EOR and Global Payroll software: a practical buyer guide for US teams
Hire in Canada, Mexico, and beyond without an entity. Here is what to look for, what to ask, and what to avoid, written for HR leaders from startup to enterprise.
What eor and global payroll software does
An employer of record (EOR) legally employs people on your behalf in countries where you do not have a company entity. It handles local contracts, payroll, taxes, statutory benefits, and termination rules, while the employee works for you day to day. Global payroll software, by contrast, is for companies that already have entities abroad and need one system to run pay across them.
For US companies, the first international hires are very often in Canada, Mexico, the UK, or India. Those first one or two hires are when an EOR earns its fee.
Signs you are ready for it
- You found a great candidate in another country and have no entity there.
- You have long-term contractors abroad who look more and more like employees.
- You run payroll in two or more countries through different local providers.
- Finance wants one consolidated view of global employment cost.
- You need to offer local benefits and equity in a compliant way.
Must-have features
Country coverage that you own
The provider should own its entities in your key countries, rather than relying on unnamed partners.
Compliant local contracts
Employment agreements built for local law, including notice periods, probation, and IP assignment.
Statutory and supplemental benefits
Mandatory benefits handled, plus options for private health or pension top-ups.
Contractor management
Compliant contractor agreements, invoicing, and classification risk checks.
Equity and expense support
Handling local tax treatment of stock options and reimbursements.
Entity transition path
A clear plan to move employees to your own entity when headcount justifies it.
US compliance to keep in mind
Every country has its own rules on termination, working hours, paid leave, and benefits, and many have strict rules about long-term contractors. For Canada specifically, employers deal with source deductions for income tax, CPP (or QPP in Quebec), and EI, plus a Record of Employment when someone leaves. On the US side, do not forget that classification and IP ownership still matter even when the worker is abroad. Treat any provider's country guide as a starting point and check high-risk questions with local counsel.
How pricing usually works
EORs usually charge a flat monthly fee per employee on top of salary and employer costs, with some charging a deposit up front. Global payroll platforms charge per employee per month. Watch for currency conversion margins, setup fees per country, and termination fees.
AI features worth asking about
Look for AI that explains local rules in plain language with links to the source, like statutory notice periods or holiday entitlements. Treat AI summaries of foreign employment law as orientation, not legal advice.
Questions to ask in every demo
- Do you own your entity in each country we need, or use a partner?
- What is the total employer cost for this role in this country, line by line?
- How do you handle a termination, and what costs could we face?
- What is your foreign exchange margin and when is the rate locked?
- How do we move employees to our own entity later?
Red flags during evaluation
- Pricing hides currency conversion fees.
- Unclear answers about who actually employs the worker in a given country.
- No local-language employment contract.
- Long minimum terms per employee.
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EOR and Global Payroll products we profile
Independent profiles of platforms that offer eor and global payroll capabilities, from startup to enterprise. Each covers fit, strengths, what to check, and demo questions.
Frequently asked questions
Is it legal to hire full-time contractors abroad instead of using an EOR?
When should we set up our own entity?
Can a PEO hire in Canada?
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