
Global Payroll vs PEO
Global payroll vs PEO, how to choose the right employment model for your team
Global payroll is infrastructure for companies with legal entities already in place: it runs the calculations and filings across those entities, but you stay the employer and carry all the compliance risk. A PEO co-employs your workers alongside you, primarily in the US, giving access to pooled benefit plans while you retain operational control. Neither solves new-country hiring without an entity. That is where an Employer of Record fits.
Two models, three questions that decide it
- Entity?
- Global payroll runs on entities you already own. No entity, no payroll in that country. The tool processes correctly; it doesn't create the legal infrastructure.
- US-only?
- True PEOs are primarily a US product. They co-employ workers alongside you for pooled benefits and shared HR admin. Outside the US, "international PEO" services typically use an EOR structure.
- EOR gap
- Neither model covers new-country hiring without a local entity. That is the Employer of Record use case: hire compliantly in a new market before you've set up your own entity there.
Global payroll vs PEO, which model fits a company growing its international headcount?
Global payroll is infrastructure for companies with legal entities already in place: it runs the calculations and filings across those entities, but you stay the employer and carry all the compliance risk. A PEO co-employs your workers alongside you, primarily in the US, giving access to pooled benefit plans while you retain operational control. Neither solves new-country hiring without an entity. That is where an Employer of Record fits.
At a glance
Global Payroll
Best for: an entity-mature company running payroll in countries where it already has legal entities and local compliance resources, and wants to reduce the operational overhead of multi-country payroll processing.
PEO
Best for: a US-based company with a growing domestic headcount that wants to pool benefits purchasing power, outsource HR administration, and share employer responsibilities without building a separate internal HR function.
Shared by both: both require the company to have a legal presence in the relevant country · both are unsuitable for hiring a first employee in a new market without an entity · both retain the client company as the operational manager of the worker
| Where it matters | Who leads | Why |
|---|---|---|
| International reach | Global Payroll | Global payroll covers every country where you have an entity. PEOs are a predominantly US model; their international offering typically relies on EOR partnerships rather than true co-employment abroad. |
| Benefits purchasing power | PEO | A PEO pools its client base to negotiate enterprise-level health, dental, vision and retirement plans that a small or growing company could not access independently. Global payroll tools do not provide benefits. |
| HR admin outsourcing | PEO | PEOs take on payroll processing, tax filings, onboarding, offboarding, and often compliance tooling as part of the co-employment bundle. Global payroll handles calculations and filings only. |
| Compliance liability transfer | Global Payroll | With global payroll you retain all employer liability, but you also retain full control. A PEO co-shares US employer obligations, which reduces admin exposure. Neither fully transfers liability the way an EOR does. |
| Cost at scale with owned entities | Global Payroll | Once entities are established, per-head payroll processing through a global payroll provider typically costs less than co-employment, which adds a PEO service fee on top of gross wages and benefits. |
| New-market entry without an entity | Draw | Neither global payroll nor a PEO lets you hire a first employee in a new country without a legal entity. Both assume the entity infrastructure already exists. This is the Employer of Record use case. |
Global Payroll on G2





Who Global Payroll is for
This guide is for finance, legal, and people operations teams at companies with international ambitions. It is for teams deciding whether to run multi-country payroll on owned entities, co-employ through a PEO, or use an Employer of Record for markets where they have no entity yet.
Not the right fit if
- Hiring a first employee in a country with no entity. Neither global payroll nor a PEO solves this. You need an Employer of Record. Teamed acts as the legal employer in that country so you can hire compliantly before you incorporate, and monitors when your headcount makes owning the entity lower-cost than the EOR fee.
- Looking for an all-in-one HRIS platform. A PEO often bundles HR tooling, but Teamed is not a HRIS: it plugs into the systems you already run. If a unified people platform is the primary need, providers like Rippling or Deel may better fit that brief.
