Organization setup or EOR? 8 takeaways from GP experts

Expanding globally has evolved from a discretionary choice to a critical strategic imperative for forward-thinking businesses. While there are numerous advantages for global entrants, decisions made in the early stages of global expansion can often shape the trajectory of the entire venture.

Catherine Barnes, senior employment consulting manager at GP, recently sat down with Thomas Merchant, host of GP’s “Pangeo Perspectives: Your Guide to Global Growth” podcast, to discuss the first and most important decision on every expansion journey: companies must sign. Along with the Employer of Record (EOR). Organization or partner set up? Let us know some important points of their discussion.

Suppose a company is convinced of its long-term commitment to a particular market and decides to set up its own organization. Barnes explained that “it takes a lot of people in a company to set up in a new country because there are a lot of stakeholders who really need to understand what’s required in that new country. You’re talking tax, you’re talking payroll, you’re talking legal, you’re talking operations … so there are multiple stakeholders that need to be engaged.”

It is possible that companies must have a domestic director on the ground, and to throw an extra spanner into the mix, some nations, such as Greece, require your domestic director to be a national citizen. Burns noted that meeting this requirement can be extremely difficult for many companies: “Certainly when you’re starting out in a country you want to hire one or two, just to see if you’ve got the market, it’s impossible for those types. business So that’s where an EOR comes into the mix.”

In some countries it can take more than 12 months to set up an association. This can be detrimental to many companies because speed to market is critical to building brand awareness and building the foundation for long-term growth. A 12-month slog through bureaucratic red tape can drain time and vital resources.

This is where the partnership with the Employer of Record is made. An EOR provider has already done the legwork and is familiar with the local landscape, gaining exceptional expertise through experience. An EOR partner with GP’s longevity and quality, for example, can enable a company to start operating in a new market within minutes — regardless of existing status.

When navigating the costs of incorporation, companies need to have a solid idea of ​​its business purpose as well as other licensing requirements. Otherwise, any discrepancies in the application documents may lead to additional scrutiny from the local government.

“Government has a huge reserve of powers. They can fine you, they can bar you from doing business, they can bar you from hiring, they can do all kinds of things to satisfy them that what you’re doing is legally compatible in their country,” Barnes noted.

Compliance can make or break your international efforts, which is why EOR is such an attractive option. When partnering with an EOR provider, they assume all the risks associated with local compliance, freeing the parent company from complex regulatory tasks and, subsequently, the financial implications that come with them.

Some countries have challenging compliance landscapes. For example, from a regulatory standpoint, China is highly complex and unique. Therefore, it is not unusual for a company to have seven or eight subsidiaries due to the regulatory requirements of different provinces in China.

Government oversight also makes protecting intellectual property difficult. India has extensive labor laws and tax regulations. And while the US is generally considered business-friendly, companies should remember that there are 50 states in the country, and each has specific levels of protection and legal requirements.

However, when partnering with an EOR, companies are freed from having to worry about complex regulatory tasks.

“I would never ask a company to underestimate corporate fees [of entity setup]” Barnes began. “When you’re not actually paying for things ─ a dollar amount or a pound amount or a euro amount ─ the time it takes for your internal staff members to try and figure out because they’re not doing what they need to do at their desks, what they’re assigned to do every day. . They are trying to do this [entity setup] Work as well [on a daily basis].”

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