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EOR

Employer of Record

An employer of record is a third party that legally employs someone on your behalf in a country or state where you have no legal entity.

How it works in practice

The EOR signs the employment contract, runs payroll, withholds taxes, and carries the compliance obligations, while the person works day to day for you. You pay the EOR a fee, usually a flat monthly amount per employee or a percentage of salary. It is the standard route for hiring one or two people in a jurisdiction where setting up an entity would cost more than it saves.

When it fits

  • →Hiring a small number of people in a new state or country
  • →Testing a market before committing to an entity
  • →Converting a long-term contractor into an employee compliantly

When it does not

  • →You already have an entity in that jurisdiction
  • →The headcount is large enough that per-employee fees exceed entity cost
  • →The role genuinely fits a contractor relationship

What it costs

Commonly $400 to $1,000 per employee per month, or 10 to 15 percent of salary, on top of the salary and statutory costs themselves.

Frequently asked questions

EOR or contractor?

A contractor relationship must survive scrutiny on control, exclusivity, and integration. When it would not, an EOR is the compliant path and is far cheaper than a misclassification finding.

Does an EOR own our intellectual property?

No. Well-drafted EOR agreements assign IP to the client. It is worth confirming that clause specifically before signing.

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