Find your pick in 20 seconds
| If you are… | Start with | Why |
|---|---|---|
| Entity-mature company running payroll in multiple owned markets | Global payroll provider | You already have the legal entities and compliance resources. A global payroll tool reduces the operational cost of running payroll across them without changing your employer liability. |
| US-based company with a growing domestic workforce | PEO | A PEO gives access to pooled benefit plans and outsources HR admin. Up to a few hundred US employees, the co-employment fee typically costs less than building an HR function in-house. |
| Company hiring in a new country with no local entity | Employer of Record | An EOR is the legal employer in that country so you can hire compliantly, fast, without the months and cost it takes to set up a local entity. |
| Company scaling internationally with mixed entity coverage | EOR for new markets, global payroll for established ones | Run an EOR in markets where you have no entity and are still testing headcount. Migrate to global payroll on your own entity once the market is proven and headcount justifies it. |
What is the global payroll vs PEO distinction?
Global payroll and a PEO are two ways of managing employment at scale, and they sit at very different points on the legal liability spectrum.
Global payroll is infrastructure for companies with entities in multiple countries. It runs wage calculations, tax filings, and payments across those entities, reducing the operational overhead of multi-country payroll processing. You stay the legal employer in every country you operate in, which means you carry all the compliance liability. The tooling reduces admin; it does not shift risk.
A PEO (Professional Employer Organisation) is primarily a US model built around co-employment. The PEO becomes the employer of record for tax and benefits purposes, pools your employees with thousands of others to access enterprise-level benefit plans, and takes on a share of the HR administration. You keep day-to-day management control. Both models assume you already have a legal presence in the relevant country. Neither is designed for a company's first hire in a new market without an entity.
What each model actually means, the legal structure
Both models sit on a spectrum from 'you own the risk' to 'the provider owns the risk'. Global payroll sits at the you-own-everything end. A PEO sits in the middle, sharing US employer duties. An EOR sits at the other end, taking the full legal employer role. Knowing where a model sits on that spectrum tells you who answers to the tax authority if something goes wrong.
| Detail | Global Payroll | PEO |
|---|---|---|
| Legal employer | You. The global payroll provider processes your payroll but you remain the employer of record in each country. | Shared. In the US, the PEO becomes the employer of record for tax and benefits while you retain day-to-day management control. |
| Compliance liability | Yours entirely. The payroll provider processes correctly; getting the underlying employment law right is on you. | Co-shared in the US. The PEO takes on employer-side tax and benefits obligations; you share the broader employment relationship. |
| Entity requirement | Yes, in every country where you want to run payroll. The tool works on your existing entities. | Yes, typically in the US. A PEO operates within a co-employment structure that requires you to be the operational employer. |
| Geographic scope | Global, limited only by where you have legal entities. | Primarily the United States. "International PEO" is an informal term often used for what is technically an EOR arrangement in other countries. |
"International PEO" is usually an EOR
Some providers market "international PEO" services for hiring outside the US. In practice, true co-employment is a US legal structure. Outside the US, these services use an Employer of Record, not co-employment. The contracts and liabilities are different, even when the marketing language overlaps. Always ask the provider which structure applies in each country and read the employment contract.
The entity question, why it decides everything
The core constraint for both models is the entity requirement. You can only run payroll for employees through a legal entity. If you want to employ someone in Germany but have no German entity, global payroll software cannot help you, because there is no German employer account to pay from. A PEO resolves US hiring for companies that want to outsource HR admin, but it doesn't solve new-market entry. That is the gap an EOR fills.
| Detail | Global Payroll | PEO |
|---|---|---|
| Hiring into a country with no entity | Not possible. Global payroll requires an entity and a registered local employer account first. | Not the purpose. US PEOs co-employ within an existing US business structure; they don't create entity infrastructure abroad. |
| Hiring where you already have an entity | Core use case. Global payroll reduces the operational cost of running payroll through owned entities. | US only. A PEO handles US entities; a separate solution is needed for international entities. |
| Time to first hire in a new country | Months to years for entity setup, plus payroll configuration in the new country. | Fast for US hires where you already operate. Not applicable for international new markets. |
| Cost to open a new market | Entity setup typically costs $20,000 to $50,000 and takes 6 to 18 months, before payroll can run. | Not applicable for new international markets. PEOs reduce US hiring overhead, not international market entry costs. |
The EOR route to a new market
An Employer of Record sidesteps the entity constraint. The EOR is the legal employer in the country, so you can hire a first employee there while you decide whether the market warrants a permanent entity. Teamed monitors the crossover point and tells you when your headcount in a country makes owning an entity lower-cost than the EOR fee.
