EOR or Entity Setup: What’s Right for Your Business?
When your company is ready to expand internationally, one of the first questions is: how do we hire employees abroad? Two common options are using an Employer of Record (EOR) or setting up a legal entity. Both come with advantages, but the right choice depends on your business goals, resources, and growth strategy.
At Parakar, we help organizations make this decision with clarity. Here’s what you should know when comparing EOR and entity setup.
What is an EOR?
An Employer of Record (EOR) is a partner that legally employs your international staff on your behalf. While you manage their day-to-day work, the EOR takes care of employment contracts, payroll, taxes, and compliance with local law.
In short: it’s a fast, low-risk way to hire internationally without needing your own legal entity.
What is an Entity Setup?
Entity setup means establishing your own legal business entity in a foreign country. This option gives you full control over operations, but it also comes with higher costs, administrative responsibilities, and ongoing compliance requirements.
Entity setup makes sense for businesses with long-term plans in a market, larger teams, or complex operations.
When to Choose an EOR
An EOR is ideal if:
- You want to hire quickly without waiting months for entity registration.
- Your team abroad will remain relatively small in the short term.
- You’re testing a new market before committing long-term.
- You want to avoid high compliance risks and upfront costs.
With an EOR like Parakar, you gain flexibility and peace of mind, while keeping your expansion agile.
When to Choose an Entity Setup
Entity setup may be the better option if:
- You plan to employ a large workforce in the new country.
- Your business needs a permanent local presence.
- You want full control over HR policies, benefits, and compliance.
- You’re ready to handle the financial and administrative responsibilities of local operations.
Entity setup is a bigger investment, but it can support long-term growth when the timing is right.
The Hybrid Approach: EOR First, Entity Later
Many businesses start with an EOR to hire employees immediately and test the market. Once the business grows and proves sustainable, they transition to setting up their own entity.
This hybrid approach reduces risk and helps companies expand step by step. Parakar supports both routes, helping you move smoothly from EOR to entity setup when the time is right.
Making the Right Choice with Parakar
Every business is different, and there’s no one-size-fits-all answer. The decision between EOR and entity setup depends on your strategy, speed, and resources.
With over 25 years of experience in international HR, Parakar guides companies through both solutions. Whether you need flexibility now or want to establish a long-term presence, we help you choose the right path for your global expansion.
Thinking about expanding internationally? Get in contact for a free consultation call!
