Can I use both a PEO and an EOR at the same time?

Yes, and many growth-stage companies do. The PEO handles US employees; the EOR handles international employees in countries without local entities. They serve different purposes and do not overlap, so using both is the standard pattern for distributed growth-stage companies.

Does a PEO work for international hiring?

Generally no. PEOs operate under US co-employment law that does not exist in most other countries. For international hiring without a local entity, an EOR is the right structure. A small number of providers offer combined PEO + EOR services across multiple geographies.

Is a PEO more expensive than running my own HR?

Per-employee, often yes. But the PEO comes with negotiating leverage on benefits that small employers cannot match, plus compliance support that would otherwise require an HR hire. The breakeven depends on company size; for most US startups under 100 employees, a PEO is cost-effective.

Can I switch from EOR to my own entity later?

Yes, this is a common path. Companies start with an EOR to validate hiring in a country, then transition to their own entity once headcount and commitment grow. Most EORs accommodate this transition, though there can be employment continuity and tax considerations to manage during the switch.

Who is the legal employer under a PEO?

Both. Under US co-employment law, the PEO is the tax employer (handling payroll taxes and certain compliance) while the client remains the common-law employer (handling work direction, performance management, and termination decisions). Both share liability for some employment matters.

Who is the legal employer under an EOR?

The EOR is the sole legal employer in the target country. The client has no direct employment relationship with the worker in that country, which is what allows the client to hire there without a local entity. The client directs the work and pays the EOR; the EOR pays the worker.

What happens if my PEO or EOR goes out of business?

PEOs and EORs are regulated to varying degrees by jurisdiction, but provider failure is a real risk worth planning for. Major providers have substantial financial backing and insurance. Always check the provider’s financial health, insurance coverage, and exit clauses before signing.

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