When you're preparing for a big fundraising round, it’s easy to focus on the flashy stuff: your pitch deck, your market potential, your product. But there’s one behind-the-scenes player that can make or break your success—and that’s your Employer of Record (EoR). While it may not seem obvious, an EoR plays a crucial role in your fundraising journey, especially when it comes to due diligence and compliance.
Compliance is Key, and Your EoR Ensures It
Investors want to know that your business is solid, and that means making sure you’re following the rules. Your EoR ensures that your company is compliant with all the local laws, from running payroll on time to getting the right taxes in place. But it’s not just about the basics. They handle the finer details, like making sure employee contracts are in order and that you're following policies for workplace safety and preventing harassment. Having an EoR who is on top of these things makes you look like a responsible, reliable company, which is exactly what investors want to see.
Smooth Due Diligence, No Surprises
Due diligence is where the rubber meets the road in any fundraising round. Investors will dig deep into every part of your business, and they’ll want to see that everything is above board. This is where an EoR really shines. They make sure your payroll records are accurate, your tax filings are correct, and that there are no financial discrepancies. If your EoR is organized and transparent, they can help you pass through this phase smoothly and quickly—without any hiccups that could delay your deal.
The Cost of Non-Compliance
If you’re not working with a compliant EoR, you’re opening the door to all sorts of potential problems. Non-compliance can lead to fines, penalties, and delays in your fundraising. Worse, if investors discover compliance issues, it can set back your fundraising goals—or even derail the whole thing. That’s why it’s essential to choose an EoR that’s not just focused on payroll, but one that handles everything from your office space to anti-money laundering practices. A solid, compliant EoR helps ensure you won’t face surprises during due diligence, keeping your fundraising process on track.
Financial Transparency Makes a Difference
For investors, financial transparency is non-negotiable. An EoR helps make sure your payroll records and expenses are in line with local regulations. If your EoR is doing regular payroll audits and keeping things above board, you’re less likely to face any unexpected issues down the line. Investors can trust that your financials are in good shape, which can give them the confidence they need to move forward with your investment.
Avoid Fundraising Delays
Even though the role of an EoR might seem behind-the-scenes, it can have a huge impact on the speed and success of your fundraising efforts. If your EoR is not compliant, it can cause delays in the due diligence process, which might slow down or even kill your deal. Working with a reliable, compliant EoR who can provide the necessary documents quickly ensures that everything goes smoothly when the investors come knocking.
Conclusion
An EoR might not be the first thing you think about when preparing for a fundraise, but it’s one of the most important partners you’ll have. From ensuring legal compliance to keeping financials clean, an EoR plays a huge role in making sure you can move through the due diligence process with ease. A compliant, diligent EoR is your ticket to a smoother, quicker fundraising round.
If you want to dive deeper into how an EoR can support your next fundraise, check out our YouTube video. We go into more detail on how an EoR can help you stay compliant and get your business in front of investors with confidence.
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