EOR or entity: Which path is right for you?

An employer of record (EOR) is a third-party service provider that allows companies to legally hire and collaborate with employees overseas without establishing their own local entity in that country, while complying with local employment law and tax regulations.

Unlike an EOR, a PEO co-employs a company’s workforce for administrative purposes, like paying employees and filing payroll taxes. Co-employment means that both the company and the PEO employ its workers–each is responsible for certain obligations of employment.

Establishing a business entity in a new country requires several key steps, including registering for local taxes, obtaining Apostille and notary services, registering with government authorities, setting up a bank account, and structuring your tax strategy. Additionally, legal counsel and tax accountants are often needed. You’ll also need to draft employee contracts and establish a payroll system for your team.

The easiest entity to set up is usually a Limited Liability Company (LLC) or its equivalent, as it typically involves less paperwork, lower costs, and simpler compliance requirements compared to other structures like corporations or subsidiaries. This can vary by country, so it’s important to consider local regulations.

The cost of registering a business internationally can vary widely depending on the country, type of entity, and additional services required. Generally, it can range from $3,000 to $20,000, including registration fees, legal services, accounting, and compliance costs. Some countries may also require a minimum capital investment.

The time required to register a business overseas can vary significantly based on the country and the type of entity. Typically, it can take anywhere from 2 weeks to 6 months, depending on local regulations, the complexity of the process, and the completion of necessary documentation and compliance requirements.​