TL;DR: A professional employer organization (PEO) shares employment with you and needs you to already have a legal entity where the person works. An employer of record (EOR) becomes the legal employer itself, so you do not need an entity. For a US startup, that single fact usually decides it: PEO for your US team once you have real headcount, EOR for anyone in a country where you have no company. Shor is an EOR (plus contractor payments), at $299-449/month per employee depending on country and $19/month per contractor, with a flat disclosed 2% margin applied only when money actually converts. Deposits depend on the country and are quoted up front before you sign.
Disclosure: we build Shor, which is an employer of record and competes with several providers named below. Every third-party figure here comes from that provider's published pricing page or a clearly cited source, as of August 2026.
These two acronyms get used as if they were competing products in the same category. They are not. They are two different legal arrangements, and once you understand which one puts your company's name on the employment contract, the decision usually makes itself in about a minute.
The actual difference: who is the legal employer
A PEO enters co-employment with you. You stay the employer of your people. The PEO takes over payroll processing, tax filing, benefits administration, and workers' compensation, and in exchange your employees are also on the PEO's books for those administrative purposes. The US Chamber of Commerce's explainer puts the distinction plainly: a PEO is the employer on record for administrative matters, while you remain responsible for the employment relationship itself.
An EOR becomes the legal employer. The EOR's entity signs the employment contract, runs the payroll, files the taxes, and carries the statutory obligations. You direct the work day to day. The person is on your team in every way that matters to them and to you, and on the EOR's entity in the way that matters to the local labor authority.
That is the whole thing. Everything else below is a consequence of it.
The question that decides it: do you have an entity there?
A PEO processes payroll through your legal entity in that jurisdiction. No entity, nothing to process. So:
- Hiring in a US state where you are already registered: a PEO works, and so does ordinary payroll software.
- Hiring in a country where you have no company: a PEO cannot help you. Either you incorporate locally (months of work, ongoing accounting, a local director in some jurisdictions) or you use an EOR.
Most founders arrive at this question in the second case. They found someone excellent in Brazil or India or Poland, they have no entity there, and they need to know what the options actually are. The options are: incorporate, use an EOR, or engage the person as a genuine contractor if the working relationship honestly supports that classification.
Where PEOs stop working: outside the US
Co-employment is largely a US legal construct. Most countries' labor law has no equivalent concept of two companies jointly employing one person for administrative convenience, which is why the PEO industry is concentrated in the US market.
This matters when you are shopping, because "global PEO" is used loosely in marketing. In practice, a provider selling a "global PEO" is almost always selling an employer of record: their local entity employs the person. That is not a problem, it is just worth knowing that the acronym on the homepage may not describe the legal structure underneath. Ask the direct question: whose entity signs the employment contract? The answer tells you which model you are actually buying.
Liability, and what certification changes
Under a PEO, liability is shared. You are still the employer, so employment disputes, wrongful termination claims, and local compliance failures land at least partly on you. Under an EOR, the EOR carries the employer obligations because it is the employer.
There is one wrinkle worth knowing on the US side. A certified PEO (CPEO) has been certified by the IRS, and per the IRS's own guidance on third-party payer arrangements, the CPEO is generally solely liable for the federal employment taxes on wages it pays to worksite employees. A non-certified PEO shares that liability with you. If you are evaluating US PEOs, certification status is a real question to ask, not a marketing badge.
None of this removes your own obligations as the company directing the work. Confirm your specific exposure with your employment counsel; this page is not legal advice.
What each costs
The two models are priced differently because they carry different things.
PEO pricing usually takes one of two shapes: a flat fee per employee per month, or a percentage of total payroll. Most PEOs quote rather than publish, so comparing them means collecting proposals. One published data point: Deel lists US PEO at $125 per employee/month on its pricing page as of August 2026. For a broader survey of how the category prices, eorHQ's PEO cost guide is a reasonable independent starting point, though you should treat any range you read as a prompt for quotes rather than a quote.
