KEY TAKEAWAYS
- You don’t always need a legal entity to expand abroad - Businesses can enter new markets, hire talent, and test opportunities without opening a subsidiary or branch.
- Employer of Record (EOR) is the game-changer - An EOR becomes the legal employer on paper, handling compliance, payroll, and taxes, while you keep control of daily work and operations.
- Benefits of EORs include speed, cost savings, flexibility, and lower risk - Companies can onboard staff in weeks, avoid upfront entity setup costs, and scale teams up or down easily.
- EORs reduce compliance headaches - They handle local labour laws, tax obligations, and data protection, preventing costly mistakes in foreign jurisdictions.
- Best suited for market testing, global hiring, and short-term projects - EORs make sense when you want agility without long-term commitments.
- Choosing the right EOR matters - Look for global coverage, proven compliance, transparent pricing, reliable tech, and strong client feedback.
- Key considerations still apply - Monitor permanent establishment risks, protect intellectual property, structure contracts carefully, and plan your exit strategy.
- Proven by real-world use - Startups, consulting firms, e-commerce players, and manufacturers already use this model to grow internationally without heavy legal admin.
Introduction
The World Bank says that on average, setting up a company abroad takes about 20 days and costs nearly a quarter of the average income in that country. For businesses in the UK looking to expand, that’s already a big challenge. But in reality, the time and money needed don’t stop there. You also face legal paperwork, compliance checks, and ongoing admin tasks that take up resources.
For years, the only way that you could expand overseas was through setting up a subsidiary or local office. It worked previously, yet it is often too expensive and slow today. Nowadays, markets change quickly. And in this scenario, businesses need faster movement. Thus more companies investigate options, grow across borders, and avoid registering a complete business locally everywhere.
The good news is, you can build up a presence within a market, hire some staff, and serve more customers through working alongside specialist partners, but without facing endless amounts of local paperwork. Teamed Global is one provider that helps companies do exactly that.
In this article, let’s get into how businesses can expand overseas without the headache of creating a legal entity.
What Does It Mean to Relocate a Business Without a Legal Entity?
To relocate without setting up a legal entity simply means you don’t create a branch, subsidiary, or representative office in the new country. Instead, you keep your company structure at home and operate abroad using different methods. This might include working with contractors, teaming up with local providers, or using employment solutions like an Employer of Record.
It’s worth pointing out how this differs from other approaches. Traditional foreign expansion usually involves registering a permanent office or even acquiring another company. Decentralisation, on the other hand, spreads out decision-making but doesn’t change the legal setup. Running without a legal entity is a more flexible option in the middle. It allows you to test the waters without making a long-term commitment.
A legal entity is simply a structure recognised by law, it has its own rights and responsibilities, separate from its owners. Most countries require foreign firms to set up such entities if they’re doing a significant amount of business locally. That’s how governments make sure taxes are paid and laws are followed.
The OECD’s Model Tax Convention explains when business activities cross the line and require a permanent presence.
But here’s the key: not all activities fall into that category. You may operate efficiently remaining under those limits. Set up the right structure in order to do so.
How Can You Operate Internationally Without Registering a Legal Entity?
In this section we will get a detailed answer to this commonly asked question!
What is an Employer of Record (EOR) and how does it work?
An EOR is a company that becomes the official employer of your staff in another country. The EOR handles all the legal work, payroll, taxes, benefits, as well as following local labour laws on paper. But in practice, you still manage all of the employees’ work, you set all goals, and you run all operations.
Think of the EOR as a shield. They deal with local compliance and act as the legal employer, while you stay focused on your business. This setup avoids the need to create a new local entity.
What are the benefits of using an EOR for business relocation?
There are many benefits of using an EOR for this business relocation purpose:
- Speed: You can get people working within weeks, instead of waiting months for approvals.
- Lower cost: You don’t have to spend money on setting up and maintaining an entity.
- Reduced risk: The EOR carries the legal responsibility for employment.
- Flexibility: It’s easy to scale teams up or down when things change.
What global compliance challenges does an EOR help you avoid?
Expanding into multiple countries brings a lot of rules, and every country is different. Here’s where an EOR steps in:
- Employment laws: Contracts, working hours, holidays, and termination rules differ everywhere. The EOR knows them all and keeps you compliant.
