EOR or Legal Entity? The Smart Way to Hire in New Countries
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Expanding into new markets opens powerful opportunities for growth, but it also brings complex regulatory, tax, and payroll challenges. Global expansion is no longer just about finding talent; it’s about doing it compliantly, efficiently, and sustainably.
A question many international companies face at this stage is: Should we hire through an Employer of Record (EOR) or establish a local legal entity?
At Mercans, we help organizations make the right choice for their global workforce strategy. Let’s explore both options and how to identify the smartest way forward.
Understanding the Difference
An Employer of Record (EOR) enables companies to hire employees in countries where they do not have a registered entity. The EOR becomes the legal employer, handling payroll, tax withholding, benefits administration, and compliance with local employment laws. Your company retains day-to-day control over the employee’s work and performance, while Mercans ensures every employment detail aligns with local regulations.
A local legal entity, by contrast, is your organization’s official presence in that country. It allows you to hire directly, invoice clients locally, and operate as a full business entity. However, setting up a legal entity involves incorporation, bank accounts, local taxation, and statutory reporting, an investment that suits companies seeking long-term, large-scale operations.
When an EOR is the Smarter Solution
If your goal is to hire quickly, compliantly, and cost-effectively, an EOR is the right place to start.
Through Mercans’ global EOR platform, companies can onboard employees in new markets within days instead of months. There is no need for local registration or complex legal setup. We manage employment contracts, payroll taxes, statutory benefits, and social contributions in full compliance with each country’s laws.
An EOR solution is ideal when:
- You want to test new markets before making a permanent commitment.
- You need to hire remote or specialized talent across multiple countries.
- You aim to ensure full compliance with local labor and tax laws.
- You want to avoid administrative overhead and focus on core operations.
With an EOR, your organization can scale global teams confidently, while Mercans takes care of the local complexity behind the scenes.
When to Establish a Local Legal Entity
If your business strategy includes a long-term presence, a growing workforce, or local commercial activity, establishing your own legal entity becomes the next logical step.
A legal entity provides:
- Full operational control over HR policies and employment terms.
- Lower long-term costs once headcount increases.
- Enhanced local credibility with partners, clients, and regulators.
- Direct ownership of intellectual property and data.
While incorporation can take several months and involves ongoing management, Mercans supports clients through every stage of entity setup, registration, and payroll implementation—ensuring a seamless transition from EOR to direct employment.
A Hybrid Approach for Sustainable Growth
The most successful global companies use a hybrid model: start with an EOR to enter markets quickly, then transition to a local entity as operations expand.
This approach minimizes risk and maximizes agility. Mercans’ integrated technology and local expertise enable a smooth employee transfer from EOR employment to your new entity, maintaining compliance, benefits, and employment continuity.
It’s the smart way to grow globally—combining speed, compliance, and control in one flexible solution.
How to Decide Between EOR and a Legal Entity
Before choosing, consider these factors:
- Time to hire: How urgently do you need to onboard talent?
- Headcount forecast: Will you hire a few employees or build a large team?
- Budget and compliance readiness: Are you prepared for entity setup and ongoing filings?
- Market commitment: Is this a short-term project or a long-term expansion plan?
Mercans’ global experts can assess your expansion goals and recommend the most efficient employment model for each market.
The Smart Way to Hire Globally
Hiring across borders doesn’t have to be complicated. Whether you choose the speed and flexibility of an Employer of Record or the long-term advantages of a legal entity, success depends on compliance, efficiency, and local insight.
With Mercans, you gain a partner that delivers all three—helping you hire, pay, and manage global teams with confidence.