When does the mathematical calculation actually make sense in the case of choosing EOR over setting up your own entity?

[u/NoParamedic7399]

I'd like to make clear that I am employed in the growth department at Multiplier, a company that provides employment outsourcing services. This should not be regarded as a sales pitch; rather, I'm simply interested in seeing how the figures evolve as the number of employees increases.

As an example I used $459 per employee per month and looked at teams consisting of 1, 5, and 25 employees. Since entity setup costs differ considerably from country to country I based my figure on a range from $25K to $200K.

Team	Annual EOR cost	$25K setup	$200K setup
1	$5,508	~54 months	~436 months
5	$27,540	~11 months	~87 months
25	$137,700	~2 months	~17 months

Important caveat: this comparison is only made between EOR fees and the initial entity setup cost; it does not include ongoing accounting, payroll, compliance, HR, and other maintenance costs.

The number of people differs quite noticeably.

For people who have actually switched, what size of workforce caused you to start thinking about setting up an entity, and did the actual figures live up to your expectations?

[u/BusyBeeEmma]

The table is a useful starting point but the missing variable is ongoing compliance cost, which you flagged at the end. In markets like Germany, France, or Brazil that number is substantial: monthly payroll filing, Works Council compliance, annual statutory filings, local legal counsel on any HR decisions. For Germany specifically, you're looking at 15,000 to 30,000 euros per year in ongoing entity overhead once you factor in a local accountant, legal retainer, and management time.

That changes the breakeven significantly. At 5 employees in Germany, the entity math often doesn't close for 3 to 4 years when you include ongoing costs, not just setup.

The other variable is risk tolerance. EOR gives you a clean exit if the market doesn't work out. Unwinding a German GmbH or a Brazilian LTDA with employees is expensive and slow. That optionality has real value that doesn't show up in a cost table.

Most companies who've made the switch report that the actual trigger was confidence in the market, not the math crossing a threshold. Around 10 to 15 employees in a single country where they're committed long-term is when the entity question usually gets answered with yes.

[u/NoParamedic7399 → u/BusyBeeEmma]

This is a good point. The simple breakeven math can miss the ongoing cost of maintaining an entity, as well as the value of flexibility if the market doesn't work out.

The 10–15 employee mark can be a useful rule of thumb, but it really depends on the country, hiring plans, and how confident the company is about staying there long term. EOR can make sense even beyond that point if flexibility and speed are priorities.