EOR pricing is higher per head, and there is a reason for it: the provider is maintaining a legal entity, carrying employment liability, and running statutory payroll in that country. Published EOR fees in 2026 run from roughly $199 to $599 per employee per month across the market, which we break down provider by provider in our EOR pricing comparison. Shor is $299-449 per employee per month depending on the country.
Two costs sit outside both stickers and are usually larger than the difference between them:
- Employer statutory contributions. Pension, social insurance, and mandatory funds, set by the country, not by the provider. These run from about 3% of gross salary in South Africa to 55-70% in Brazil. No platform changes them, and any quote that does not separate them from the platform fee is hiding the bigger number.
- Currency conversion. If you are paying in a currency you do not hold, someone is taking a margin on the conversion. Ask for it as a written percentage rather than inferring it from a rate.
When a PEO is the right answer
Honestly: more often than EOR vendors like to admit.
If your team is mostly in the United States, you are past roughly ten employees, and what you actually want is group-rate health insurance, a real 401(k), workers' compensation, and someone else handling multi-state payroll tax registration, a PEO is the correct tool and an EOR is not. The health benefits point is the substantive one. PEOs aggregate many small employers into large risk pools, which is how a fifteen-person company gets plan pricing it could not negotiate alone. That is a genuine advantage and it is not something an EOR replicates.
Shor does not sell a US PEO, and if that is the problem you are solving, we are not the answer. Where we can help is the other half of the same company: the engineer in Lagos, the designer in Buenos Aires, the support lead in Manila.
A hybrid setup is normal and works fine: PEO for the US team, EOR for everyone abroad. Two vendors, two invoices, no conflict.
What this looks like on Shor
For employees outside the US, we are the employer of record: our local entity holds the contract, runs statutory payroll, and files what the country requires. $299-449 per employee per month depending on the country, no setup fees, no minimums, month to month. Where a country requires a deposit, we quote it before you sign rather than at onboarding.
For contractors, $19 per month per person, covering contracts, W-8BEN and W-9 collection, and invoicing. Conversion carries a flat 2% margin, shown on the receipt, charged only when money actually converts. Contractors who hold their balance in USD and convert only what they need pay it on that fraction rather than the full amount. Same-day local rails cover India, the Philippines, Nigeria, and 12 or more LATAM corridors; other corridors settle on standard timelines.
If you are trying to work out which countries to hire in before you pick a model, our country cost comparison puts the statutory load for 25 markets in one table. The pricing calculator will quote a specific country.
All third-party pricing and features referenced are from each provider's published pages or the cited sources as of August 2026 and may change; confirm current figures directly with each provider. Trademarks belong to their respective owners, and no provider mentioned here is affiliated with or endorses Shor.
FAQ
Is an employer of record the same as a PEO? No. A PEO co-employs your staff and requires you to have your own legal entity in that jurisdiction, because payroll runs through your entity. An employer of record is itself the legal employer through its own local entity, so you do not need one. The practical test when comparing providers: ask whose entity signs the employment contract.
Do I need my own entity to use a PEO? Yes. That is the defining constraint. A PEO administers employment that legally sits with your company, so there has to be a company there to sit with. If you have no entity in the country, your realistic options are to incorporate, use an employer of record, or engage the person as a genuine independent contractor where the relationship honestly supports it.
Which is cheaper, an EOR or a PEO? Per employee, a PEO is usually cheaper on the platform fee, because it is not maintaining an entity or carrying employment liability for you. That comparison only matters where both are available, which means inside the US and only if you already have an entity. Once you are hiring somewhere you have no company, the alternative to an EOR is not a PEO, it is incorporating, and against that comparison an EOR is dramatically cheaper for the first few hires.
Can I use a PEO to hire someone in another country? Not unless you already have a legal entity in that country. Providers advertising a "global PEO" are in nearly all cases offering an employer of record, where their local entity employs the person. It is a fine product, it is just not co-employment, and the difference determines who is liable when something goes wrong.