Benefits and HR admin, where the PEO genuinely wins
If your team is US-based and growing fast, the PEO's benefits argument is real. By pooling thousands of client companies, a PEO can offer health plans, dental, vision and retirement options that a 50-person company could not negotiate independently. That purchasing power gap closes as you scale, but for companies under a few hundred US employees it is a genuine advantage over building an HR function from scratch.
| Detail | Global Payroll | PEO |
|---|---|---|
| Benefits purchasing power | None. Global payroll tools process wages and filings; benefits are your responsibility to source and administer. | Significant for US workers. PEOs pool client employees to access enterprise-level health, dental, vision and retirement plans. |
| HR admin bundled | No. You manage HR separately and provide the payroll provider with correct inputs. | Yes. Onboarding, offboarding, compliance filings, and often performance tooling are part of the co-employment bundle. |
| Workers' compensation | Your responsibility to source and administer in each entity country. | Typically included in the PEO bundle, at pooled rates. |
| Relevant for international workers | Benefits are your design and your cost in each entity country. | Not the PEO's purpose. Benefit purchasing-power pooling applies to US employees only. |
The cost breakeven point
Most PEO buyers weigh the co-employment fee against the cost of building a US HR and benefits function from scratch. The fee is typically a percentage of gross wages or a per-employee per-month charge, and it includes the HR admin and benefits access. For teams under a few hundred US employees, the PEO often wins on total cost. Above that, direct benefits contracting and an internal HR team often make more sense.
Compliance liability, who carries what
The compliance story is the most important one to get right before you sign. Global payroll tools are accurate when you feed them correctly, but they carry no employer liability. Everything sits with you. A PEO shares US employer liability under a co-employment arrangement, but you remain a co-employer, so you haven't fully stepped back. An EOR removes you from the employer relationship entirely in that country.
| Detail | Global Payroll | PEO |
|---|---|---|
| Employment tax filing | Processed by the payroll provider using your entity details. You remain legally responsible for correctness and timely payment. | The PEO files and pays federal employment taxes on behalf of the co-employment arrangement. A CPEO takes on sole liability for those taxes. |
| Statutory benefits and protections | Your obligation to understand and implement in each entity country. | Shared in the US under co-employment. The PEO handles the admin; you carry some employer duties. |
| Employment law compliance | Entirely yours. You need qualified legal advice in each entity country. | Partially shared for US employees. For international workers outside the US, a separate solution is needed. |
| What happens if there is a problem | The liability is yours. The payroll provider processed what you gave them. | For US taxes with a CPEO, the PEO assumes sole liability. For other obligations, liability is split under the co-employment agreement. |
Certified PEO (CPEO) vs standard PEO
The IRS certifies PEOs that meet financial, background and reporting requirements. A CPEO assumes sole liability for federal employment taxes on wages it pays, which is a meaningful protection for the client. An uncertified PEO shares that liability. The IRS publishes an up-to-date list of CPEOs.
IRS guidance on PEOs and CPEOsCost at scale, when each model becomes the wrong tool
Cost comparison between global payroll and a PEO only makes sense in the US context, because that is where they overlap. For pure international hiring, the relevant comparison is between the EOR fee and the cost of your own entity. PEOs charge a co-employment fee; global payroll providers charge per-employee plus implementation; an EOR charges a flat fee per employee per month with no entity infrastructure required.
| Detail | Global Payroll | PEO |
|---|---|---|
| Pricing model | Per-employee per-month fee plus implementation and configuration. Costs vary by provider and number of countries. | Typically a percentage of gross wages or a per-employee per-month fee, including HR admin and benefits access. |
| Cost at low headcount | Higher per head because implementation cost is spread over fewer employees. | Can be cost-effective for US teams where pooled benefits offset the co-employment fee. |
| Cost at high headcount | Lower per-head cost once the entity infrastructure and payroll configuration is mature. | A percentage-of-wages fee grows with wages. Many companies bring HR in-house above a few hundred employees. |
| Costs to check in the contract | Entity setup costs, local payroll registration fees, and local legal counsel costs in each country. | Per-employee and benefits administration charges in the contract. PEO pricing can carry multiple line items. |
When does EOR cross over to your own entity?
