Employers of Record for Startups

You’ve found the right candidates, but they’re based in Berlin, São Paulo, or Manila. Setting up an entity to hire them is slow, expensive, and distracts from product, sales, and growth. But hiring them as a contractor could expose you to misclassification risks.

An EOR offers a simpler path. It lets you hire full-time talent abroad—legally, quickly, and without setting up a company in every country. They handle the contracts, payroll, and compliance.

For startups, this means you get a full-time employee experience, without the complexity of becoming a legal employer in every country.

If global hiring is on your roadmap, and you need to move fast without cutting corners, it’s worth understanding how EORs work and when they make sense. Let’s break it down.

Read more on how an Employer of Record works.

Why Startups Choose EORs

Hiring across borders sounds exciting, until you hit legal, payroll, and setup roadblocks.

An EOR helps you go global without legal and financial drag. 

1. Avoids $20K–$100K in setup costs

Opening a legal entity abroad often costs between $20K and $100K or more, depending on the country you want to operate in. You’ll pay for incorporation, legal counsel, payroll setup, bank accounts, and more before hiring even begins.

With an EOR, you skip all that. Instead of upfront costs, you pay a monthly fee per employee, or a percentage of their salary, depending on the EOR you choose.

2. Skip entity setup and hire in days

Setting up a legal entity abroad can take 3–6 months and cost tens of thousands. For startups with limited headcount and lean operations, that’s too slow and too expensive, especially if you just want to hire 1–3 people in a new market.

An EOR removes that barrier. It lets you legally hire and onboard in days, using the EOR’s existing infrastructure. 

3. Access global talent, instantly 

Great talent isn’t always in your HQ’s time zone. Your ideal engineer might be in Manila, not Mountain View. But waiting 3 months for entity setup means losing them to another startup that moves faster. 

EORs let you hire the best person wherever they live, without waiting to “set up shop” in that country.

4. Offload compliance and HR admin

Global hiring introduces complex layers of compliance:

• Local labor laws
• Statutory benefits
• Payroll tax withholding
• Termination rules
• Country-specific holidays, bonuses, and reporting requirements

For a startup, managing this in-house for multiple countries is not just time-consuming, it’s risky. An EOR absorbs these complexities. They draft contracts, manage localized payroll and tax filings, administer benefits, and stay current with legal changes in each jurisdiction.

This reduces the risk of errors, and lets you focus on scaling, not chasing foreign labor law updates. This also translates to lower legal and admin spend and reduced risk of costly mistakes.

5. Scale without structural commitment

Startups thrive on speed and iteration. But forming an entity to hire 2 people in Mexico? That’s a CFO’s nightmare if the market flops.

EORs give you flexibility: spin up a team fast, validate traction, pivot if needed. No local infrastructure to shut down. No payroll systems to unwind.

6. Reduce risk while moving fast

Hiring someone as a “contractor” can lead to misclassification issues, especially if those individuals are working full-time, under your direction, and with set hours. 

EORs eliminate that risk. Your hire is legally employed, classified correctly, and covered under all relevant protections. 

7. Keep your team focused

Every hour spent setting up entities, handling local HR rules, or chasing international payroll issues is time your leadership team isn’t spending on product, customers, or go-to-market execution.

EORs act as operational infrastructure, handling everything from onboarding paperwork to benefits administration, so your core team stays lean and focused.

This is why many post-Series A or Series B startups build their first international teams through EORs while keeping internal headcount low.

Also Read: Top 5 Hacks to Hiring & Managing Talent Abroad.

Global Hiring: EOR vs Entity vs Contractor

While EORs are often the best choice for startups, they’re not the only path.

There are two more ways you can hire internationally: setting up a local entity, or hiring independent contractors.

Each of them have tradeoffs, and picking the wrong approach can cost time, money, or legal exposure.

