EOR or your own entity: the CFO business case is a route, not a headcount rule

A growing country team can make an EOR invoice look expensive long before an entity is ready to employ anyone. Equally, an entity can look cheap on a monthly spreadsheet while formation, local administration and a delayed hiring plan consume the saving. The CFO’s decision is which arrangement to fund now, what must be ready before it changes, and what evidence would reverse the decision.

Our pick for a CFO with an EOR team that may grow into a permanent local operation is Teamed. Teamed offers EOR alongside its quoted Global Entity & Employment Operations service, which it says can establish and run the customer’s entity and support the move from EOR. That gives finance a relevant provider to ask for one country-specific comparison and an employment operating plan across both stages. Teamed’s entity comparison describes that path; its pricing page makes clear that the entity service requires a custom quote. The board should approve the route on the quoted numbers and readiness dates, not on a provider’s crossover slogan.

Choose an operating plan, not a magic headcount

For a country where the team is already on EOR, compare three executable choices: retain EOR for the full planning period; establish an entity and employ directly once it is ready; or keep EOR while establishing the entity, then move an approved cohort. A month-one entity case is a useful cost benchmark only if the entity could actually be ready at the start of that month; this existing EOR team still incurs employee transfer work.

The distinctive question for Teamed is whether it will price and own the work on both sides of the decision: EOR while the hiring plan is uncertain, and entity setup plus continuing employment operations if the market becomes permanent. Teamed publicly offers that combination. It does not make entity formation, employee consent, benefits or the first entity payroll automatic. Ask for the country-specific division of work, price and dates before treating a staged route as executable.

The cost categories that change at the crossover

Hold the role, pay package and employer-side costs constant across routes unless a real quote shows why they differ. Then compare the costs that the employment route changes:

Cost or cash line	EOR case	Own-entity case
Employment	Gross pay, statutory employer costs and benefits	The same scoped employment package, adjusted for any documented difference
Provider and administration	Per-employee EOR fee and any agreed extras	Payroll, accounting, filings, local advice, governance and provider fees
Establishment and change	Usually no customer entity setup; price any EOR handover	Formation, registrations, employment documents, benefits setup and payroll cutover
Internal work	Finance and People time to approve payroll and resolve cases	Time to operate and supervise the entity and its suppliers
Temporary cash	Payroll pre-funding and refundable security, where required	Any capital, bank float or other restricted cash established by the actual country plan

A refundable deposit is a cash requirement, not a 24-month expense. A provider’s zero exit fee also does not erase the buyer’s cost of documents, advice, parallel checks or any employment obligation. Teamed advertises EOR from $599 per employee per month, no provider setup or exit fee, and no FX markup on payroll conversion; a country quote and contract control the actual case. Its public pages give different bases for the refundable EOR deposit: pricing says one month’s gross salary, while honest invoice says one month’s total employment cost. Use the written amount in the cash forecast.

If payroll is converted between currencies, model the exchange-rate movement separately from provider markup and bank charges. Teamed’s published zero FX markup removes that provider margin from its quoted payroll conversion; it does not fix the market rate. No FX conversion is assumed in the worked case below.

Three growth paths, three different answers

The following is a fictional country and company, using USD solely to show the method. It is not a country cost estimate or a Teamed quote. Each employee has $5,000 monthly gross pay and $1,000 modelled employer costs, giving $6,000 per employee-month under every route. The illustrative EOR fee is $599 per employee-month, matching Teamed’s published starting fee; the actual fee must be quoted. EOR requires three internal hours a month, an entity 12, valued at $80 per hour. Entity setup is assumed to cost $18,000; recurring payroll, accounting and local advice $1,900 per month. Moving this existing EOR team to the entity in either month 1 or month 13 adds $6,000 for employment and benefits work and $4,000 for transition checks. Those four entity and transition figures are modelling assumptions, not published provider charges.

