When to Transition from EOR to Your Own Entity
For many companies, using an Employer of Record (EOR) is the fastest and most cost-effective way to start hiring internationally. It lets you quickly build a team abroad without the need for your own local entity. But as your business grows, there may come a time when transitioning to your own entity makes more sense.
At Parakar, we guide companies through both stages, helping them decide when the switch is right. Here are the key signs that it might be time to move from EOR to entity setup.
1. Your team abroad is growing
EOR is perfect for hiring your first few employees in a new market. But if your headcount grows significantly, the ongoing EOR service fees may become less cost-efficient compared to managing employees directly through your own entity.
If you’re planning long-term expansion with a larger workforce, entity setup can help reduce per-employee costs.
2. You need a permanent local presence
Some markets, industries, or clients expect you to have an official local entity to do business. For example, you may need an entity to open a local bank account, sign contracts, or access certain government incentives.
If having “boots on the ground” is a strategic advantage, transitioning to your own entity can unlock new opportunities.
3. You want more control over HR and payroll
EOR providers handle compliance, payroll, and contracts on your behalf. While this saves time and effort, some companies eventually want to manage HR processes directly.
With your own entity, you gain full control over employee benefits, HR policies, and payroll structures, allowing you to customize them exactly to your business needs.
4. You’re committed to the market long term
EOR works best for testing new markets or starting with flexibility. But if your business has proven successful abroad and you’re committed to staying, setting up an entity can give you stability for the future.
This is especially relevant if your growth plans include investments in local offices, larger teams, or market-specific operations.
The Smooth Transition: From EOR to Entity
The good news is: you don’t have to choose one or the other right away. Many companies start with EOR, then transition to their own entity once they reach the right stage of growth.
At Parakar, we not only provide EOR services but also support you through entity setup. That means we can seamlessly move your employees from EOR contracts to your own entity, without disruption for your team.
Grow at your own pace
The decision to move from EOR to entity setup depends on size, strategy, and long-term vision. An EOR is often the best way to start fast, but once your business scales and settles, an entity can offer greater control and cost-efficiency.
With over 25 years of experience, Parakar helps businesses expand step by step, starting lean and flexible, and transitioning smoothly when the time is right.
Ready to explore entity setup for your international team? Get a free consultancy call.