Here’s how they compare and when each makes sense:

Approach	Setup time	Compliance risk	Control over contracts & HR	Cost	Best for
EOR	Days	Low	Moderate (shared HR ownership)	Moderate (per employee fee)	Small teams(1-5 hires), fast expansion, market testing
Local Entity	Months	Low (but your risk)	Full	High (setup + admin)	Long-term, a large headcount in one country(10+)
Contractor	Hours	High	Low (can’t direct like employees)	Low (until misclassification happens)	Freelancers, short-term, non-core roles

Key Differences Between EOR, Entity, and Contractor Hiring Models

Takeaway:

• EOR = Fast and compliant, with shared HR control
• Entity = Full control, but slow and expensive
• Contractor = Fast and cheap, but risky if misclassified

An EOR avoids that. It hires the person legally in-country, provides full employment protections, and ensures you’re compliant from day one.

What an EOR Can Do vs. Can’t Do

Here’s an easy, one-on-one comparison:

EOR Can	EOR Can’t
Draft compliant, country-specific contracts	Let you override local policies on leave or termination
Run local payroll and remits taxes	Integrate with your internal HR tools or workflows
Administer mandatory benefits like insurance and pension	Handle cultural onboarding or team-building
Manage compliant terminations and severance	Support contractor hiring (unless bundled with the platform)
Provide HR portals and local employee support	Offer cost efficiency at scale (10+ hires in one country)
Advise on visas and work permits (where applicable)	Guarantee legal coverage in every country
Track local labor laws and adjusts employment terms	Ensure employees feel fully connected to your brand without your effort

Features and Limitations of an Employer of Record (EOR)

Thinking about hiring in a new country? Use this market research guide to validate where and how to start conducting effective market research for international hiring.

Core Services EORs Handle (So You Don’t Have To)

When you hire startup employees through an EOR, you’re delegating legal responsibility. The EOR becomes the employer of your employee in the eyes of the law, and that comes with a specific set of deliverables.

Payroll and taxes

EORs run local payroll in your employee’s currency, calculate taxes, and ensure everything’s filed correctly. They cover:

• Tax withholdings and employer contributions
• Social security, pension, unemployment insurance
• On-time, compliant payments based on local regulations

Benefits administration

EORs provide and manage access to mandatory and supplementary benefits, health insurance, retirement plans, paid leave, 13th-month bonuses (if required), and more. 

Examples:

• France: Paid vacation + private healthcare
• Brazil: Meal vouchers + transport stipends

They localize benefits packages so your hires get what they’re legally entitled to and what’s competitive in that market.

Also Read: Why Hire Remote Workers?

Employment contracts and local compliance

The EOR drafts compliant employment agreements based on the laws of the employee’s country, covering notice periods, probation, working hours, and severance terms. They update these contracts as laws change and store them per local retention rules.

Onboarding and documentation

From employment eligibility verification to statutory registrations (with social security or tax authorities), the EOR handles all first-day paperwork. They also ensure the employee is enrolled in payroll and benefits systems with minimal friction.

Employee termination

If an employee needs to be let go, the EOR ensures the process aligns with local labor laws, handling notice periods, severance calculations, final payouts, and paperwork. They shield you from wrongful termination claims or severance miscalculations.

Ongoing HR support and systems

Most EORs offer a dashboard or portal where employees can view pay slips, manage leave, and access benefits information. They also provide a point of contact for routine HR issues like sick leave policies, documentation questions, or holiday pay.

For your startup, this reduces the burden on internal ops and HR teams.

Visa and work permits

Some EORs support visa sponsorship or relocation, though this varies by provider and country. In many cases, EORs can advise on whether a local work permit is needed and what the viable path is.

EOR and Startup Culture: Can They Coexist?

Short answer: Yes.

Hiring through an EOR doesn’t mean compromising on culture. But you do have to be intentional.

Set expectations early

What your employees see: They’re doing the job, attending meetings, and talking to your managers..

What’s actually happening: Their paycheck, contract, and HR support come from a third party (the EOR).

That disconnect can create confusion unless you manage it head-on.

You have to do your part in communicating this to your EOR hires. 

