EOR vs setting up your own entity: the break-even headcount

The short answer

EOR fee per employee

$4,788 to $8,388a year, at $399 to $699 a month

Payroll for your own entity

$348 to $3,828a year for 1 employee (Remote $29; Oyster $290 + $29 a month)

Break-even at $599 EOR

5 to 8 employeeswith $30,000 to $50,000 entity overhead

Setup time one buyer reported

3 months to a yearolder Hacker News comment, Germany and UK

Use an EOR for your first hires in a country, when you are testing a market, or when you need someone started within weeks. Open your own entity when headcount in one country passes the break-even for your costs, when you will sell or sign contracts there anyway, or when you want staff on your own contracts. Our explanation of the employer of record model covers how the EOR side works.

What you pay either way

Salary, employer social contributions, mandatory bonuses, paid leave, notice and severance follow the employee's country, not the hiring route. An EOR bills them to you at cost. Your own entity pays them directly. So they belong in your budget, not in the EOR vs entity decision.

Two exceptions push EOR costs up in some countries. Atlas adds a country rate (its "LES rate") on top of its $599 platform fee, and Multiplier says about 11% of its countries cost more than the list price. Get a country quote before you run the numbers. To compare contribution rates across all countries we track, see the employer cost by country index.

What an EOR costs per employee per year

EOR fees scale in a straight line: ten people cost ten times one person. That is the whole reason a break-even exists. For deposits, FX terms and the rest of each provider's pricing, see our EOR pricing comparison.

What running your own entity costs

A subsidiary has a fixed cost base that does not grow much with headcount. These are the items to price with a local accountant before you decide:

An entity also makes you a taxpayer in that country by design. Your subsidiary files corporate tax returns there and needs an intercompany agreement with the parent. With an EOR you have no local company, but that does not guarantee you have no taxable presence: see how permanent establishment risk works with an EOR.

The break-even math

Your own entity is cheaper once the EOR fees you save exceed what the entity costs to run. Using Oyster's published global payroll price for the entity side ($290 per entity per month, so $3,480 a year, plus $29 per employee per month, so $348 a year):

Break-even headcount = (yearly entity overhead + $3,480) / (yearly EOR fee per employee − $348)

Yearly entity overhead means everything in the cost table except payroll: accountant, audit, registered office, director service, bank, legal and your own staff time. The figures in the first column are assumptions for you to replace with local quotes. They are not market averages.

Three things the table leaves out, all of which favor staying on an EOR a little longer:

• Setup costs and time. Formation fees, legal work, the $500 Oyster payroll implementation fee and months of your team's time land in year one.
• Risk you take back. With your own entity, a payroll or tax filing error is your company's liability, and a termination dispute is against your company.
• Exit cost. Closing a subsidiary later takes filings and time; ending an EOR takes 30 days' notice at Oyster and under Remote's standard terms, though Remote's order forms can also owe a Minimum Contract Value shortfall if you leave before the term ends.

Use the international employee cost calculator to add salary and contributions for your country, then add the EOR fee or your entity overhead.

How long setup takes, and how to move staff over

One founder on Hacker News reported, in an older comment (2024 or earlier), that it took about a year to set up a UK subsidiary and 3 to 6 months in Germany. That is one buyer's report, not an official processing time, but they show why most companies hire on an EOR while the entity is being set up.

1. Register the entity and the employer accounts. Your subsidiary needs tax and social security registrations before it can run payroll.
2. Choose payroll. Remote (from $29), Multiplier (from $20), Papaya (from $12) and Oyster ($290 per entity plus $29 per employee) all publish global payroll prices. Compare them in our global payroll providers guide.
3. Offer new contracts. Each employee signs a contract with your entity. Ask a local lawyer how to carry over start dates, leave balances and notice so the move does not reset or break continuity.
4. Give the EOR notice. Oyster needs 30 days' written notice. Remote's standard terms run 12 months, renew automatically and need at least 30 days' written notice. Multiplier needs a 30-day lead time per termination (60 for bulk) and charges 15% of the final invoice if you contact the employee about termination directly.
5. Recover the deposit. Refunds take about 60 days at Oyster and within 60 days at Multiplier, and about 45 days at Pebl.

EOR or entity: a decision table

Common mistakes

• Counting employer contributions as an EOR cost. You pay them either way. Only the fee is the EOR's price.
• Using the headline EOR price. Atlas and Multiplier both say some countries cost more. Run the break-even on the country quote.
• Leaving your own time out of entity overhead. Someone has to own filings, audits and local banking.
• Opening an entity for one senior hire. At $7,188 a year for a $599 EOR, a single hire rarely covers a subsidiary's running costs.
• Forgetting tax presence. An EOR removes the need for a company, not the tax rules on what your staff do there.

To compare providers for the EOR phase, see our ranked list of EOR services; for US hires, a PEO plays a similar role, covered in PEO vs EOR.