Entity setup is incorporating a legal business presence — a subsidiary, branch, or representative office — in a foreign country. This gives you direct control over hiring, payroll, contracts, and operations in that market. It’s the alternative to using an EOR.
The cost and timeline vary widely. Singapore: $3K–$5K and 1–2 weeks. Germany (GmbH): $10K–$25K and 4–8 weeks. India (Private Limited): $15K–$30K and 8–14 weeks. Brazil (LTDA): $20K–$40K and 8–12 weeks. These figures include legal fees, registration, bank account setup, and initial compliance filings. They don’t include ongoing costs.
Ongoing maintenance — accounting, tax filings, annual audits, registered agent fees — runs $3K–$8K/month depending on the country and your headcount. That fixed overhead is why entity setup doesn’t make financial sense below 15–20 employees in a single country. The EOR cost guide models this crossover point in detail, and the math is straightforward: multiply your EOR per-employee fee by headcount, then compare against entity setup plus maintenance. Below the break-even, EOR wins.
Entity type matters too. A subsidiary is a fully independent legal entity owned by your parent company — it offers the most control but carries the most compliance burden. A branch office is an extension of your existing company, simpler to set up but creating direct liability for the parent. A representative office lets you have a local presence for market research or liaison purposes, but can’t employ workers or generate revenue. Most companies expanding internationally choose a subsidiary because it limits parent-company liability.
Closing an entity is often harder than opening one. Winding down requires clearing all tax obligations, terminating employees (with statutory severance), filing dissolution paperwork, and waiting for government approval. This takes 6–18 months in most jurisdictions and costs $10K–$30K. The World Bank’s Doing Business indicators track the time and cost of starting and closing businesses across 190 economies.
Why It Matters for EOR
Entity setup is EOR’s primary competitor. Every company using EOR should have a threshold at which they’d switch to their own entity. That threshold is typically 15–20 employees in one country, but it shifts based on the country’s incorporation costs and your growth trajectory.
Some EOR providers help with the transition. Multiplier and Remote offer entity-setup advisory services alongside their EOR product, recognizing that graduating clients to their own entity is better than losing them to a competitor. If you’re approaching the crossover point, start the entity setup process 3–6 months before you plan to switch — the transition involves transferring employment contracts, benefits enrollment, and payroll operations, and doing it mid-quarter creates unnecessary complications.
For practical use of this concept, see EOR vs PEO explained and remote jobs by country.
Further Reading
- EOR vs. setting up your own entity: a side-by-side comparison — The definitive breakdown of when EOR saves money and when your own entity makes more sense.
- Hiring in Singapore: one of the fastest countries to incorporate — Singapore is a common first entity for companies expanding into Asia, with setup in as little as 1–2 weeks.
- EOR comparisons
- Read Deel review
- EOR vs PEO explained
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