There are four common ways to employ or engage people. The right one depends on where the person lives, how long you will work with them, and how many people you plan to hire there.

EORPEOContractorYour own entity
Who is the legal employerThe EORCo-employment with the PEONobody; the person is self-employedYou
Typical useEmployees in countries where you have no entityHR, payroll and benefits in your home countryIndependent project or specialist workLong-term, larger teams in one country
Local payroll and benefitsHandled by the EORHandled with the PEONot applicableYou or a payroll provider
Misclassification riskLowLowHigher if the person works like an employeeLow
Setup effortLowLowLowestHighest
Best forInternational hiring, small teams, market testingDomestic HR outsourcingShort-term or independent workStable headcount in a country

EOR vs PEO

An EOR is built for hiring across borders, while a PEO mainly serves companies employing people in their home market through a co-employment arrangement. If your team is in one country and you want help with benefits and HR admin, a PEO may fit. If you want to hire in another country without a local company, you need an EOR.

EOR vs contractors

Contractors invoice you as independent businesses and manage their own taxes and benefits. An EOR employs people locally with payroll, contracts and benefits. If someone works set hours, under your direction, for a long period, an EOR can reduce misclassification risk. Read our full guide on EOR vs contractors to decide which model fits.

EOR vs your own entity

Opening your own entity gives you full control, but it takes time and money for registration, accounting, payroll and legal support in each country. An EOR lets you start sooner with lower upfront cost. Many teams switch to their own entity once they have enough people in a country.

Rules differ by country, so take local legal or tax advice before you decide.

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