Teamed proactively monitors the point where your per-country headcount makes owning an entity lower-cost than the EOR fee. That typically happens between 10 and 15 employees in most European markets, depending on entity setup and compliance costs. The right EOR tells you when that crossover arrives, rather than waiting for you to raise it.
Why the comparison matters
Behind every line item is a real person, in a real place.
The fee, the FX and the support model are not abstractions. They decide whether the person you hired in Barcelona or Rome is paid right, on time, by someone who knows their employment law. That is the comparison worth running.
What each stakeholder evaluates
| Criterion | Legal | Finance | People Ops | Security |
|---|---|---|---|---|
| Deciding between global payroll and a PEO | The legal question is who carries the employer liability. With global payroll, you own it in full. With a PEO, co-employment shares it for US obligations. In either case, you need qualified employment-law counsel in every country you operate, and a PEO does not change that outside the US. | Model the per-employee cost of each option against your current setup. Factor in entity costs for global payroll, and the PEO fee as a percentage of gross wages. Get the fee schedule in writing before the contract is signed. Check for minimum-term, early-exit, and per-employee administration charges. | A PEO bundles onboarding, benefits, and HR tooling, which matters if your people team is small. Global payroll requires you to manage all of that separately. For international workers, neither model replaces a compliant employment contract in each country, which is why many teams run EOR for new markets and global payroll for established ones. | Both models handle sensitive payroll data. Verify that the provider is GDPR-compliant for European payroll, and that the data processing agreement covers the countries where you have employees. Ask where payroll data is stored and processed. |
| Scaling from US-only to international | A US PEO only covers US co-employment. The moment you hire outside the US, you need a separate solution for each country, either a local entity with global payroll software, or an EOR. Check whether your PEO also offers EOR internationally and what the contract terms are for each country. | An EOR fee is typically lower-cost than setting up a legal entity in a new market, which can run to $20,000 to $50,000 and 6 to 18 months. The EOR fee exceeds the owned-entity cost above roughly 10 to 15 employees per country in most markets. | Your US PEO's benefits and HR tooling will not extend to international employees. Manage the transition carefully so employees in new markets don't have a materially worse experience than US colleagues. Communicate clearly what the employment model is and which entity employs them. | Adding international payroll means operating under multiple data-protection regimes: GDPR in Europe, LGPD in Brazil, PDPL in Saudi Arabia. The EOR or global payroll provider needs to demonstrate compliant data handling in each country. |
| Deciding when to graduate from EOR to an owned entity | The crossover decision has a legal dimension: your own entity requires registering with local authorities, appointing local directors in some jurisdictions, and complying with local corporate law. Take qualified local counsel before you incorporate, not after. | The EOR fee stops being the lower-cost option at a headcount that varies by country, typically 10 to 15 employees in Germany, France, or the Netherlands, but lower in markets with lower entity-setup costs. Build a model that compares entity costs plus internal compliance overhead against the EOR monthly fee. | Moving from EOR to your own entity means re-employing your workers on a new entity contract. Plan the transition with enough notice to maintain trust, explain the change clearly, and avoid disrupting benefits or payroll continuity. Your EOR should help manage the transition. | Owning the entity means owning the data-processing obligations. Payroll data and HR records move from the EOR to your own systems. Agree a data-portability plan with the EOR before you close the arrangement. |
How to decide which model fits your situation
The right model depends on three questions in sequence: do you have entities in the countries where you need employees, is your hiring US-domestic or international, and are you in market-test or scale mode? Work through them before you sign any contract.
Step 1
Check your entity map
List every country where you employ or plan to employ people. For each country, do you have a legal entity or registered employer account? If yes, global payroll is a viable option. If no, an EOR is the only compliant route without setting up an entity first.
Step 2
Identify the US vs international split
If the bulk of your hiring is US-domestic and you want to outsource HR administration and access pooled benefits, a PEO is worth evaluating. If hiring is international or mixed, a PEO covers only part of the picture and you'll need a separate model for international markets.
Step 3
Model the cost crossover
For each country where you use an EOR, estimate the point where owned-entity costs fall below the EOR fee. That is typically 10 to 15 employees in most European markets. Build that trigger into your headcount plan so the transition is planned, not reactive.
