The Crypto Guide to Employer of Record (EOR) Services

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As the crypto industry rapidly evolves, so does the need for effective and compliant global employment solutions. For many crypto companies, navigating the complexities of international hiring, payroll, and compliance can be daunting, especially when balancing the demands of a dynamic and fast-moving market. Enter Employer of Record (EOR) services—a crucial solution for scaling your team efficiently and compliantly across borders.

This guide will help you understand the essentials of EOR and Professional Employer Organization (PEO) services, highlighting how they differ and what each can offer. We'll dive into the core functions of these services, the situations where they shine, and the unique considerations for crypto companies. You'll also learn why choosing an EOR with crypto expertise is critical for handling token-based compensation, on-chain payments, and navigating the regulatory landscape.

Understanding EOR and PEO Services

What are EORs and PEOs?

[fs-toc-h2]Employer of Record (EOR)

Think of an EOR as your company's stand-in around the world. They legally employ your team members in countries where you don't have an entity, handling payroll, benefits, and compliance.

How it works:

1. You find a candidate you want to hire.
2. The EOR becomes the legal employer of record for that worker and ensures your workers are hired compliantly in the countries where they are based.
3. You maintain day-to-day management and work direction.
4. The EOR handles all legal, tax, and HR compliance issues; sometimes they are able to sponsor visas as well.
5. The EOR processes payroll, provides benefits, and manages local tax withholdings.

[fs-toc-h2]Professional Employer Organization (PEO)

A PEO is like a co-pilot for your HR functions, but works only in the US. The setup is similar to the EOR, but instead of the PEO being the sole legal employer, they share employer responsibilities with you.

How it works:

1. Your company enters into a co-employment relationship with the PEO.
2. You retain full control over your employees' day-to-day activities and core business functions.
3. The PEO becomes the employer of record for tax purposes and handles payroll processing, tax filing, and benefits administration.
4. Your employees often get access to better benefits at lower premiums due to the PEO's larger pool of employees. The PEO's scale allows them to negotiate better rates with insurance providers.
5. The PEO helps ensure compliance with employment laws and regulations.

Important note: PEOs exist only in the US and require you to have a US entity to use their services.

[fs-toc-h2]Understanding the differences — EOR vs. PEO

When navigating the complexities of global hiring, it’s essential to understand the key differences between EOR and PEO services. Here’s a clear breakdown to help you choose the right solution for your needs:

Geographic scope

• EORs: Operate globally, making them ideal for international hiring. They manage employment responsibilities in any country where you don’t have a local entity.
• PEOs: Are US-specific. They are best suited for managing employment within the United States.

Legal structure

• EORs: Act as the full legal employer for your employees in countries where you don’t have a local entity. This means they handle all local employment compliance and administrative tasks.
• PEOs: Utilize a co-employment model in the US, where both your company and the PEO share certain employer responsibilities. 

Entity requirements

• EORs: Don’t require you to have a local entity. This flexibility allows you to hire employees across jurisdictions without needing to establish a legal presence.
• PEOs: Require you to have a US entity. This is necessary for the co-employment relationship and to ensure compliance with US employment laws.

Important note: Establishing a US entity isn't always part of the strategy for crypto startups, especially those focusing on a global market or seeking to minimize US regulatory exposure. In such cases, you can choose to use an EOR service even for US-based employees, allowing you to hire in the US without establishing a legal US entity. 

What EORs and PEOs actually do

When expanding your team globally or within the US, understanding what EOR and PEO services offer can help you make the right choice. Here’s a snapshot of their core functions:

Payroll management

• Handle payroll in local currency: Process salary payments, manage bonuses and commissions, and provide pay slips and year-end tax documents.
• Ensure compliance: Stay updated with local regulations and ensure proper employment contracts.

Tax and compliance

• Manage tax withholdings and filings: Calculate and withhold income taxes, handle social security contributions, and file employer taxes.
• Ensure local labor law compliance: Advise on labor standards, such as working hours, overtime, and leave policies.

Benefits administration

• Offer benefits packages: Administer mandatory benefits like health insurance and pension plans, manage optional benefits, and handle employee enrollments and claims.

Hiring and termination

• Manage hiring processes: Assist with locally-compliant offer letters, employment contracts, onboarding paperwork, and background checks.
• Handle terminations: Advise on termination procedures, manage severance payments, and final settlements.

Additional services

• HR support: Provide guidance, manage employee data, assist with work visas, and offer HR compliance training.
• Tools and systems: Provide time tracking, leave management, and other HR tools.

When to consider partnering with an EOR or PEO

You might want to consider working with an EOR or PEO when:

• You’re playing global talent tetris: If you’re juggling hires from Tokyo to Tbilisi to Toronto, and the thought of setting up entities in each country gives you a migraine, an EOR can help you onboard quickly and efficiently across multiple countries without slowing your growth.
• Your admin work is slowing you down: If you’re spending more time on HR paperwork than on building your product, and setting up an in-house payroll team isn’t in the budget, an EOR can free up your time and resources.
• You want to stay compliant: If the thought of a compliance audit sends shivers down your spine, and you prefer not to worry about accidentally breaking labor and payroll laws, an EOR can act as your shield.
• You need more than contractors: While contractors offer flexibility, they’re not always enough. Some roles require full-time employees for legal or practical reasons. In many jurisdictions, long-term contractors risk being classified as employees anyway. An EOR allows you to hire full-time staff compliantly, providing stability and commitment for critical roles while avoiding misclassification risks.
• You want to level the playing field globally: If you aim to attract top talent worldwide, an EOR can help you navigate the diverse landscape of social benefits. They ensure you’re offering competitive packages that make sense in each location—whether that means enhancing benefits in countries with minimal social security or complementing strong government programs with unique perks.
• You need immigration and visa support: If you’ve found the perfect candidate who needs work authorization, and hiring them as a contractor isn’t feasible, an EOR can help you secure the necessary work permits and bring global talent on board.

