What Is an AOR (Agency of Record)?

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An agency of record (AOR) is a third-party entity providing compliant workforce administration for independent contractors. An AOR company assumes responsibility for ensuring your contractors are paid compliantly with all applicable regulatory and tax considerations, wherever they are assigned.

In today’s ever-evolving workforce, many leaders in business management are leveraging AORs to provide thorough, ongoing IC compliance and mitigate misclassification risks. Plus, an AOR also saves time for workforce management by managing IC invoicing and payment processes.

To learn more about AORs from our experts in workforce management, read on! 

What Are the Benefits of Using an AOR?

  • Onboarding/offboarding documentation management
  • Enforcement of client policies regarding background checks, drug screens, NDAs, and more
  • Contract administration
  • Risk mitigation for IC compliance
  • State and federal reporting requirements
  • Invoice management, expense reporting, and approval
  • SOW execution
  • End of the year 1099 and other tax document delivery
  • Audit defense data maintenance
  • Single point of contact throughout the assignment
  • Unburden and redeploy purchasing and accounting personnel
  • An additional layer of insulation between the company and potential audit

How does nextSource Differentiate Among AOR Solution Providers?

  • IC remediation — we invest much of our time and effort into helping talent qualify as 1099
  • Integrated solution with EOR offering to ensure optimal and safe engagement of talent
  • A platform-based solution that dramatically reduces screening in onboarding cycle time

Why Might I Need an Agency of Record for My Organization?

Determining if your organization can benefit from an AOR arrangement to manage contract staffing is pretty simple. 

Particularly, if your organization intends to ramp up its employment of contract workers—particularly independent contractors, freelancers, or SOW project workers—but can’t adequately manage the following HR-related tasks for the influx of new contractors, the use of an AOR can help ensure compliance with all required regulatory compliance, worker classification, tax, and business, rules-based concerns. These things are crucially important to a successful contract worker program:

  • Invoice processing and funding
  • Tax reporting and filings
  • Engagement/SOW contracts and paperwork
  • Maintaining Certificate of Insurance
  • Background checks and drug screenings
  • Contractor terminations
  • Contractor issues

Adding to the HR headcount to manage a newly expanded contract workforce can add significant costs to an HR department. And if cost savings and efficiencies are among the reasons why you may be considering adding contract workers to your workforce mix, then it seems counterproductive to add full-time resources to HR. In these cases, the AOR is definitely worth consideration.

Contact nextSource for AOR Solutions

If your business could benefit from using an agency of record, our experts in workforce solutions at nextSource would love to tell you everything you need to know on how to get started and take advantage of its potential benefits. Contact us today to learn more.

For more free tips, resources, and advice on effective workforce management, check out our blog.

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