Step 4
Match model to phase
Use an EOR for new markets and uncertain headcount. Use global payroll on entities once the market is proven. Use a PEO for domestic US headcount where pooled benefits and HR outsourcing reduce operating cost compared to building the function in-house.
Dyke Yaxley · UK chartered accountancy
+100% audit capacity. No entity needed.
- Audit capacity in 2024
- +100%
- Compliance issues across the engagement
- 0
- EOR employees, both retained
- 2
- Entity setup required
- None
Challenge
Dyke Yaxley, a UK chartered accountancy with over a century of history, was turning down audit work in 2024. Local UK talent supply for qualified auditors had not kept pace with client demand, and cross-border hiring felt too legally involved for a firm whose reputation sits on compliance discipline.
Approach
Dyke Yaxley used Teamed to employ two qualified audit professionals in South Africa via EOR, rather than setting up a South African entity or engaging them as contractors. Teamed acted as the legal employer: a compliant local contract, local payroll, statutory tax obligations and onboarding, all without the firm needing any local entity infrastructure.
Result
Both hires exceeded expectations on technical quality, client satisfaction and cultural fit. Audit capacity doubled in 2024, with zero compliance issues. The firm went from declining new audit mandates to confidently taking on additional clients.
Interactive tool
Work out which model fits your headcount
The crossover from EOR to your own entity typically happens at 10 to 15 employees per country in most European markets. A real HR or legal expert can model that number for your specific countries, entity-setup costs, and compliance overhead. No commitment, no sales pitch.
Decision checklist
- Use an Employer of Record when you want to hire in a country where you have no legal entity, and you are testing the market before committing to entity setup.
- Use a global payroll provider once you have legal entities in place and need to reduce the operational overhead of running payroll across them at scale.
- Use a PEO for a growing US domestic workforce where access to pooled benefit plans and outsourced HR administration reduces the cost of an in-house HR function.
- Model the EOR-to-entity crossover point for each country: it varies, but typically falls between 10 and 15 employees in most European markets.
- Review any provider contract carefully before you sign: minimum terms, offboarding charges, and per-employee administration fees can change the total cost significantly.
Honest take
When global payroll or a PEO is the right call
- Choose a global payroll provider when you have legal entities in the countries you operate and need to reduce the operational overhead of running payroll across them. The EOR fee stops being the right fit once your in-country headcount passes the entity crossover point.
- Choose a PEO when your hiring is primarily US-domestic and you want to access pooled benefit plans, outsource HR administration, and share employer responsibilities without building a dedicated HR function, particularly at lower US headcount.
- Choose global payroll or a PEO over an EOR when you have the in-house legal and compliance resource to own employer liability in each country, and the entity infrastructure to run payroll on.
Teamed is an Employer of Record. It is the right fit for companies hiring internationally without entity infrastructure, or testing new markets before committing. It is not the lowest-cost option at high per-country headcount once you own an entity, and it is not a HRIS. If your team is entity-mature and running payroll on owned infrastructure, a global payroll provider is the better tool.
Questions to ask any EOR before you sign
- 1Do we have a legal entity in every country where we need to employ people today?
- 2Are our workers primarily US-based, or are we hiring into multiple international markets?
- 3Do we have the in-house compliance and legal resource to own employer liability in each country?
- 4At what headcount per country does running our own entity undercut the EOR fee?
- 5What minimum-term, offboarding, or per-employee administration fees are in the contract? Read it before you sign.
- 6If we use a PEO, what happens to our employees and their benefits if we leave the co-employment arrangement?
- 7Does the provider have owned entities in the countries that matter to us, or are they using third-party partners?
- 8Can we reach a real HR or legal expert when something goes wrong, or is support a bot wall?
Frequently asked questions
What is the difference between global payroll and a PEO?
Global payroll is software and service infrastructure for running payroll across multiple countries. It calculates wages, tax filings, and statutory deductions, and sends payments through your existing legal entities. You stay the employer in every country and carry all the compliance liability. A PEO (Professional Employer Organisation) is a co-employment model primarily used in the United States. The PEO becomes the employer of record for tax and benefits purposes, pools your employees with thousands of others to access group benefit plans, and takes on a share of the HR administration. You retain operational management control. The key difference: global payroll runs your payroll in countries where you already have entities; a PEO shares US employer responsibilities and provides benefits infrastructure.Can a PEO help with international hiring outside the US?