Say this on Day 1:

“You’ll be legally employed by our EOR partner for compliance reasons, but you’re part of our team like anyone else.”

This framing removes uncertainty while reinforcing belonging.

Build inclusion across borders

Culture doesn’t come from tax forms. It comes from communication, structure, and rituals. Make sure EOR teammates:

• Join the same Slack/Teams channels
• Attend the company all-hands, standups, and retros
• Show up in team KPIs, wins, and celebrations
• Get the same equipment and onboarding experience as local employees

As you scale, invest in async-friendly policies, virtual offsites, and manager training for remote leadership.

Address common concerns about EOR status proactively 

Some employees may wonder:

• Am I really part of the company if I’m employed by someone else?
• Will this affect my benefits or job security?

Reassure them that employment via an EOR is standard for global startups, and they’ll receive full legal protections and benefits in their country, often with better HR access than contractors ever would. Plus, their work, recognition, and growth opportunities are no different.

Improve employee experience

Make sure to partner with EORs that offer country-specific benefits, local-language HR support, and smooth onboarding. 

In many cases, that’s a better employee experience than a startup trying to patch together local support on its own.

5 Best EOR Providers for Startups in 2025

Choosing an EOR is like choosing a co-founder for global hiring. Here are five EORs that early-stage and scaling startups trust, with details on how they differ in pricing, coverage, support, and product experience.

#1 Tarmack

Built from the ground up for fast-moving startups, Tarmack combines fast onboarding with end-to-end compliance coverage, startup-savvy support, and flat, transparent pricing. 

Key features:

• Flat pricing ($199/per employee/month)
• Fast, guided onboarding
• 150+ countries supported
• Direct access to hiring/compliance experts
• Strong legal documentation and IP protection
• No lock-in: No minimums or long-term contracts
• Lightweight UI that plays well with your stack
  

Best for: Seed to Series B startups hiring their first few international employees across multiple countries.

Explore Tarmack pricing in detail

2. Deel

From contractors to full-time hires to equity, Deel’s platform handles it all. Ideal for startups managing multiple entity types.

Key features:

• Covers 100+ countries
• Unified dashboard for all employee types
• Deep integrations with HR/payroll tools
• Stock options, visa support, and equipment provisioning
• 24/7 customer support

Best for: Series A+ startups scaling fast across regions

3. Remote.com

Remote positions itself as the most legally robust option in the market. It owns its own entities, no third-party partners, which means better consistency and control over compliance and IP.

Key features:

• Owned infrastructure (no third-party partner entities)
• Strong local benefits and equity support
• Built-in IP protection agreements
• Transparent pricing (starts at $599/employee/month)
• GDPR and SOC 2 compliant

Best for: Startups hiring engineers, PMs, or any IP-sensitive roles globally.

4. HireBorderless

HireBorderless is a newer player, focusing on affordability and speed for startups hiring in less common markets. Their platform uses AI to recommend countries, generate compliant contracts, and flag risks in real time. 

Key features:

• Affordable EOR pricing
• AI-assisted onboarding and compliance checks
• Fast document turnaround times
• Optional immigration and visa services

Best for: Startups testing hires in LATAM, Africa, SE Asia, or Eastern Europe

5. Engage Anywhere

Engage Anywhere takes a boutique approach to global hiring. Rather than offering a massive self-serve platform, they assign account managers to help you through the process, from offer letter to day-one onboarding.

Key features:

• Dedicated account manager
• Custom onboarding support
• Easy-to-navigate platform
• Hands-on documentation and compliance help
• Flexible pricing options

Best for: First-time global employers who want close, step-by-step support

Not Sure Yet? Start Small

You don’t need to overhaul your hiring strategy overnight. Many startups begin with:

• Hiring 1–2 team members in a test market
• Using an EOR for support roles or local customer success
• Trying an EOR for a 6–12 month pilot before entity setup

With providers like Tarmack, you can scale up or step back anytime, with no lock-ins.
Learn more about Tarmack’s global hiring solutions.