Lightsource’s current service presentation centers on an Employer of Record model for U.S. hiring. Its own comparison distinguishes an EOR acting as the legal employer from a PEO operating through co-employment. That distinction matters more than whether both proposals mention payroll, benefits, and HR support. Lightsource’s EOR and PEO explanation.
When evaluating the service, establish who will employ the worker and how responsibilities are documented. Do not choose a model solely because its feature list looks longer.
Three Similar-Looking Proposals Can Solve Different Problems
A business may receive proposals for employment services, co-employment, or payroll administration. All three can involve employee data and recurring payments, but they should not be compared as interchangeable packages.
| Proposed arrangement | First question to resolve | Evidence to request |
|---|---|---|
| EOR | Which entity will employ this worker? | Service agreement and proposed employment documentation |
| PEO | What co-employment relationship is being established? | Agreement identifying the parties and allocated responsibilities |
| Payroll administration | Who remains responsible for employment and tax duties? | Service scope and relevant authorizations |
The table organizes a review. It does not determine the legal treatment of a particular contract.
If your company already employs people through a U.S. entity, explain that before discussing a solution. If it has no existing U.S. employment arrangement, explain that too. The starting position changes what the provider needs to solve.
Identify the Contracting and Employing Entities
Ask for the legal names of the parties before treating the proposal as complete. Establish which entity provides the service, which employs the worker, and which issues invoices.
A brand name is useful for identifying a business, but your operating plan should use the names that appear in the applicable documents. This makes later questions about employment records, tax documents, and service responsibilities easier to resolve.
If an affiliate or another organization performs part of the service, ask for that relationship to be explained. Do not assume that every task is performed by the same entity.
Translate Responsibility Into Actions
Broad language such as “handles HR” needs operational detail. Ask how a hiring decision, pay change, leave request, or employment concern moves between the client and the provider.
For a pay change, determine who approves the commercial decision, who checks the proposed terms, who updates the employment record, and who confirms the payroll result.
For an employment concern, identify the route for obtaining advice before a manager takes action. A client should understand how to use the arrangement in practice, not just who appears on the paperwork.
Treat Liability Statements Carefully
Lightsource’s comparison uses broad language about EOR responsibility. Such language should not be read as proof that a client has no remaining obligations in every situation.
Federal payroll tax treatment illustrates why the actual arrangement matters. The IRS distinguishes payroll service providers, reporting agents, Section 3504 agents, and certified professional employer organizations, with different responsibility rules. It states that using a payroll service provider or reporting agent does not relieve an employer of its federal employment tax duties. IRS third-party arrangements.
An EOR label does not, by itself, establish certified PEO status. No such status is established for a Lightsource contracting entity in this article.
Where the decision depends on a specific legal or tax consequence, obtain advice on the actual documents and facts.
Compare the Arrangement Over Its Full Life
Ask how the service starts, how employee changes are handled, and how it ends. If you later establish your own employment operation, determine what a transfer would require and which records would be available.
These questions do not imply that a move will be necessary. They help you avoid choosing a service whose exit requirements you have never considered.
Use the Lightsource pricing guide to compare financial commitments and the first-hire guide to test readiness. The appropriate model is the one that addresses your hiring situation with clear, documented responsibilities.