EOR vs PEO: which one do you actually need?
They sound similar and the marketing pages blur the line on purpose. Here's the clear difference, when each one tends to win, and what they typically cost.
Employer of Record (EOR)
An EOR is a third-party company that legally employs your worker in a country where you have no entity. They run payroll, file taxes, and carry compliance risk under their own local tax ID. You direct the work; they're on the legal hook.
- No entity required
- Global, typically 80–150+ countries
- Onboarding in 1–5 days
- Per-employee fee ($199–$699/mo)
Professional Employer Organization (PEO)
A PEO is a co-employer: you already have a local entity and the PEO takes over HR admin, payroll, and benefits under a shared employer relationship. Almost entirely a US construct; "international PEO" is usually just EOR rebranded.
- Requires you to have a local entity
- Cheaper per-employee fee
- Access to group health & 401k rates
- US-centric, limited international reach
- EOR
- EOR is the legal employer in-country
- PEO
- Co-employment, you remain the legal employer
- EOR
- No
- PEO
- Yes (you must already have one)
- EOR
- Hiring abroad with no entity
- PEO
- Reducing HR admin in countries where you already operate
- EOR
- $199–$699 per employee / month
- PEO
- $50–$200 per employee / month (entity costs are on top)
- EOR
- Global, 80–150+ countries
- PEO
- Mostly US (true international PEOs are rare)
- EOR
- 1–5 business days
- PEO
- Weeks (after entity setup)
- EOR
- Sits with the EOR
- PEO
- Shared with you
- EOR
- Local statutory + supplemental
- PEO
- Group-rate US benefits (health, 401k)
| Dimension | EOR | PEO |
|---|---|---|
| Legal employer | EOR is the legal employer in-country | Co-employment, you remain the legal employer |
| Needs a local entity? | No | Yes (you must already have one) |
| Best for | Hiring abroad with no entity | Reducing HR admin in countries where you already operate |
| Typical cost | $199–$699 per employee / month | $50–$200 per employee / month (entity costs are on top) |
| Geographic scope | Global, 80–150+ countries | Mostly US (true international PEOs are rare) |
| Setup time | 1–5 business days | Weeks (after entity setup) |
| Compliance liability | Sits with the EOR | Shared with you |
| Benefits administration | Local statutory + supplemental | Group-rate US benefits (health, 401k) |
Quick decision rule
- • No entity in the country? You need an EOR. A PEO can't legally employ for you.
- • US entity, want cheaper benefits and HR admin? A PEO fits.
- • Hiring 15+ people in one country and already on an EOR? Run the math on opening an entity, see our EOR vs Entity calculator.
- • Comparing EOR providers? Check live EOR pricing across vendors.
FAQ
An Employer of Record (EOR) is the legal employer of your worker in a country where you don't have an entity; they handle payroll, taxes, benefits and compliance under their own tax ID. A Professional Employer Organization (PEO) is a co-employer that shares responsibility with you and requires you to already have a legal entity in the country (PEOs are almost exclusively a US arrangement).
Not really. PEOs operate under a co-employment model that requires a registered entity in each jurisdiction. To hire abroad without setting up an entity, you need an EOR.
Per-employee EOR fees ($199–$699/month) are usually higher than PEO admin fees ($50–$200/month per employee), but a PEO requires you to already run a local entity, which typically costs on the order of $15k–$50k/year per country in compliance and accounting (varies widely by jurisdiction). For 1–20 hires in a country, the EOR usually has the lower modelled monthly cost once entity overhead is included.
The switch from EOR to your own entity typically pays off at ~5–15 employees per country (cheap-entity markets like the UK, Netherlands, Singapore flip at the low end; expensive ones like Brazil, India, Germany at the high end). A US-domestic PEO is a different question: PEOs replace HR admin, not the legal entity, so the economics turn on payroll fees rather than entity break-even. Our EOR vs Entity calculator shows the exact per-country break-even.