When your company starts to grow beyond borders, one of the first challenges you’ll face is managing people, legally, efficiently, and compliantly.
Two popular solutions that often come up are the Employer of Record (EOR) and the Professional Employer Organization (PEO).
Employer of Record vs PEO?
Both help businesses handle HR, payroll, taxes, and compliance, but their structures are fundamentally different.
Understanding the differences between an Employer of Record and a PEO will help you decide which model fits your company’s growth stage and hiring goals.
At Betternship, we help startups and growing companies expand globally by hiring vetted African talent through both EOR and PEO models. Here’s a complete breakdown of both options and how to choose the right one.
What Are EOR and PEO?
An Employer of Record (EOR) is a third-party organization that legally employs workers on behalf of your company.
It manages all employment responsibilities, payroll, taxes, benefits, and compliance, while you handle their daily work and performance.
In other words, you can hire internationally without establishing a local entity.
For example, if your company in the U.S. wants to hire a developer in Nigeria, an EOR like Betternship becomes the legal employer. The developer works directly for you, but Betternship manages payroll, taxes, and compliance with Nigerian labor laws.
A Professional Employer Organization (PEO), on the other hand, operates through a co-employment model.
This means both the PEO and your company share employment responsibilities. You remain the legal employer, but the PEO handles HR administration, benefits, and compliance.
This works best for companies that already have a local entity but want to reduce HR complexity.
Employer of Record vs PEO: Key Differences
Here’s a clear comparison of how both models differ:
| Category | Employer of Record (EOR) | Professional Employer Organization (PEO) |
| Legal Responsibility | Acts as the legal employer for your workers. | Operates under a co-employment model. You remain a legal employer. |
| Entity Requirement | No local entity required – the EOR employs talent on your behalf. | Local entity required – the PEO supports your existing company. |
| Compliance Management | EOR fully handles compliance with local labor laws. | PEO helps maintain compliance but relies on your company’s entity. |
| Speed & Flexibility | Hire globally within days. Ideal for testing new markets. | Best for established companies operating locally. |
| Cost Structure | Typically a flat monthly fee per employee covering payroll and compliance. | Usually charges a percentage of payroll or a fixed HR management fee. |
| Ownership of Employee | Employee is on EOR’s payroll but dedicated to your team. | Employee is on your company’s payroll, managed jointly with the PEO. |
In short:
- Use an EOR when you want to hire globally fast and avoid entity setup.
- Use a PEO when you already operate locally and need HR efficiency.
How to Choose Between an Employer of Record and a PEO
Here’s how to know which is right for you:
Choose an Employer of Record (EOR) if:
- You want to hire internationally without creating local entities.
- You’re testing new markets before fully expanding.
- You prefer zero legal risk while focusing on operations.
- Your workforce is remote-first or globally distributed.
Choose a Professional Employer Organization (PEO) if:
- You already have a legal entity in the country.
- You want to reduce HR and payroll workload.
- You’re building long-term HR infrastructure and employee benefits programs.
For startups and SMEs expanding for the first time, EORs offer speed and simplicity. For established organizations, PEOs provide stability and structure.
Why Betternship Is the Right Partner for Both EOR and PEO Services
At Betternship, we help startups and global companies hire top African talent while ensuring compliance and seamless payroll operations.
Whether you’re hiring tech or non-tech roles, we adapt to your structure, acting as your EOR or PEO based on your needs.
When Betternship Acts as Your Employer of Record
We become the legal employer for your African team members, so you can hire talent quickly without registering an entity. We handle:
- Locally compliant contracts and onboarding
- Payroll processing and tax remittance
- Benefits administration and HR support
- Ongoing legal compliance
You focus on results, we handle the complexity.
Learn how Betternship helps companies hire remote talent
When Betternship Acts as Your PEO Partner
If your company already has a legal presence in Africa, Betternship provides co-employment services. We manage payroll, benefits, and compliance, ensuring your HR runs efficiently and meets every local regulation.
How to hire and pay employees in Nigeria
Our Experience
We currently support companies like Vume, a global gaming company, helping them manage and pay African talent efficiently through our hybrid EOR-PEO model.
With Betternship, you can:
- Hire vetted African talent within days
- Manage payroll across multiple countries
- Stay compliant with zero legal burden
No matter your stage, Betternship helps you scale smoothly, from a single remote hire to full regional operations.
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