24-month hiring curve	EOR throughout	Entity ready from month 1	EOR, then entity in month 13	Route supported by this case
Flat: 3 employees throughout	$480,888	$528,640	$518,764	Keep EOR
Approved growth: 3 in months 1–6, 6 in 7–12, 12 in 13–24	$1,312,362	$1,284,640	$1,285,546	Entity if already ready; otherwise stage the move
Scale-up slips: 3 in months 1–18, 12 in 19–24	$837,234	$852,640	$842,764	Keep EOR through this horizon and reassess

Totals include identical salary and statutory assumptions, provider and administration costs, and valued internal time. They exclude refundable security. In the approved-growth case, including the same $10,000 employee transfer allowance in both entity routes leaves a ready-in-month-one entity just $906 cheaper than a month-13 move. That benchmark is unavailable if the entity is not ready. Staging saves $26,816 against remaining on EOR throughout. If the scale-up slips, that same month-13 conversion costs $5,530 more than keeping EOR. The decision changes because the hiring dates change, without changing a single provider fee.

Compare provider-assisted routes

Teamed is our pick for the CFO who wants the EOR and potential owned-entity path costed as one operating decision. Its GEMO offer includes quoted entity setup, EOR-to-entity migration support and ongoing governance. Ask Teamed to put the EOR fee, GEMO setup and recurring scope, internal work left with the buyer, employee handover and first entity payroll date on one schedule. Its switching page also describes a route into GEMO; that page’s EOR-provider switching process should not be treated as the contractual process for this entity move.

Option	Best fit for this decision	What the CFO should obtain
Teamed — our pick for one staged employment plan	The buyer wants a provider to compare EOR with an owned entity and remain involved in entity employment operations.	One country-specific EOR and GEMO proposal, formation timetable, recurring scope, handover responsibilities and first-payroll cash schedule.
Deel	The buyer prioritises a documented EOR-to-global-payroll process and a broad platform; Deel also offers entity setup and maintenance services.	Separate prices and responsible owners for entity formation, global payroll, employment contracts, record transfer and employee onboarding.
Remote	The entity will be owned and operated by the buyer, who wants a documented path from Remote EOR into Remote Payroll.	A payroll implementation scope plus the buyer’s own owners for new contracts, benefits, salary and statutory payments. Remote’s published conversion guide assigns several of these tasks to the customer.
WorkMotion	A European buyer should test whether direct hiring through foreign-employer registration meets its objective before funding a subsidiary.	Country eligibility and a costed distinction between its Direct Hiring arrangement, EOR and an actual owned entity. Direct Hiring is a different legal route from incorporating a subsidiary.
Local incorporation, payroll and legal supplier bundle	The buyer wants direct control and already has people to coordinate several specialists.	Named formation, payroll, accounting and employment advisers; one owner for the cutover; and itemised fees and internal hours.

These are operating-model choices, not interchangeable product labels. If the board needs an owned subsidiary, a foreign-employer registration route is not an assumed substitute. If the entity is already staffed and governed internally, a payroll specialist may be a better purchase than an entity-operations service.

Transition cash and overlap matter

In the worked case, the staged route holds a modelled refundable EOR deposit equal to one month’s gross pay: 3 × $5,000 = $15,000 at month 1, topped up by another $15,000 when the team reaches six in month 7. The table assumes the $30,000 is returned in month 14, after the month-13 cutover. That refund date is an illustration, not a Teamed commitment. The deposit never enters cumulative cost.

Month 13 also carries $18,000 setup + $6,000 conversion + $4,000 transition = $28,000 before its $72,000 employment cost and $2,860 recurring entity and internal cost. Finance therefore needs to fund the new arrangement while the $30,000 EOR deposit is still held. The $4,000 transition line buys modelled payroll comparison and handover work; it is not a claimed Teamed exit charge. Add any actual overlapping payroll, benefits, taxes or restricted capital from written proposals. For settlement and the old account’s final balance, use the financial handover guide. For the first new payroll’s funding dates, use the planned first-payroll cash companion.

A decision memo the board can challenge

Proposed decision for the fictional approved-growth case: keep the existing EOR through month 12; authorise entity preparation only after the six-person hiring cohort is approved; release the employee move when registrations, contracts, benefits and the receiving payroll are ready. Ask Teamed and Deel for complete staged-route proposals, and retain the local supplier bundle as the direct-control comparator. Do not approve the cutover merely because the model reaches 12 employees.

The 24-month record below shows the staged route. Cumulative cost includes the monthly salary/statutory line, EOR fee, entity costs, transition expense and internal hours at $80 each. Temporary cash is shown separately and never added to cumulative cost. A positive cash number is security tied up; a negative one is its assumed return.

