EOR vs. Setting Up Your Legal Entity: Which is a Better Fit for Your Global Workforce Management

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Atlas Team

Atlas helps innovative companies like yours to expand, onboard, manage and pay international teams in 160+ countries.

Published: 19 Jul 2023

When considering international expansion, businesses are often faced with a crucial decision: should they establish a local entity or opt for an Employer of Record (EOR) service? Here we break down the key differences, helping you make an informed choice that best suits your global ambitions.

Employer of Record (EOR)

What is it?

An EOR acts as the legal employer of your international employees, handling all HR tasks, payroll, benefits, and compliance issues in each country.

Benefits of Using an EOR like Atlas

Quick Market Entry: With Atlas, you can start operations in a new country quickly without dealing with the complex processes of setting up a legal entity.

Less Administrative Burden: We handle all HR, payroll, and legal compliance tasks, leaving you to focus on your core business operations.

Reduced Legal Risks: As the legal employer, Atlas handles all legal and compliance issues, reducing your risk exposure.

Cost-Effective: There are no setup costs or the need for a significant initial investment as with establishing a legal entity.

Scalability: Atlas' EOR solution is ideal for companies of all sizes, making it easy to scale operations up or down as needed.

Setting Up Your Own Legal Entity

What is it?

When a company establishes its legal entity in a foreign country, it takes on all employer responsibilities, including HR, payroll, and legal compliance.

Challenges of Setting Up a Legal Entity

Slow Market Entry: Establishing a legal entity in a foreign country can take several months, delaying your market entry.

Administrative Burden: Your company has to manage all HR tasks, payroll, and legal compliance in each country.

Increased Legal Risks: If you're not fully aware of the local employment laws and regulations, you could face hefty fines and legal issues.

High Costs: Establishing a legal entity requires a significant initial investment and ongoing costs for maintaining the entity.

Difficult to Scale: Scaling up or down can be long and complicated when managing your legal entities.

Employer of Record (Atlas)Setting up Your Own Legal Entity
Time to MarketQuick market entry due to established entities in 160+ countries.Slow market entry due to the time-consuming process of setting up a legal entity.
Administrative BurdenAtlas handles all HR, payroll, and legal compliance tasks.Your company is responsible for managing all HR tasks, payroll, and legal compliance in each country.
Legal RisksReduced risk as Atlas, acting as the legal employer, handles all compliance issues.Increased legal risks due to potential lack of knowledge of local employment laws and regulations.
Initial and Ongoing CostsNo setup costs. Atlas' service fees are the only costs.Significant initial investment required to set up a legal entity, plus ongoing costs for maintenance.
ScalabilityEasy to scale operations up or down quickly as needed.Scaling operations can be a long, complicated process when managing your own legal entities.
Focus on Core BusinessWith Atlas handling HR tasks, payroll, and legal compliance, you can focus on your core business.The burden of HR, payroll, and legal compliance could distract from core business operations.

Atlas offers a simple, effective, and efficient alternative to setting up your legal entity. Our EOR services take the burden off your shoulders so that you can focus on your core business.

Why Take the Longer Route, When Atlas is Here to Simplify Your Global Expansion?

The choice between setting up a local entity and employing an EOR service boils down to your specific business needs and capacity. While setting up a local entity offers more control over your operations, it also comes with challenges and expenses. On the other hand, using an EOR service can significantly reduce costs, save time, streamline processes, and ensure compliance, making it a viable option for businesses looking to fast-track their global expansion. If you're interested in learning more about EOR services and how they can benefit your business, don't hesitate to engage further with our team at Atlas.