You’ve identified a new potential revenue stream. The opportunity is clear, the talent is available, and the potential for growth is huge. But before you can build a team, you need to decide how to establish your presence in the marketplace.
Do you move quickly with an Employer of Record (EOR), take full control by opening a local entity, or share the load through a joint venture? Each approach offers a different balance of speed, cost, compliance, and risk.
Understanding the key differences in the EOR vs. entity decision, and how joint ventures compare, can help you choose the right fit for your hiring goals, compliance requirements, and long-term strategy.
What Is an Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party company that hires employees on your behalf in another country. The EOR becomes the legal employer; they handle payroll, tax withholding, benefits, and employment compliance. Your business directs the employees’ day-to-day work, but the EOR assumes the legal responsibility.
Benefits of Using an EOR
Each of these EOR benefits plays a role in helping businesses grow globally while reducing setup time, costs, and risk:
- Faster hiring – With an EOR, you don’t need to wait months to set up a business. You can onboard employees in just days.
- Compliance coverage – The EOR ensures adherence to local labour laws and mitigates legal risk.
- Lower setup costs – With an EOR, you avoid the administrative and legal costs of establishing a formal entity.
- Scalable model – EORs are perfect for businesses testing new markets, considering hiring temporary workers, or working on short-term projects.
See how our EOR solutions help businesses onboard quickly, stay compliant, and avoid the overhead of local entity setup.
What Is a Local Entity?
A local entity is a legally registered business presence in a foreign country. This structure allows you to hire directly and operate there long-term.
Pros and Cons of Establishing a Local Entity
While establishing a local entity can give your business full control, it often requires navigating complex compliance processes and committing to long-term overhead.
Even still, there are certainly pros to creating your own local entity:
- Local entities have full operational control over their local workforce.
- They can use local invoicing, contracts, and bank accounts.
- They can boost their brand presence and trust with partners.
Of course, there are disadvantages to consider, too. Local entities often demand:
- High administrative overhead and legal costs
- Time-consuming setup and maintenance
- Complex tax filings and compliance responsibilities
Setting up a local entity looks different in every country, varying based on each country’s legal, tax, and administrative landscape. Learn more about setting up a local entity to understand what to expect and how to navigate the process successfully.
What Is a Joint Venture?
A joint venture (JV) is a partnership between your company and a local business to form a new, jointly-owned entity. Both parties share profits, responsibilities, and governance.
Key Advantages and Risks of Joint Ventures
Joint ventures come with opportunities to share resources and local expertise, but they also introduce risks that can affect control and alignment.
Let’s take a closer look at some of the advantages of a JV:
- Business owners get access to local market knowledge and networks
- JVs share financial investment and operational resources
- Businesses can easily align with local cultural and regulatory expectations
There are also a few risks related to forming a Joint Venture:
- Partners may have misaligned goals or unequal commitment to the venture
- Shared control can slow decision-making
- Partners will encounter complexities in profit sharing, governance, and intellectual property
JVs can be useful in highly regulated markets or where local ownership is required by law.
However, they require thorough due diligence and governance planning.
EOR vs. Local Entity vs. Joint Venture: Key Differences
Each option offers a unique mix of speed, control, compliance responsibility, and cost. This side-by-side comparison helps clarify how they stack up:
Best Use Cases for Each Model
Whether you’re scaling gradually or aggressively entering a new market, each model suits a different type of expansion strategy:
- EORs are ideal for early-stage market testing, single or remote hires, and quick global expansion.
- Local Entities are best for large teams, permanent operations, or regulated industries.
- Joint Ventures are most useful when local partnerships, cultural expertise, or resource sharing are essential.
How to Choose the Right Expansion Model for Your Business
To identify the best option for your business, consider:
- Speed – How urgently do you need to hire or operate?
- Budget – Can you absorb upfront legal and administrative costs?
- Risk tolerance – Are you equipped to manage local compliance and liabilities?
- Strategy – Is this a short-term hire, market test, or permanent business?
- In-house resources – Do you have HR and legal support to manage international hiring?
These questions can help you assess your internal capabilities and long-term goals.
Why Companies Choose EOR for Fast Global Hiring
More companies are using EORs to build global teams quickly and stay compliant. In fact, EORs are helping smaller companies access global talent without the regulatory burden of setting up entities.
With an EOR, you reduce time-to-hire, manage less paperwork, and stay compliant in multiple jurisdictions. It’s an effective model for modern, globally distributed workforces.
