When do you graduate from an EOR to your own Australia entity?

The calculation below uses AUD 920 as the illustrative AUD equivalent of the Teamed fee. This is illustrative, not a fixed AUD price. The actual AUD amount depends on the exchange rate at the time of invoice. Teamed charges from $599 USD with zero FX mark-up.

All entity cost figures in this table are typical ranges. They cover outsourced payroll, bookkeeping, ASIC filings, superannuation administration, HR advisory, and workers' compensation insurance for a small Australian Pty Ltd. They are illustrative, not law figures. Actual costs vary with the complexity of your structure and the states your employees work in.

State payroll tax shifts the crossover earlier for businesses in New South Wales, Victoria, or Queensland. Each of those states has an annual wages threshold. Once you cross it, payroll tax is charged at 4.75% to 5.45% on wages above the threshold. Very large employers in Victoria and Queensland pay surcharges on top. An EOR carries that obligation on its own entity. You do not. That benefit disappears the moment you set up your own entity and the threshold is crossed.

Superannuation Guarantee at 12% applies on both sides of the comparison. Annual leave of 4 weeks a year also applies on both sides. Neither changes the crossover calculation because they are symmetrical. Run the Crossover Calculator with your own headcount.

1. