PEO and EOR name two different legal structures that the market often sells under one banner. A professional employer organization co-employs workers you already employ through your own entity, taking on payroll, benefits and HR administration, mostly as a US product. An employer of record becomes the sole legal employer of your hire in a country or state where you have no entity at all. The test is one question: do you have a legal entity where the person works? If yes, a PEO is on the table; if no, only an EOR can employ them compliantly. Service agreements control in every case and nothing here is legal or tax advice.
What a PEO is
In a PEO arrangement your company remains the common-law employer and the PEO handles some or all of the employment tax withholding, reporting and payment, along with benefits administration and HR support, under a co-employment agreement. The IRS is precise about what this does and does not move: the client generally remains responsible for employment taxes and filing returns, and a standard PEO becomes liable only in limited situations. That changed shape in 2014, when Congress created a voluntary certification program; a certified PEO, or CPEO, is treated as the employer of worksite employees for employment tax purposes under sections 3511 and 7705, which is why certification is worth checking before you sign rather than after.
What an EOR is
An employer of record legally employs your hire through an entity it owns or partners with in the worker's jurisdiction, issues the local employment contract, runs payroll, files taxes and carries the legal employer obligations, while you direct the day-to-day work. The product exists because opening an entity in every country you hire in is slow and expensive; the EOR spreads its local compliance infrastructure across many clients and charges a per-employee monthly fee. Vendors position it exactly this way, as global expansion without entity cost. Where a PEO shares duties you already hold, an EOR holds duties you cannot lawfully hold at all without a local entity, which is why the two are not interchangeable however similar the brochures look.
Choosing between them, and pricing them
The decision usually makes itself. US employees inside your US entity, where you want better benefits and outsourced HR administration: PEO, priced per employee per month or as a percentage of payroll. A hire in a country or state where you have no entity: EOR, priced per employee per month with the statutory employer costs passed through on the invoice. The failure mode is buying the wrong one at the boundary, for example putting a long-term foreign hire on a contractor agreement because your PEO cannot employ them abroad, which trades a visible fee for invisible misclassification risk. Several vendors in this site's index sell both products at different prices, and the comparison tables hold each vendor's verified published pricing for each.
Questions people ask about peo eor
Is an EOR just an international PEO?
No. A PEO co-employs staff your own entity already employs; an EOR is the sole legal employer where you have no entity. Some vendors market global PEO services that are legally EOR arrangements, so read the service agreement for who the named employer is.
Who is liable for employment taxes with a PEO?
In a standard PEO arrangement the client generally remains responsible, per the IRS. Only a certified PEO (CPEO) is treated as the employer for employment tax purposes on worksite employee wages under the certification rules from the 2014 legislation.
Can I use a PEO for a hire in another country?
Not if you have no entity there; co-employment presumes you are already an employer in that jurisdiction. That hire needs an employer of record, which employs the person through its own local entity while you direct the work.
Which costs more, a PEO or an EOR?
They price similarly in form, a per-employee monthly fee, but cover different scope: EOR invoices carry the full statutory employer costs of the hire's country. Compare all-in monthly cost per employee for your actual case; the tables on this site hold verified list prices for both.