EOR vs. U.S. Entity: Costs, Headcount Thresholds and When to Switch

Is there a headcount threshold?

There is no universal employee number at which an EOR stops making sense. The decision depends on your current headcount and hiring plan, what the EOR charges per head, how many states you employ in, the benefits you want to offer, how much control you need over policy and equity, and whether anyone internally has the capacity to own U.S. employment.

Read the routes into the U.S. market in how a European company can hire employees in the U.S., or see how we support U.S. employment for international companies.

The switching signals

Most companies switch late. These are the signals we look for:

• EOR fees exceed the fully loaded cost of an entity plus payroll and benefits administration.
• You want to grant equity on terms the EOR can't accommodate.
• Benefits quality is costing you candidates.
• You have employees in five or more states and the EOR's policy set no longer fits.
• U.S. employees feel structurally separate from the rest of the company.

What an entity actually adds to your workload

Registration in each state where you employ, payroll tax accounts, a benefits broker and renewal cycle, workers' compensation, a handbook, and ongoing employee relations. None of it is difficult. All of it needs an owner.

That owner does not have to be a full-time U.S. HR hire — that's the gap a managed U.S. People function fills.

International companies can use U.S. employment support for international companies to map the EOR-to-entity decision against their actual U.S. growth plan.