EOR vs PEO vs Entity Setup — Which Is Right for Your Company?
A practical comparison of the three main routes to international hiring — with a clear framework to help you choose.
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Three routes to international hiring
When you're ready to hire internationally, you have three main structural options: an Employer of Record (EOR), a Professional Employer Organisation (PEO), or your own local entity. Each has different cost, compliance, speed, and control implications.
Employer of Record (EOR)
An EOR is the full legal employer in a foreign country on your behalf. It works in markets where you have no legal entity — the EOR owns the employment relationship entirely, handles all payroll and compliance, and you direct the work via a commercial agreement.
Best for: hiring 1–15 employees in a new country, fast market entry, testing demand before committing to a local entity.
Professional Employer Organisation (PEO)
A PEO is a co-employment arrangement — the PEO and your company share employer responsibilities. PEOs are most common in the US, where they provide access to better group benefits rates and handle payroll admin. Unlike an EOR, a PEO requires you to already have a legal entity in the country.
If you don't have a US entity and want to hire US employees, you need an EOR — not a PEO. Providers like Gusto and Justworks operate primarily as PEOs in the US; Deel and Rippling offer both EOR and PEO products depending on your situation.
Setting up your own entity
A local subsidiary or branch gives you full ownership of employment relationships and is the right structure when you're building a significant permanent team — typically 10+ employees in a single country.
The process typically takes 3–6 months and costs $10,000–$50,000+ depending on the jurisdiction, with ongoing accounting, legal, and compliance overhead. Many companies use an EOR to hire while their entity is being established.
How to choose
- Choose EOR if you're hiring 1–15 employees in a new country, need speed, or are testing a market
- Choose PEO if you already have a US entity and want to outsource HR and benefits admin
- Choose entity setup if you're committing to 10+ employees and need full ownership of the employment relationship
March 23, 2026
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