Payroll, PEO and EOR glossary

Payroll and tax terms

Start with what a paycheck is made of. Gross pay is what an employee earns before anything comes out, and net pay is what reaches the bank. The difference is mostly FICA (7.65% from each side in 2026) and income tax set by the Form W-4. Each pay stub shows those lines, and the W-2 adds them up for the year.

Employers also pay taxes the worker never sees: FUTA, usually $42 per employee a year, and SUTA, which depends on your state and your layoff history. A 1099 contractor sits outside all of this, which is why classification matters. Rates for every state are in 2026 payroll tax rates, and providers are ranked in the best payroll software.

PEO terms

A PEO becomes the co-employer of your staff and runs payroll, benefits and HR under its own plans. The labels matter when you buy: a certified PEO is on the IRS CPEO list and takes on federal employment tax liability, an accredited PEO has passed private ESAC checks, and employee leasing is the term Florida's licensing law uses. The ASO model runs the same services without co-employment. Before signing, read the PEO agreement, then compare fees in what a PEO costs and rankings in the best PEOs.

EOR and global hiring terms

To hire abroad without your own company there, you use an employer of record, also called a global employment organization or a global PEO. The EOR contract sets deposits, notice and exit costs. Many countries add pay rules you will not see in the US, such as the aguinaldo in Mexico and 13th month pay, and offshore staff leasing is a close cousin of the EOR model. Country costs are in the EOR cost index and providers in the best EOR services.

All terms A to Z

• 13th month payThe extra month of salary: which countries require it, how to compute it, and the tax rules.
• A1 certificateThe EU form that keeps a posted worker in their home social security system.
• ASOAdministrative services only in HR and health plans, how it differs from a PEO, and a/s/o.
• Accredited PEOESAC accreditation: what it checks, the bond, and how it differs from IRS certification.
• Agent of record (AOR)AOR in contractor hiring, insurance, advertising and construction.
• AguinaldoMexico's mandatory Christmas bonus, plus Argentina and the U.S.
• BPOWhat business process outsourcing covers and how it compares with hiring through an EOR.
• Biweekly payrollEvery two weeks, 26 paychecks a year, and why it is not the same as semimonthly or bi-monthly.
• Certified PEO (CPEO)What IRS certification changes for your payroll taxes, and what it does not.
• Cost of living adjustment (COLA)What a COLA raise is, how Social Security sets its rate, and what one costs an employer.
• Distributed workforceTeams spread across states and countries: what changes for payroll, with a 12-person example.
• Décimo terceiroBrazil's extra month of pay: how it accrues, when it is due, what it costs.
• EOR contractThe service agreement and the local employment contract, and the clauses that cost money.
• Employee leasingThe tax-code meaning of a leased employee, and why leasing now means PEO.
• Employee misclassificationContractor vs employee tests, what reclassification costs, and the relief rules.
• FTEFull-time equivalent: the budgeting meaning and the ACA formula.
• Global PEOThe international version of a PEO, usually sold as an employer of record, with real fees.
• Global delivery modelOnshore, nearshore and offshore teams working as one, and what each location adds to the cost of a hire.
• Global employment outsourcingPaying a provider to employ your staff abroad: what it covers, what it costs, who is liable.
• HRO (HR outsourcing)The forms HR outsourcing takes, who stays the employer, and what each costs for 10 people.
• I-9Employment eligibility verification: who fills out what, by when, and how long you keep it.
• In-house payrollRunning payroll yourself: the tasks, the deadlines and the software bill for 10 employees.
• MSPManaged service provider: who runs what, and why it is not your payroll or your employer.
• PAYEThe UK's Pay As You Earn system, with 2026 to 2027 rates and an example.
• PEO insuranceHealth plans, workers' comp and other cover through a PEO, and the fees around them.
• PEO workers compensationHow a PEO master workers' comp policy is priced and billed, and how to read the line.
• PTOWhat paid time off covers, who must offer it, and payout math.
• Payment in lieu of notice (PILON)Pay for the notice period instead of working it: UK rules, a worked example and other countries.
• Pension contributionsEmployer and employee pension shares in the US, UK, Germany, Canada and Australia, with the math.
• Portage salarialFrance's three-party setup for consultants who want employee status.
• Portugal NHRThe NHR 2.0 tax regime in Portugal, who it covers, and what it does not change for employers.
• RPORecruitment process outsourcing: how it works and how it differs from staffing.
• Remote workWhat counts as remote work, and why the employee's location still decides payroll taxes.
• SUTAState unemployment tax: the wage base, your rate and what it costs per employee.
• Shadow payrollThe host-country payroll that pays no one but reports and withholds tax for an assignee.
• Staff leasingLeased full-time staff at home or abroad, what they cost and how it differs from EOR and PEO.
• Standard contractual clausesThe model contract terms that let employee data leave the EU or UK, and what to check in an EOR contract.
• TOIL (time off in lieu)Time off instead of overtime pay: common in the UK, mostly not allowed for US private employers.
• Taxpayer ID number (TIN)SSN, EIN, ITIN, ATIN and PTIN: who issues each and who needs it.
• Transfer impact assessmentThe documented check behind SCC data transfers, and what it means for EU payroll and EOR data.
• Umbrella companyHow UK umbrella firms employ agency temps, and what they deduct before your gross pay.
• W-4The withholding form every new hire fills out, step by step.
• WFHWhat WFH means in texts and job ads, and what it changes on payroll.
• FICASocial Security and Medicare tax: 7.65% from you, 7.65% from your employer.
• FUTAFederal unemployment tax: usually $42 per employee a year, more in credit reduction states.
• 1099 workerIndependent contractors, the $2,000 1099-NEC threshold and the cost of getting it wrong.
• PEO agreementThe client service agreement behind co-employment: fees, duties, term and how to get out.
• W-2The yearly wage and tax form, its 2027 deadline and why its wage amounts differ.
• Digital nomadRemote work on the move: the tax tests, the employer risks and what it costs to hire one properly.
• Pay stubEvery line on a paycheck stub, and where pay stub rules come from.
• Temp agencyHow temporary staffing agencies hire, pay and bill for workers.
• Gross payTotal pay before anything comes out, with salary, hourly and overtime math.
• Net payTake-home pay: what comes out of gross pay, line by line.
• YTD (year to date)What the YTD column on a pay stub adds up, and why it changes your take-home pay.
• Zero hours contractA UK contract with no guaranteed hours: worker rights, employer costs and the US comparison.