Not in the strict sense. True co-employment is a US legal structure. Outside the United States, services marketed as "international PEO" are typically using an Employer of Record model, not genuine co-employment. The contracts, liabilities, and legal structures are different, even when the marketing language sounds similar. If you need to hire in Germany, France, or Brazil, ask the provider explicitly whether the arrangement is co-employment or EOR, and read the employment contract to see who is named as the employer.Do I need a legal entity to use global payroll software?
Yes. Global payroll software runs payroll through your existing legal entities. If you want to employ someone in Germany, you need a registered German entity (a GmbH or a registered foreign-employer account) before global payroll can process that employee. The software reduces the operational overhead of running payroll across multiple entities; it doesn't create the legal infrastructure. If you need to hire in a country where you have no entity, an Employer of Record is the route: the EOR is the legal employer, so you can hire compliantly before you incorporate.What does co-employment mean in a PEO arrangement?
Co-employment means two organisations share employer responsibilities for the same workers. In a PEO arrangement, the PEO becomes the employer of record for payroll tax and benefits administration. It files and pays federal employment taxes, and provides access to its group benefit plans. The client company retains control of hiring decisions, day-to-day management, and termination. Both parties sign a Client Services Agreement that sets out how employer responsibilities are divided. A Certified PEO (CPEO) goes further: the IRS gives CPEOs sole liability for federal employment taxes on wages they pay, which is a cleaner legal split than a standard co-employment arrangement.When does EOR become more expensive than running your own entity?
The crossover depends on the country, the entity-setup cost, and your internal compliance overhead. In most European markets, setting up a legal entity costs $20,000 to $50,000 and takes 6 to 18 months. At an EOR fee of $599 per employee per month, the crossover typically falls between 10 and 15 employees. Below that, the EOR is the more cost-effective route because it absorbs the entity and compliance overhead. Above it, your own entity amortises setup costs over enough headcount to bring the per-head cost below the EOR fee. The right EOR should proactively tell you when you are approaching that crossover, not wait for you to ask.Is a PEO or an EOR right for a fast-growing startup hiring internationally?
For international hiring, an EOR is typically the right first step. It lets you hire compliantly in a new country within days, without entity setup, without local legal counsel on retainer, and without minimum headcount. You test the market and the talent, and only commit to an entity when the headcount justifies it. A PEO solves a different problem: it is designed for US-domestic hiring, where access to pooled benefit plans and outsourced HR administration reduces the cost of building a US people function. For a startup with a US team and international ambitions, the typical setup is EOR for international markets and a PEO or EOR for US employees while the team is small.
Common questions
Global payroll vs PEO, which one should we use for an international hire?
It depends on whether you have a legal entity in the country. If you do, global payroll software can run payroll through it. If you don't, neither global payroll nor a PEO can help: you need an Employer of Record. A PEO is the right tool for US-domestic hiring where you want to outsource HR administration and access pooled benefit plans. An EOR is the right tool for international hiring where you don't yet have entity infrastructure. Many growing companies use all three: EOR for new markets, global payroll on mature entities, and a PEO or EOR for the US team.What is the difference between a PEO and an EOR?
A PEO co-employs your workers alongside you, primarily in the United States. Both parties share employer responsibilities, set out in a Client Services Agreement. The PEO handles payroll taxes and benefits; you retain operational management control. An EOR is the sole legal employer in the relevant country. There is no co-employment: the EOR takes the full employer role, including the compliance liability. You direct the day-to-day work. The practical difference is that an EOR can hire in any country without you needing an entity there; a PEO operates within your existing US business structure and is not designed for international market entry.
For the buying committee
Share with your team
Send this page to legal, finance, or HR for review. They will see the same statutory data and source citations you did.
Not sure which model fits your hiring plan?
Tell us about the countries you are hiring in and your current entity setup. A real HR or legal expert will map the right combination of EOR, global payroll, and entity for your situation.
The honest path
Want the PEO comparison run on your numbers?
Tell us your headcount and where you're hiring. A real HR or legal expert sends back a like-for-like breakdown with the FX shown against mid-market. No demo, no deck.


















