Checklist: How Ready Is Your Business for an Entity?
Expanding internationally is exciting, but it also comes with complex decisions. One of the most important questions companies face is: When is the right time to set up a legal entity abroad?
While setting up your own entity can give you full control, it also means taking on responsibilities around compliance, payroll, HR, and tax obligations. Before taking this step, it’s crucial to check if your business is truly ready.
This checklist helps you evaluate whether establishing an entity is the right move, or if working with an Employer of Record (EOR) might be a smarter option for now.
1. Do you already have a long-term business strategy in this market?
Setting up an entity makes sense if you’re committed to the country for the long run. If you’re only exploring opportunities or hiring a small team, an entity might be premature.
- If yes: You may be ready for an entity.
- If no: Consider starting with an EOR, which lets you hire quickly without committing to a full setup.
2. How many employees do you plan to hire locally?
Entities usually become cost-effective when you employ more than 10 people in a country. With smaller teams, the administrative and financial burden often outweighs the benefits.
- Small team: EOR services provide flexibility while you grow.
- Larger team: An entity may be worth considering.
3. Do you have local compliance expertise?
Every country has its own employment laws, tax rules, and reporting requirements. With an entity, your company takes full responsibility for staying compliant.
- If your business has strong in-house resources: You may be ready to handle this step.
- If not: Partnering with Parakar means you can rely on our local HR and compliance expertise, avoiding costly risks.
4. Are you ready for administrative responsibilities?
Running an entity goes far beyond hiring, it includes payroll, contracts, benefits, and ongoing HR processes. These tasks require time, tools, and dedicated expertise.
- If your team has capacity and infrastructure: You may be ready to manage this.
- If not: Parakar can take care of payroll, HR administration, and local requirements, so your business can focus on growth instead of paperwork.
5. Do you have the budget for setup and maintenance?
Entity setup is a significant investment. Beyond setup costs that can be very costly, you’ll face ongoing legal, tax, and compliance expenses. The question isn’t just “can we afford it?” but also “is this the best use of our resources right now?”
- If your business is stable and scaling fast: Setting up an entity may be a strategic next step.
- If you want flexibility and lower upfront costs: Starting with an EOR allows you to expand internationally without tying up capital in administration. With Parakar, you can scale at your own pace and switch to an entity when the timing is right.
6. How fast do you need to hire?
Entity setup can take months. EOR lets you hire talent in a matter of days.
- Urgent hires: EOR helps you stay competitive.
- No rush: Setting up an entity might be feasible.
Your Next Step
If you answered “yes” to most of these questions, your business may be ready to establish an entity. If not, don’t worry, many growing companies start with Employer of Record services to hire quickly and compliantly. Once your presence grows, you can always transition to your own entity later.
At Parakar, we guide companies through both stages. Whether you need the flexibility of EOR or support in setting up your own entity, our local experts make international expansion easy.
Want to know which option fits your business best? We offer a free consultancy call with our experts!
