Understanding the Role of an Agent of Record

As more companies bring on freelancers, gig workers, and other types of independent contractors, staying on top of employment laws and regulations can feel like a full-time job in and of itself. Agents of Record (AORs) provide a simple solution to this ongoing challenge.

Think of an AOR as your behind-the-scenes partner who helps you succeed in the sometimes confusing world of hiring and managing independent talent while keeping everything above board.

Let’s break down what AORs do and why they might be just what your company needs.

How Do Agents of Record Work?

An AOR is essentially your guide for legal and administrative tasks that come with hiring independent contractors. You still call all the shots about who you work with and what projects they handle. All the creative and strategic decisions? Those remain 100% in your hands.

Meanwhile, your AOR partner takes care of the not-so-exciting necessary tasks like:

• Processing payments
• Managing tax paperwork
• Creating solid contracts
• Following established laws like IRS guidelines or EU regulations
• Staying on top of ever-changing regulations

Discover: How to Maximize the Potential of Your Workforce With Contingent Talent

What’s the Difference Between an Agent of Record and an Employer of Record?

Before we go any further, it’s important to note the differences between an Agent of Record and an Employer of Record (EOR) to determine which solution best fits your needs.

Here’s a quick breakdown:

• AOR: An AOR does not establish an employer-employee relationship. The contractor remains independent, and the AOR simply facilitates compliance, payments, and administrative tasks (e.g., tax forms like 1099s).
• EOR: An EOR becomes the legal employer for tax, benefits, and liability purposes. EORs are primarily used for W-2 employees working on a full-time, part-time, or project basis, not for contractors.

The important thing is understanding the specific services each provider offers so you can choose the right one for your organization.

What Services Do Agents of Record Offer?

When you partner with an AOR, they provide several essential services that make your workforce management much easier:

They Handle All Payments

Say goodbye to chasing invoices and figuring out tax forms like 1099s or W-8BENs for international contractors. Your team gets paid on time, which tends to build stronger loyalty to your company.

They Keep You Compliant

Your AOR verifies that all your contractors are classified correctly under local, state, and federal laws. For example, they’ll make sure your freelance worker isn’t accidentally being treated as an employee under current regulations.

They Create Clear Contracts

AORs draft clear agreements that protect your business interests while meeting all legal standards. This means fewer misunderstandings and clearer expectations for everyone involved.

They Reduce Risk

AORs help prevent problems like overtime disputes or benefits claims, which can become more serious. Handling these issues early can save the organization from costly expenses that could impact your finances.

They Provide Global Support

Working with talent across borders? Your AOR will help navigate language barriers, cultural differences, and country-specific regulations so you don’t have to become an expert in international law.

They Protect Your Data

All contractor tax IDs, bank details, and other sensitive information stay protected through secure systems designed specifically for this purpose.

Why Partner With an AOR?

Working with an AOR offers some meaningful advantages as you build your flexible workforce:

Quick Access to Specialized Talent

Need specialized expertise for a project? An AOR helps you bring in exactly the right people quickly without experiencing classification issues or other administrative challenges. This flexibility lets your team evolve as your needs change.

Positive Contractor Experiences

AORs also make the entire process more comfortable for both your organization and your independent contractors. Creating a positive experience helps you attract and retain top independent talent, giving you a real edge in today’s competitive marketplace.

Global Expertise at Your Service

If your contractors are spread across multiple locations, AORs bring expertise in different regulatory environments. This saves you from having to become an expert in complex legal requirements for each location.

Compliance Protection for Your Business

Perhaps the most valuable benefit of working with an AOR is peace of mind. Your AOR stays current with changing labor laws and contractor classification guidelines everywhere you operate, which helps protect you from potential compliance problems before they ever become serious issues.

See: 3 Benefits of Creating a Contractor Compliance Program

How to Find the Right AOR Services Provider

When looking for the right AOR, keep an eye out for these important qualities:

Deep Compliance Knowledge

Your ideal partner should have a thorough understanding of contractor classification laws in all regions where you operate. Their expertise should give you confidence that your engagements will meet every legal requirement.

Reliable Payment Systems

Look for an AOR with the ability to handle payments efficiently, including different currencies if your contractors work internationally.

User-Friendly Technology

The right partner offers intuitive platforms that make managing contractor relationships easier from initial onboarding through final payment.

Responsive Support

Consider how attentive and helpful an AOR will be when questions come up. Quality support impacts everyone involved in your contractor relationships.

Relevant Industry Experience

Partners who understand your specific industry and have worked with similar organizations will be better equipped to address your unique needs effectively.

AOR Services Available With MBO Partners

The right AOR becomes an extension of your team, letting you focus on results instead of red tape. At MBO, we combine compliance expertise with tools that make managing independent contractors simple, secure, and scalable.

Ready to see the difference? Discover how our Agent of Record (AOR) services free you to grow your business without limits. For more on MBO, including our Employer of Record (EOR) solutions, visit our solutions page.