- Taxes: Payroll and social security contributions can create risks if handled poorly. EY research shows that even remote work can trigger tax obligations in a country. An EOR makes sure this doesn’t happen.
- Data protection: Laws like GDPR are strict about employee information. EORs usually have systems already in place to handle this properly.
When Does Using an EOR Make Strategic Sense?
EORs aren’t for every situation. But they’re ideal when:
- You want to test a market before investing fully.
- You need to hire talent worldwide without opening local offices.
- You’re running a short-term project that doesn’t justify full setup.
- The country has uncertain or complex laws.
- You don’t have in-house legal or HR experts.
- You want to save cash by avoiding high upfront costs.
How Do You Choose the Right EOR for International Relocation?
Choosing the right partner is critical. Here’s what to look for:
- Coverage: Do they offer support for all of the countries that you plan to expand in?
- Technology: Are payroll as well as HR systems truly reliable? Also, are these systems easy to use?
- Compliance: Do they have a good track record of following rules?
- Service agreements: Are responsibilities and timelines clear?
- Flexibility: Can they change as your business grows?
- Transparent pricing: Is there upfront clarity present for all costs.
- Client feedback: Can they provide references from similar businesses?
What Are the Key Considerations Before Operating Without a Legal Entity?
Here are some major considerations that you have to be very mindful of when operating without a legal entity.
- Permanent establishment thresholds: Track your activity levels so you don’t accidentally trigger local entity requirements.
- Contracts: Write agreements carefully to avoid worker misclassification. The IRS guidance is a helpful resource here.
- Intellectual property: Make sure your IP is protected across borders.
- Customer management: Plan how contracts and disputes will be handled if you’re operating through an EOR.
- Exit strategy: Create a plan beforehand regarding how you’ll leave a market or shift in complex circumstances.
- Insurance: Cover risks like liability, employment issues, and cross-border operations.
- Financial reporting: Get systems to consolidate accounts from different countries.
What Are Real-World Examples of Companies Operating Internationally Without a Legal Entity?
Plenty of businesses are already using this approach. Some examples:
- Tech startups: Many hire developers in Eastern Europe or Asia using EORs. This lets them grow quickly without wasting time on legal setups.
- Consulting firms: These companies often need short-term teams in new markets. EORs let them hire quickly without a full office.
- E-commerce and digital marketing companies: They often need local specialists for campaigns or customer service. Teamed Global’s client portfolio shows how this works in practice.
- Manufacturers: Some hire local inspectors or logistics staff through EORs instead of opening subsidiaries.
So Can Your Business Really Relocate Without a Local Legal Entity?
Well, you can and many other companies just like yours are already doing it. You just have to be with the right partner and have a clear plan to follow. Basically, using an Employer of Record, contractors and getting into strategic partnerships, companies can expand quite easily. The best part remains that these options reduce the risks, saves time and gives you an opportunity as well.
At Teamed Global, we help businesses get into the new markets easily and safely. If speed, flexibility, and cost savings are priorities for your company, this model is definitely worth considering.
FAQs
1. How do you move your business to a different country?
You can relocate your business by setting up a local entity, partnering with a global Employer of Record (EOR), or using international PEO services. EORs allow you to hire, pay, and manage employees abroad without opening a foreign subsidiary.
2. What is it called when you move your business to another country?
This process is often called business relocation or global expansion. When done without setting up a local company, it’s known as hiring through an Employer of Record or using international expansion services.
3. Can you own a business in a country you don’t live in?
Yes, in many cases. You can either register a legal entity abroad or use an EOR solution to operate without establishing a local company. An EOR handles payroll, compliance, and employment law while you focus on business growth.
4. Can an LLC do business internationally?
Yes, an LLC can operate internationally. However, running global operations directly can require navigating complex compliance rules. Many LLCs use an EOR to legally hire international employees without creating multiple foreign entities.
5. What are the benefits of relocating without a local legal entity?
Using an EOR or global PEO service saves time, lowers costs, ensures compliance with local labor laws, and allows you to expand into new markets quickly without the burden of setting up a subsidiary.
6. What challenges come with international business relocation?
Key challenges include tax compliance, labor law differences, payroll management, and cultural integration. Partnering with an EOR helps mitigate these risks and streamlines global onboarding.
