Do I need to set up a legal entity to expand abroad?
Short answer? Not always.
When companies think about international expansion, the first assumption is often: we need to open a local company. In reality, that is only one of several options and for many businesses, not the most efficient one at the start.
Before you invest time and budget into entity setup, it is worth understanding what you actually need and what your growth plans look like.
When does setting up a legal entity make sense?
Opening a local entity can be the right move if:
- You plan to build a long-term presence in that country
- You expect multiple hires
- You want full operational independence
- You will generate local revenue
A legal entity gives you full control, but it also comes with ongoing responsibilities. Registration procedures, local directors in some countries, tax filings, accounting obligations, payroll setup, compliance monitoring and annual reporting all become part of your structure.
It is not just a one-time registration. It is a permanent commitment. For companies entering a market for the first time, that level of investment can feel heavy, especially if growth plans are still evolving.
When you might not need an entity
If you are:
- Hiring one or two employees
- Testing a new market
- Expanding quickly across multiple countries
- Unsure about long-term presence
Then setting up a local company might slow you down rather than support you. This is where many businesses look at alternative models such as an Employer of Record (EOR).
How Parakar supports international expansion
At Parakar, we support companies expanding across Europe, whether that means hiring through an Employer of Record, setting up payroll for an existing entity, or guiding you through entity establishment.
Our approach is practical. We look at your growth plans, hiring volume, timelines and long-term strategy. Then we advise on the structure that fits.
Through one coordinated partnership, we provide:
- Employer of Record services
- Local payroll management
- HR support
- Immigration assistance
- Entity setup
Our in-country specialists understand local labour law and regulatory frameworks across Europe. That means clear answers, compliant solutions and no unnecessary complexity.
So, do you need a legal entity to expand abroad?
Sometimes yes. Often not at the beginning.
The right choice depends on your goals, speed of expansion and risk appetite. The key is making an informed decision before you hire.
If you are exploring international expansion and want clarity on your options, we’re is happy to guide you through the possibilities and build a structure that supports sustainable growth.
Expanding abroad should feel strategic, not overwhelming.
