EOR vs PEO vs contractors vs your own entity

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.

	EOR	PEO	Contractor	Your own entity
Who is the legal employer	The EOR	Co-employment with the PEO	Nobody; the person is self-employed	You
Typical use	Employees in countries where you have no entity	HR, payroll and benefits in your home country	Independent project or specialist work	Long-term, larger teams in one country
Local payroll and benefits	Handled by the EOR	Handled with the PEO	Not applicable	You or a payroll provider
Misclassification risk	Low	Low	Higher if the person works like an employee	Low
Setup effort	Low	Low	Lowest	Highest
Best for	International hiring, small teams, market testing	Domestic HR outsourcing	Short-term or independent work	Stable 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.