Register a company or use an Employer of Record?

• Two main routes for overseas hiring: Businesses can either register a local legal entity, which offers full control but requires significant time, cost, and compliance effort, or use an Employer of Record (EOR), which enables international hiring without setting up a local presence.
• When to choose each option: Registering a company suits long-term, large-scale expansion in a specific market, while an EOR is ideal for testing new markets, hiring small teams, and achieving faster, lower-risk entry.
• Why EORs are popular: EORs simplify compliance, reduce legal and financial risk, speed up market entry, and provide predictable costs, allowing companies to focus on growth and employee performance rather than local regulations.

You’ve made the decision to expand overseas. Great! What’s next? Deciding how best to employ staff overseas. In a world where global expansion is easier, and more necessary, than ever, there are numerous avenues open to you.

The primary two routes are registering a company in your new country of operation or using an Employer of Record. Both have their pros and their cons. Understanding the differences between these two approaches is essential for making an informed and strategic decision that’s right for your business.

Understanding your options for international hiring

Registering a company overseas means establishing a legal entity such as a subsidiary or branch in the target country. That entity becomes the direct employer and is responsible for meeting all local legal and regulatory obligations. This includes employment contracts, payroll processing, tax filings, social security contributions and compliance with local labour laws.

This model offers total control over your business, workers and operation. However, it is a significant time and cost investment, requiring extensive administrative undertaking and legal expertise.

Employer of Record is an increasingly popular choice. An Employer of Record (EOR) is a third party that legally employs workers on behalf of your business in a specific country. The Employer of Record takes responsibility for employment compliance, payroll, tax and statutory benefits. Meanwhile your organisation retains full control over the employee’s daily work, responsibilities and performance management. This approach allows companies to hire internationally without establishing a local legal presence.

What to consider when registering a company

If you’re certain about the country in which you’re setting up and are ready to make a long-term commitment with multiple staff, then registering a company overseas can be the right decision.

For businesses that plan to build a permanent local presence, operate physical offices or hire large teams often benefit from having their own legal entity, direct employment can become more cost-effective over time.

It should be noted that this option involves long setup timelines, higher overheads, and a significant compliance burden. Payroll experts, legal support, and accountants will need to be engaged in order to ensure adherence to all local rules and regulations.

Local employment laws vary significantly between jurisdictions and require continuous monitoring. For HR teams, managing these obligations internally can stretch resources. Overextended teams are more prone to human error which can increase compliance risk.

Why many businesses choose an Employer of Record

If your business is looking to test the waters of a new market or markets, or hire a small number of employees overseas, Employer of Record may be the option for you. Trying out a new market without investing large amounts of time and money can be the sensible option for start-ups and SMEs working with limited budgets.

An Employer of Record can hire, onboard, and manage your global employees, allowing for speedier market entry, often within days or weeks rather than months. This speed to market is particularly valuable when responding to new opportunities or securing in-demand talent.

Compliance is another key advantage of using an EOR service. Employment laws are complex and frequently updated, especially around payroll, statutory benefits and termination requirements. An Employer of Record takes care of the legal requirements. It ensures that employment contracts, tax obligations and employee entitlements are handled in full compliance with local regulations.

This significantly reduces the legal and financial risks associated with employing staff overseas. It also means that your staff are freed from the burden of constantly monitoring and actioning these changes.

Financially, if you partner with an EOR, you can count on consistency and predictability. Instead of managing multiple vendors and ongoing compliance costs, EOR clients typically pay a transparent, per-employee fee. This makes budgeting simpler and avoids unexpected expenses that often arise when operating a foreign entity.

Managing compliance and risk when employing staff overseas

Compliance is at the core of any successful overseas venture and as such, is one of the most critical challenges when employing global staff. Accidental payroll, tax or HR errors can lead to serious problems and reputational damage.

An Employer of Record assumes responsibility for meeting local employment requirements. It ensures accurate payroll processing and managing of statutory benefits and leave entitlements. This allows internal HR teams to focus on strategic priorities rather than getting bogged down navigating unfamiliar legal frameworks.

Employee experience and employer brand

Maintaining a positive employee experience is essential when expanding internationally. Employees expect timely payroll, compliant contracts and access to appropriate local benefits. A reputable Employer of Record delivers these fundamentals while allowing your organisation to maintain its own culture, values and performance standards.

Although the Employer of Record is the legal employer, employees remain fully integrated into your business from an operational perspective. This helps preserve a consistent employer brand while ensuring local compliance is handled professionally.

Making the right choice for your organisation

Deciding whether to register a company or use an Employer of Record depends on your organisation’s goals, scale and appetite for risk. Businesses that prioritise speed, flexibility and compliance often choose an Employer of Record when employing staff overseas. Those making a long-term, high-volume investment in a single market may eventually benefit from establishing a local entity.

Many leading organisations adopt a phased approach by using an Employer of Record initially and transitioning to a registered company once operations are stable and demand is proven.

When employing staff overseas, there is no one-size-fits-all solution. Choosing between registering a company and using an Employer of Record is a strategic decision that should align with your growth plans and operational priorities. For many modern businesses, an Employer of Record provides a compliant, efficient and low-risk pathway to international expansion while preserving flexibility for the future.

Partnering with an experienced Employer of Record allows business leaders and HR teams to focus on building high-performing global teams and driving sustainable growth with confidence.

Frequently asked questions

Does Employer of Record reduce managerial control?

Using an Employer of Record does not reduce managerial authority. Your business continues to direct the employee’s work, objectives and performance, while the Employer of Record manages employment administration.

Can an EOR support hiring across multiple countries?

An Employer of Record can also support hiring across multiple countries, making it a practical solution for organisations building distributed international teams. It is equally suitable for senior hires, including executives and specialists, particularly during early market entry.

Is it cheaper to register a company than to use an EOR?

Cost is another frequent question. While registering a company may appear cheaper on a per-employee basis in the long term, the total cost of ownership is often higher when legal, administrative and compliance expenses are taken into account. For small to medium teams or uncertain timelines, an Employer of Record is frequently the more cost-effective option.