Agent of Record Explained – What is an AOR?

Agent of Record is a perfect contractor management service for growing companies.

It offers cost-effective and safe recruitment solutions, protecting you from worker misclassification penalties and legal challenges.

In this article, you’ll learn everything about AOR’s role in contractor management. I have explained its core services and added a few recommendations to help you find the best solutions for your business.

Let’s get started!

What is AOR?

An Agent of Record–AOR– is a third-party outsourcing company that takes legal responsibility for your contractors on your behalf.

Those responsibilities include several key areas such as contract generation, hiring, documentation collection, and multi-currency transactions.

The core job of an AOR is to oversee all the activities from hiring to termination to make sure you can work with contractors securely and compliantly.

How Does AOR Work? 

An Agent of Record acts as a middleman between you and your contractors. When you hire an AOR, you assign all the contractor management responsibilities to the agent, giving them the authority to onboard and pay contractors.

You can engage AOR for both domestic and international contractors. Most of them operate in multiple countries and can give you access to local and global markets. 

In practice, however, companies usually opt for AOR services for overseas freelancers It helps them avoid the legal and compliance complexities of working with international contractors.

I have shared some pointers on how to pick the best AOR for your business. But before we discuss them, let’s talk about AOR’s core responsibilities first.

AOR Core Services

As your company’s representative, an Agent of Record covers the compliance side of the job, simplifying the documentation and payment process for you. 

Some may also deliver other side services, like customization or contractor verification.

Here are the top services provided by an Agent of Record;

• Contractor management.
• Worker classification.
• Payment processing.
• Company’s representative.
• In-house expertise.

To explain the AOR’s key responsibilities a little bit more, I have expanded the top three core services for you.

You can also check out the AOR platforms at the bottom of the page to discover more.

1. Contractor Management

AOR is specifically built for contractor management. 

Its job is to facilitate communication between the company and freelancers and handle the back end of the job–such as onboarding and disputes.

Some key areas an AOR covers are;

• Agreement generation, amendments, and negotiation.
• Document collection, verification, and storage.
• Payment sending and receiving.
• In-house expertise on local employment laws and guidance.

AOR can also help you rent equipment for freelancers. Several AOR providers like Deel have agreements with third-party service providers to offer competitive rates and shipping facilities to their customers.

2. Worker Classification

One of Agent of Record’s core jobs is to help companies prevent worker misclassification.

Misclassification carries a penalty risk that can be easily avoided with expert guidance. An AOR uses its in-house resources to determine whether your selected candidate can work as a contractor and suggest the correct classification.

Some key areas an AOR covers are;

• Contractor’s eligibility verification.
• Proper worker classification.
• Protection from penalties.

The best thing about an AOR is its reliability. In case you incur any penalty from misclassification, the AOR bears all the expenses.

3. Payment Disbursement

AOR is responsible for sending payments to the contractors. It collects and verifies invoices, calculates the amounts, and makes the necessary tax deductions.

For payment disbursement, it provides a digital platform with a secure gateway to send payments to all freelancers in their local currencies. 

Some key areas an AOR covers;

• Invoice and tax document collection.
• Amount verification and calculation.
• Payment processing.

If there’s any payment discrepancy, AOR’s in-house team handles the dispute.

Pros And Cons of Agent Of Record

AOR is incredibly convenient for contractor management.

The agent has the resources to deal with local compliance, offering its expertise to help you work with freelancers with ease.

There are, however, some pros and cons of working with an AOR. If you plan to hire one for your company, here are a few things to keep in mind while exploring your options.

Pros

• AOR takes full responsibility for contractors and all the associated risks. Meaning, it’s probably one of the safest ways to work with freelancers.
• With expertise in local labor laws, your AOR generates compliant contracts and keeps you updated to ensure your dealings with overseas contractors are always legal.
• You don’t have to worry about payments. AOR oversees the invoices, including calculation and payment disbursement.

Cons

• AOR charges monthly fees for contractor management. It’s a good option for overseas freelancers but might be costly for the domestic workforce.
• AOR doesn’t handle taxes directly. While it collects the necessary tax documents and deductions, contractors have to file their own taxes.
• An Agent of Record works with third parties for information and payment processing. That means you might occasionally face customer service issues.

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What To Look For When Choosing An AOR

In addition to the pros and cons, there’s one thing more you should learn about the AOR–its service quality. 

Most AOR providers generally offer all the core services, but their global network, expertise, and payment methods differ slightly, giving one an edge over another.

For example, Deel is one of the top Agent of Record platforms, but it only supports seven billing currencies. Papaya Global, on the other hand, accepts client payments in 15 currencies.

Below are the six things to look for in an AOR. The list might help you pick the best service provider.

1. Country Coverage

The first thing to consider before choosing any Agent of Record is their country coverage. 

If you live in Canada and want to work with someone from Ireland, make sure the platform supports both your and your contractor’s country of residence. 

The same applies to domestic hiring. It would be pointless to hire an AOR if most of your contractors live in a city where its service isn’t available. 

The best example is Deel’s Singapore packages. Its AOR package for Singapore-based companies is only available for domestic contractor hiring. If you are US-based, you might not face the same restrictions.

2. Payment Terms

Price transparency is the main factor that might influence your purchase decision. 

Many platforms share package pricing on their website to create transparency, but their final rates typically vary to meet specific business requirements.

