EOR or PEO: which is right for your US team?
An Employer of Record lets you hire in the US without a US company. A PEO works with your own US entity, so it costs less per employee but you pay to set up and run the entity. See which suits your hiring plans, and when to switch.
Your US hiring plans
Adjust the fees and entity costs
Bookkeeping, year-end accounts and tax returns, business insurance and state filing fees.
Salaries, employer taxes and benefits are the same under both models, so they are left out of the comparison.
Year by year
| Year 1 | Year 2 | Year 3 | Total |
|---|
Fees and costs only. Your team's pay, employer taxes and benefits come on top under either model.
A planning estimate, not a quote. Default fees are based on typical Foothold America pricing for our Employer of Record, PEO+ and US entity services. Other entity costs are an estimate. Your quote may differ depending on your team, your states and your plans.
What is the difference between an EOR and a PEO?
An Employer of Record (EOR) legally employs your US team for you, so you do not need a US entity. A Professional Employer Organisation (PEO) works alongside your own US entity, handling payroll, benefits and HR as a co-employer.
An EOR is the fastest, lowest-commitment way to make your first US hires. Its fee per employee is higher, but there is no company to set up or run. A PEO charges less per employee, but you first need a US entity, which brings setup costs and yearly running costs such as filings, bookkeeping and insurance. Most companies move to their own entity with PEO+ once they have three or more US employees, when the savings clearly outweigh the cost of setting up and running the entity.
At Foothold America, we offer both, plus US entity setup. Many clients start with our Employer of Record service and move to our PEO+ service as their team grows, without a gap in pay or benefits.
Side by side
EOR vs your own entity with a PEO
Both give your US employees compliant payroll and benefits. The difference is who employs them, how fast you can start and what you pay along the way.
What matters
Employer of Record
Own entity + PEO
Do you need a US entity?
Employer of Record
- No, the EOR is the legal employer
Own entity + PEO
- Yes, you set up and run a US company
How fast can you hire?
Employer of Record
- Usually within days
Own entity + PEO
- After entity setup, usually a few weeks
Who employs your team?
Employer of Record
- The EOR employs them for you
Own entity + PEO
- Your US company, with the PEO as co-employer
How the cost works
Employer of Record
- Higher fee per employee, no entity costs
Own entity + PEO
- Lower fee per employee, plus entity costs
Best for
Employer of Record
- Testing the market and your first few hires
Own entity + PEO
- Growing teams and long-term US plans
One partner, both routes
We do both EOR and PEO+, so you never have to start again.
Employer of Record
Hire in the US without setting up a US company. We become the legal employer and take care of payroll, taxes, benefits and compliance for your team.
- No US entity needed
- A fast way to make your first US hires
- Simple to exit if your plans change
PEO+ Cross-Border Support
For companies with their own US entity. You get everything a PEO offers, plus the cross-border support international companies need. If you do not have an entity yet, we set it up for you.
- Payroll, benefits and HR for your US entity
- US entity setup if you need it
- Lower costs as your team grows
Many clients start with our Employer of Record service, then set up their entity and move to PEO+ as their team grows. Because we run both, we plan the move with you so your team’s pay and benefits carry on without a gap.
When to switch
Six signs it is time to move from an EOR to a PEO.
Your US team is growing
Once you have three or more US employees, your own entity with PEO+ usually saves you money.
You sell as a US company
Some customers want contracts and invoices from a US company. That needs your own entity.
You need a US bank account
A US business bank account is opened in the name of a US entity.
You are raising US investment
US investors usually expect to invest in a US company.
You import or hold stock
Importing goods or holding inventory in the US is simpler with your own entity.
You are in the US for the long term
Leases, partnerships and a lasting US presence all point to your own entity.
Free guides to EOR, PEO and US entities
Employer of Record vs PEO Guide
Employer of Record, PEO+ or your own US entity, compared on who carries the entity, the liability and the cost.
Navigating EOR to PEO
Your EOR was the right call when you started. Once you have a US entity, the model often becomes a constraint rather than a convenience. Learn the 6 signs your operation has outgrown its EOR, and what changes when you switch. Download now!
Navigating PEO Selection
Choosing a PEO partner is a long-term decision that touches every payroll, benefit, and compliance filing. Learn the 10 critical factors that separate a great PEO from an expensive mistake, and find the right partner for your US team. Download now!
Navigating US Company Registration
Your EOR was the right call when you started. Once you have a US entity, the model often becomes a constraint rather than a convenience. Learn the 6 signs your operation has outgrown its EOR, and what changes when you switch. Download now!
Not sure which route fits?
EOR, PEO or your own entity is rarely a one-off choice. We will help you pick the right route today, and plan when to change it.
Laurie Spicer
Director of US Expansion. UK based.
What to expect on the call
- No sales pitch, just an honest read on your plans
- A cost comparison for your team and states
- A clear plan for when to move from EOR to PEO
- Come as you are, no prep needed
Book a call with Laurie
EOR vs PEO: FAQs
Straight answers about choosing how to employ your US team.
An Employer of Record legally employs your US staff for you, so you do not need a US entity. A PEO works with your own US entity as a co-employer, running payroll, benefits and HR.
Yes. A PEO works alongside your own US company. If you do not have one yet, we can set it up for you.
EOR fees in the US usually run from $400 to $1,000 per employee per month, on top of salary, employer taxes and benefits. Ask us for a quote for your team.
Typical US PEO admin fees run from about $40 to $160 per employee per month, according to ADP. Our PEO+ service adds cross-border support for international companies, and the fee per employee falls as your team grows. You also pay to set up and run your US entity, and we can do both for you.
Usually once your US team reaches three or more people, or sooner if you need a US company to sell, open a bank account or raise investment. The calculator shows the best switch point for your plans.
Yes. We plan the move with you so your team’s pay and benefits carry on without a gap.
Yes. We offer our Employer of Record service, our PEO+ service for companies with a US entity, and US entity setup. You can start with one and move to another as you grow.
Hiring in the US? Choose the right route from day one.
Tell us your plans and we will show you whether an EOR, a PEO or your own entity fits best, and when that might change.
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