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When a company lands its first overseas hire, excitement often turns to confusion. Do you set up a company there? Do you need local directors, tax accounts, or benefits plans? Or do you partner with an Employer of Record (EOR) that already has all those foundations in place?
The conversation often starts and ends with price tags. But the real question isn’t just “What will this cost?” but rather “What are we buying, what are we risking, and how fast can we move?”
In this article, we break down the real trade-offs between the EOR services and entity setup. We’ll look at the hidden costs, the regulatory pitfalls, and the strategic considerations that should drive your decision — plus how Glints TalentHub helps companies scale smarter across Southeast Asia.
Global expansion no longer means setting up a brick-and-mortar entity right away. Modern teams hire wherever talent thrives, whether that is in Indonesia, Vietnam, or the Philippines, without the traditional barriers of entity incorporation. The EOR model enables companies to employ workers legally in a foreign market without owning a local entity while ensuring compliance with payroll, tax, and labor laws from day one. This flexibility is reshaping how companies build their regional footprint. The decision between EOR and entity setup impacts three critical business levers: capital efficiency, speed to market, and legal risk exposure.
👉 Read the related article to understanding misclassification risk.
Setting up your own legal entity sounds straightforward on paper. In practice, it’s a multi-month commitment that touches nearly every business function and drains resources beyond initial registration fees.
Typical first-year costs range between USD $15,000 and $50,000, including:
Also, there is hidden time cost beyond direct expenses. Entity setup consumes 200-400 hours of internal team time across legal, finance, HR, and operations. This includes:
Setup can take two to six months in Southeast Asia market, and exiting a market later can double that timeline. For early-stage or exploratory expansion, that rigidity can become a serious drag on growth.
Through an established in-country entity, EOR partners can:
This makes EORs ideal for testing new markets or hiring your first few regional team members without the heavy lift of incorporation.
The speed difference matters in several scenarios.
| Aspect | Entity Setup | Employer of Record (EOR) |
|---|---|---|
| Time Investment | 2–6 months depending on market (Singapore ~6–8 weeks; Vietnam/Indonesia up to 6 months) | 1–3 weeks, sometimes faster |
| Upfront Costs | USD 5,000–50,000+ including registration, legal, and capital deposits | Minimal or no upfront cost; subscription or per-employee model |
| Operational Infrastructure | Must establish bank accounts, local director, office address, and accounting systems | Fully managed by EOR with existing local entity, payroll, and compliance setup |
| Aspect | Entity Setup | Employer of Record (EOR) |
|---|---|---|
| Payroll & Compliance | Must manage payroll, social security, and tax filings (CPF, EPF, BPJS, etc.) | Payroll and compliance handled by EOR; you only review and approve |
| Accounting & Audit | Annual statements and statutory audits required; USD 8,000–25,000+ per year | Included in EOR service fees; no separate audit obligations |
| HR & Labor Laws | Must manage contracts, benefits, terminations, and local employment law | EOR ensures contracts and HR processes comply with local laws |
| Governance & Admin | Requires board meetings, filings, and ongoing regulatory compliance | EOR manages all employer-related filings and reports |
| Aspect | Entity Setup | Employer of Record (EOR) |
|---|---|---|
| Management Overhead | Internal team or FTEs needed to oversee operations and compliance | No internal oversight needed; EOR manages all HR and compliance workflows |
| Exit Complexity | 6–18 months to close entity; USD 10,000–50,000+ in dissolution and severance costs | No lock-in; hiring and exits are fast and low-cost |
| Tax Exposure | Risk of permanent establishment and added tax liabilities | EOR structure shields parent company from PE exposure |
| Scalability | Rigid structure; scaling up or down requires legal changes | Highly flexible; scale headcount in days |
Cost is only part of the equation. Risk exposure differs dramatically between the two models.
| Risk Area | Entity Setup | Employer of Record (EOR) |
|---|---|---|
| Liability Exposure | Full liability for all employment, tax, and compliance obligations | Shared liability model; EOR assumes primary employer risk |
| Misclassification Risk | Direct exposure if contractors are reclassified as employees; leads to back pay, penalties, and audits | Greatly reduced; EOR ensures proper classification and compliant contracts |
| Payroll & Tax Penalties | You manage filings; late or incorrect submissions can incur fines or director liability | EOR handles payroll, tax filings, and remittances on your behalf |
| Employment Disputes | Company is named in lawsuits or claims; legal costs borne directly | EOR is the legal employer and manages employee-related claims |
| Corporate Compliance | Must handle all entity filings, audits, and governance; missed deadlines can suspend operations | No corporate-level obligations; EOR maintains compliance infrastructure |
| Permanent Establishment (PE) Risk | Higher risk if business operations or decision-making occur locally; may create taxable nexus | Generally lower risk; EOR acts as independent entity without contract authority |
| Monitoring & Updates | Requires internal HR/legal oversight to track regulatory changes | EOR’s in-country experts continuously monitor and adapt to new laws |
Not all providers, however, operate equally. Partnering with one that has direct entities and legal experts on the ground, such as Glints, minimizes exposure and ensures accountability across every market.
There are times when setting up your own entity is still the right move:
Even in these cases, many companies begin with an EOR model to get started immediately while their entity setup is in progress. Once the entity is ready, they simply transition their team seamlessly under direct employment.
Many companies use both. Common pattern:
This gives you the best of both worlds: speed and flexibility early, cost efficiency at scale.
As the best EOR companies, Glints TalentHub empower companies to go borderless with full compliance, transparency, and control. We help you make the right call for your specific situation and then execute with precision.
Whether you are hiring through an EOR, setting up an entity, or using a hybrid approach, we provide:
With Glints TalentHub, you gain both speed and certainty, scaling confidently across Southeast Asia.
There is no one-size-fits-all solution to expansion. The right model depends on your hiring volume, compliance risk tolerance, capital availability, and strategic timeline.
But one thing is clear: speed and compliance are now strategic advantages. By leveraging EORs effectively, companies can hire top talent faster, reduce risk, and enter new markets with agility and confidence.
This article is brought to you by Glints TalentHub. Leading companies are actively building their borderless teams in Southeast Asia, Taiwan, and beyond. However, the prospect of going borderless can be daunting due to complex regulations and cultural ambiguities. With Glints TalentHub, you’ll have a dedicated team of in-market legal, HR, and talent experts by your side at every step of the way.
Glints TalentHub offers an end-to-end, tech-enabled talent solution that encompasses talent acquisition, EOR, and talent development. We empower businesses to leverage the strengths of regional talent efficiently to build high-performing, cost-efficient teams.
Schedule a no-obligation consultation with our experts to receive a tailored proposal today!
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