When you might not need an EOR or PEO

You might be okay without an EOR or PEO when:

• You are a control freak: If you're the type who needs to micromanage every HR detail, from crafting bespoke employment contracts to personally overseeing each payroll run, EORs and PEOs might feel too hands-off for you. These services are about delegation, not dictatorship.
• You keep your team in one place: If your hiring strategy is focused on just one or two countries for the foreseeable future, setting up your own local entity might be more cost-effective in the long run. EORs make the most sense when you're spread across multiple jurisdictions.
• You are big enough to DIY: If your company has grown to the point where you're considering installing a water slide in the office, you might be big enough to justify building your own in-house global HR and payroll team. When the cost-benefit analysis tips in favor of bringing it all in-house, it might be time to bid farewell to external services or at least switch over from EOR to payroll-only support.
• You haven't found the right crypto-savvy partner: Not all EORs are created equal. Some will flat-out reject crypto companies, others will hear you ask about paying people in USDC and think you're speaking alien, and some will pretend they understand only for you to realize when it's too late. A misstep could lead to compliance nightmares, fines, and even criminal charges. Do your due diligence and find a provider who can keep up.

Important note: While EORs and PEOs can help you scale globally faster and support your team, they're not a one-size-fits-all solution. It's all about finding the right partner for your crypto-native unique needs, growth stage, and global ambitions. When in doubt, talk to a few providers and ask them difficult questions — your future self (and your sanity) will thank you. And don't worry, we've got your back with a crypto-operator-approved interrogation kit in the section below.

Beyond traditional EORs — why crypto expertise matters

For crypto companies scaling globally, choosing an EOR with crypto expertise is critical. Traditional EORs often lack the know-how for crypto compensation, token tax withholding, and shifting regulations. 

Here’s why you might need a crypto-native EOR and what to look for in a partner:

Technical infrastructure and on-chain payments

• The technical capabilities of an EOR are especially important for crypto companies, especially when it comes to handling on-chain payments. Traditional EORs often rely on legacy financial systems built for fiat but ill-equipped for crypto. A crypto-native EOR should have the technical infrastructure to facilitate both fiat payments via banking infrastructure and on-chain payments, allowing you to pay people in any combination of the two.
• What to ask: Do you support hybrid compensation (crypto/fiat)? Do you support stablecoins? Do you support native tokens? Can you run payroll on-chain? Do you integrate with our existing crypto wallets or systems? How do you handle gas fees and transaction confirmations?

Token-based compensation challenges

• Many crypto companies offer long-term incentive awards in tokens (think restricted token awards (RTAs), restricted token units (RTUs), token options, etc.) as part of their compensation packages, a practice that can baffle traditional EORs. These unique compensation structures come with their own set of legal and tax implications that require specialized knowledge. 
• What to ask: Can you provide guidance on structuring token awards (RTAs, RTUs, options) to ensure compliance? What experience do you have in managing the reporting and tax withholding for token-based compensation? Do you offer support for the vesting schedules and performance tracking of token-based incentives?

Volatility in token prices

• Token price fluctuations significantly impact employee compensation value, creating unique challenges for payroll and tax calculations. Most EORs close payroll days before actual transfers, which works for fiat but leads to inaccurate tax calculations in the volatile crypto market. If you want to pay your employees in tokens, you will need an EOR with dynamic systems capable of real-time price adjustments and tax calculations up to the moment of transfer. The right EOR's ability to manage this volatility can mean the difference between compliance and potential tax and legal issues.
• What to ask: How do you handle the valuation of tokens for tax and accounting purposes? Can you provide examples of how you’ve handled token price volatility in past payroll cycles? 

Important note: You might also want to ask for a mock payroll to validate everything you hear on a sales call and see how the payroll cycle would look like in practice.

Regulatory uncertainty

• The regulatory landscape for crypto is in a constant state of flux, with new rules and interpretations emerging regularly across different jurisdictions. This uncertainty poses a significant challenge for crypto companies and their EOR partners. An effective EOR in this space needs to be more than just compliant; they must be proactive in anticipating and adapting to regulatory changes.
• What to ask: How do you track and adapt to new crypto regulations in different countries? How do you support clients in understanding and adapting to regulatory changes?

IP assignment

• Many EORs operate through a patchwork of local providers or simply rebrand solutions from other providers, creating a layer of opacity that can hide crucial operational details and lead to inconsistent and unreliable IP assignment practices.
• What to ask: Do you manage all your entities directly, or do you work with local providers? What standardized IP assignment clauses do you include in your employment contracts? What documentation do you provide to support IP assignment and transfer? 

Employee education

• As crypto companies bring on new talent, many employees may be encountering crypto-based compensation for the first time and let's be honest — it can be confusing or even intimidating for some. A truly valuable EOR partner should be able to provide comprehensive guidance and educational resources to employees about their crypto compensation. This includes explaining the tax implications, helping with wallet setup, and providing general financial literacy around crypto.
• What to ask: Can you provide examples of how you’ve helped employees understand their crypto compensation in the past? What ongoing support do you provide to employees?

Summary

As the crypto industry continues to evolve, so do the challenges of hiring, managing and compensating a global team. EOR and PEO services can be a game-changer for companies looking to scale rapidly and compliantly across borders. However, not all EORs are created equal, especially when it comes to the unique needs of the crypto space.

Throughout your search, let due diligence be your best friend.