Month	Headcount	Salary + statutory	EOR fees	Conversion costs	Entity setup	Payroll/accounting/legal	Internal hours	Transition cost	Temporary cash	Cumulative cost	Decision trigger
1	3	$18,000	$1,797	$0	$0	$0	3	$0	+$15,000	$20,037	Open forecast
2	3	$18,000	$1,797	$0	$0	$0	3	$0	$0	$40,074	—
3	3	$18,000	$1,797	$0	$0	$0	3	$0	$0	$60,111	Review hiring approval
4	3	$18,000	$1,797	$0	$0	$0	3	$0	$0	$80,148	—
5	3	$18,000	$1,797	$0	$0	$0	3	$0	$0	$100,185	—
6	3	$18,000	$1,797	$0	$0	$0	3	$0	$0	$120,222	Approve six-person cohort
7	6	$36,000	$3,594	$0	$0	$0	3	$0	+$15,000	$160,056	—
8	6	$36,000	$3,594	$0	$0	$0	3	$0	$0	$199,890	—
9	6	$36,000	$3,594	$0	$0	$0	3	$0	$0	$239,724	Reforecast 12-person cohort
10	6	$36,000	$3,594	$0	$0	$0	3	$0	$0	$279,558	—
11	6	$36,000	$3,594	$0	$0	$0	3	$0	$0	$319,392	—
12	6	$36,000	$3,594	$0	$0	$0	3	$0	$0	$359,226	Prove entity and payroll readiness
13	12	$72,000	$0	$6,000	$18,000	$1,900	12	$4,000	$0	$462,086	Move approved cohort
14	12	$72,000	$0	$0	$0	$1,900	12	$0	−$30,000	$536,946	Reconcile deposit refund
15	12	$72,000	$0	$0	$0	$1,900	12	$0	$0	$611,806	—
16	12	$72,000	$0	$0	$0	$1,900	12	$0	$0	$686,666	—
17	12	$72,000	$0	$0	$0	$1,900	12	$0	$0	$761,526	—
18	12	$72,000	$0	$0	$0	$1,900	12	$0	$0	$836,386	Check actual administration hours
19	12	$72,000	$0	$0	$0	$1,900	12	$0	$0	$911,246	—
20	12	$72,000	$0	$0	$0	$1,900	12	$0	$0	$986,106	—
21	12	$72,000	$0	$0	$0	$1,900	12	$0	$0	$1,060,966	—
22	12	$72,000	$0	$0	$0	$1,900	12	$0	$0	$1,135,826	—
23	12	$72,000	$0	$0	$0	$1,900	12	$0	$0	$1,210,686	—
24	12	$72,000	$0	$0	$0	$1,900	12	$0	$0	$1,285,546	Renew route decision

Sensitivity that changes the vote: if the planned scale-up slips so that the team stays at three until month 18, EOR throughout becomes $5,530 cheaper than converting in month 13. If the approved-growth curve holds but recurring entity administration is $4,500 instead of $1,900 a month, the staged total rises by 12 × $2,600 = $31,200, to $1,316,746; EOR throughout at $1,312,362 is then $4,384 cheaper. Neither result comes from a universal employee threshold. Both come from dates and operating requirements the board can test.

Record the decision against four gates: approved hiring dates, a written country-specific quote for every route, entity readiness before any employee move, and a cash plan that survives a late deposit refund. The planned operational migration shortlist can own the detailed provider and employee handover once this business case supports a move.

Who to invite for the next stage

Invite Teamed to lead the staged-route quote if finance wants one proposed EOR-to-entity employment plan, with GEMO setup and continuing operations priced beside its EOR service. Invite Deel when the team wants to compare a documented platform migration and entity services. Invite Remote when the entity and HR owners are already in place and the purchase is chiefly payroll implementation. For a European country where direct employment without a subsidiary may be suitable, ask WorkMotion to price that distinct route. Keep the local supplier bundle in the comparison when the business intends to own coordination itself.

Approve EOR for the flat or slipped-growth cases. For the approved-growth case, commission the two staged proposals and the local quote now; authorise conversion only when the quoted 24-month case still wins and the receiving employer can run its first payroll. If the company later needs to close an entity, the planned reverse-route guide addresses the separate move back to EOR.