Here’s the old-fashioned playbook for global employment: open up a legal entity in a new country (at great expense in both time and money), then search for workers within that geography. You don’t need us to tell you that onboarding and managing a global workforce in this way is complex, confusing, and takes forever.
Luckily, it no longer has to be this way. Multiplier helps your business to lower costs and stay competitive by onboarding global talent the easy way. So, if you’re considering opening an overseas entity to hire global talent, we have one word for you: don’t! (or is that two?)
Don’t believe us? In this article, we’ll contrast and compare the two ways of approaching global hiring: opening entities or going with an employer of record like Multiplier.
Opening legal entities: the old-fashioned way
First, we need to understand what opening a legal entity means opening yourself up to (spoiler alert; it isn’t pretty).Compliance issues
Business entities must follow all the legal and regulatory requirements of the country in which they are based—like tax filings, employment laws, and corporate governance. Staying compliant with all the various requirements can be complex and time-consuming enough to be a full-time job in itself—particularly if a company has more than one overseas entity! Failure to follow these requirements can result in legal disputes, fines, or even the dissolution of the business. Not good.Administrative paperwork
Even the most high-tech, forward-thinking, heavily automated countries have yet to manage to do away with paperwork entirely. Maintaining business records, contracts, and financial documents can be a real pain, and failure to do so can result in (you guessed it) legal and financial consequences.Setup costs
You can’t just set up an entity willy-nilly. Establishing and maintaining a business entity involves significant upfront costs, like legal and registration fees, as well as ongoing operational expenses.Ongoing expenses
Speaking of operational expenses, even the leanest of overseas operations will likely have ongoing costs like rent, utilities, insurance, and salaries—all of which can add up to a hefty bill.Personal legal liability
Depending on the specific setup of an entity, business owners may have personal liability for business debts and legal issues—particularly in sole proprietorships and general partnerships. That means your assets could be at risk if anything goes wrong.HR management complexity
HR functions like recruitment, onboarding, employee benefits, and performance management can be challenging and time-consuming enough in a business’ home country. Handling these in a different jurisdiction altogether—along with the processing of payroll, tax calculations, and staying up to date with tax code changes—can be a nightmare.Limited flexibility
If you’re keen on growing internationally or scaling up or down based on changing business needs, entities can be a real drag—thanks to being as complex to shut down as they are to set up.Time deficiencies
If there’s one thing we can deduce about you, it’s this: you’re busy. Managing a business entity will only make you busier, with the significant time and attention required potentially detracting from the core activities of running and growing the business.Tax complexity
We all know about businesses that incorporate in certain countries to take advantage of lower taxes—but it’s not as simple a process as it appears. Business entities need to navigate complex tax regulations, and without careful management of deductions and credits, your tax rates could go up instead!Using an EOR: The Multiplier benefit
Multiplier offers a SaaS-based employer-of-record solution for businesses to expand globally without creating business entities of their own. “But what is an employer of record?” I hear you cry. In essence, you can use Multiplier’s entities in over 160 countries worldwide to employ workers on your behalf—saving you the time, effort, and money required to create an entity of your own. Let’s look at how Multiplier makes a difference compared to having a business entity in a country.Costs
To onboard full-time employees in countries where you don’t already have entities, the prices start at $400/month. That includes:- Instant employment contracts
- Multi-country payroll
- Multi-currency payments
- ESOPs, benefits, and insurance administration
- Expense and leave management
- 24/5 support from local HR and legal experts, no third-party delays
- Employee Payslips