Some information also isn’t visible on the website.

For example, most AOR platforms ask for a month’s deposit in advance as a security to cover the contractor’s wages if the client decides not to pay the workers. Since these platforms take legal responsibility for your staff, they have to pay contractors regardless.

Make sure to check out their pricing page or learn about their payment terms to avoid any surprises.

3. Side Services

Many AOR providers sell some kind of side services or related products to their customers. It gives them a competitive edge and a way to generate additional revenue.

Take full advantage of their promotions and discounts to get additional benefits. 

Also, explore their add-ons to see if they might help your business grow.

4. Scalability

If you are a growing company or plan to expand your business soon, it’s important to choose a platform that can accommodate your workforce volume. 

Check out the type of support an AOR agent offers to growing businesses. For example, Papaya Global provides enterprise-grade services. You can onboard contractors in bulk via this platform.

Ask for custom packages to get a better idea of the AOR’s service quality.

5. Tech Support

AOR typically provides services online. It uses in-house software to connect with clients and onboard contractors. 

Go for an AOR with good tech support. Most AOR offer user-friendly tools to make contractor management easier. But some, like Deel, also provide additional tools and plugins to improve the overall experience.

Whatever AOR platform you pick, try out their digital software to see their usability.

6. Reputation

This may seem like an obvious point, but I am mentioning it regardless to underscore its importance. 

To make sure you are choosing the right AOR, check out the company’s credentials and track record.

Look for online reviews, historical data, and media coverage to measure its industry experience. 

You can also try out the starter package to test their service quality.

Five Best AOR Platforms

Here, I have listed the top three platforms that can act as your Agent of Record. They are completely online and work with tons of companies.

1. Deel

Deel is a well-known international HR platform. It operates 150 entities worldwide, providing software and services to help companies with international workforce management.

Some of its notable services include international hiring, online payroll, benefits administration, and compliance management. You’ll receive a digital portal to connect with your staff and handle day-to-day administration.

You can also hire Deel as your Agent of Record to manage overseas contractors. The package will contain worker classification, onboarding, payment processing, and legal advice.

Core Services

• Contractor onboarding.
• Global payroll.
• Compliance management.
• Flexible payment options for contractors.
• Benefits administration.
• In-house experts.
• User-friendly software with third-party integration.
• Presence in 150+ countries.

Price

Deel’s contractor packages start at $49. For Agent of Record services, contract sales. You can create a free account and book a demo. 

2. Papaya Global

Papaya Global sells global hiring and payroll solutions to established companies. It offers a wide range of HR products, one of which is Agent of Record services.

As an AOR, Papaya Global vets and classifies contractors before onboarding them. During their tenure, the in-house team keeps a record of each freelancer and updates local employment policies.

Cross-border payment is easier with Papaya Global. It has access to 160+ locations and supports multiple currencies.

Core Features

• Contractor onboarding.
• Compliance management.
• Cross-border payments.
• Self-service portal.
• Third-party integration.
• In-house experts.
• Presence in 160+ countries.

Price

Papaya Global’s Agent of Record prices start at $200. 

3. Skuad

Skuad is a subsidiary product of a popular fine-tech company, Payoneer. 

Its Agent of Record package contains country-specific contracts, misclassification protection, record keeping, and multicurrency payments. For invoice and administrative tasks, Skuad delivers a self-service portal.

Over 600 companies use Skuad for overseas hiring and cross-border payments.

Core Features

• Contractor onboarding.
• Background checks.
• Global coverage.
• Contract generation.
• Invoice management.
• Self-service portal.
• Multicurrency support.

Price

Skuad’s contractor package starts at $19. For complete AOR services, contact sales.

4. Multiplier

Multiplier is another good option for contractor management. It’s a reputable platform with good testimonials.

You can use it easily to onboard contractors, get compliant agreements, and send cross-border payments. It supports both startups and enterprises and has extensive country coverage.

Step-by-step guide hiring guide is available on the platform. You can also book a demo to explore it.

Core Features

• Contractor onboarding.
• Contract generation.
• Misclassification protection.
• Access to 150+ countries.
• Payment in 100+ currencies.
• Invoice and expense management.
• Self-service portal.

Price

Multiplier’s starting price is $40. Sales representatives can provide tailored rates on request.

5. TalentDesk

TalentDesk is primarily a freelancer management platform. But it also offers Agent of Record services to companies.

With its AOR, you can work with vetted contractors and protect yourself from compliance risks. 

You’ll receive several other benefits with its AOR service. For example, you will get access to a talent marketplace for contractor sourcing. 

Payment and tax management solutions are also available.

I recommend checking out its website to get a better idea of its services.

Core Features

• Freelance management software.
• Talent pool.
• Contractor onboarding.
• Compliant agreement.
• Payment and tax solutions.
• Background checks.
• Third-party integration.

Price

Talent Desk AOR’s is an add-on service and costs around $99 per contractor.

Conclusion–Why Should You Go For An AOR? 

Agent of Record offers tons of benefits to companies that want to work with overseas freelancers but are unsure about compliance management.

They give you access to a pool of vetted contractors and act as an intermediary, handling all the paperwork and payments for you.

By choosing an AOR, you can prevent compliance errors and save yourself from potential risks.

Go ahead and check out the platforms I have listed above. Get in touch with the sales representatives and share your requirements to get precise information. Good luck!