Understanding the Role of an Agent of Record
8 MIN
- Hiring independent contractors comes with complex employment laws that can be challenging to navigate.
- An Agent of Record (AOR) works behind the scenes to help you hire and manage independent workers while following the rules.
- MBO breaks down what AORs do and why they might be what your company needs to ensure the success of your workforce.
As more companies engage freelancers, gig workers, and other types of independent contractors, staying on top of employment laws and regulations can feel like a full-time job. 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 — all while keeping your operations compliant and efficient.
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
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.
Understanding the scope of each provider’s services helps you choose the right solution for your workforce.
See More: AOR vs. EOR: Choosing the Right Model for Your Business
What Services Do AORs 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, building trust and loyalty among your independent workforce.
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. These efforts help you avoid misclassification penalties before they arise.
They Create Clear Contracts
AORs draft clear agreements that protect your business interests while meeting all legal standards. This means fewer misunderstandings and a smoother engagement process for everyone involved.
They Reduce Risk
AORs help prevent problems like overtime disputes or benefits claims, which can become more serious. Handling these responsibilities early can save the organization from unexpected costs and legal issues.
They Provide Global Support
Working with talent across borders? Your AOR will help navigate language barriers, cultural differences, and country-specific regulations so you can stay focused on your business rather than international compliance.
They Protect Your Data
All contractor tax IDs, bank details, and other sensitive information stay protected through secure, purpose-built systems designed to safeguard contractor data.
Check Out: Driving Global Talent Success Through AOR Solutions
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 getting bogged down by compliance issues or administrative delays.
Positive Contractor Experiences
AORs also make the entire process more comfortable for both your organization and your independent contractors. Delivering a smooth, professional experience encourages long-term contractor relationships and enhances your brand.
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: Reducing Workforce Compliance Risk With an Agent of Record
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.
Check Out: MBO’s EOR and AOR Solutions: The Keys to Workforce Success
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. And for more on MBO, including our Employer of Record (EOR) solutions, visit our solutions page.
Categories
Subscribe to the Insights blog to get weekly insights on the next way of working
Compliantly engage independent contractors through MBO's AOR Solution
Learn more about MBO
Learn how to start, run and grow your business with expert insights from MBO Partners
Learn how to find, manage and retain top-tier independent talent for your independent workforce.
MBO Partners publishes influential reports, cited by government and other major media outlets.
Research and tools designed to uncover insights and develop groundbreaking solutions.