everything will be handled properly and frees up dozens of hours of time.

Bridgewater TI: Your comprehensive Canadian EOR

Bridgewater TI provides a full suite of Canada EOR services that includes payroll and benefits administration, HR advice and administration, employment contracts – and more.

Everything we do is grounded in a comprehensive knowledge of what it takes to be compliant with Canadian employment law. To that end, we work with a network of employment lawyers across Canada to ensure all our employment contracts follow federal and provincial laws, as well as health and safety regulations.

We also help you navigate the complex web of requirements for vacation, paid leaves and minimum entitlements to help you avoid big payouts at the end of employment.

Learn how we can seamlessly help you employ Canadian talent.

Talk to us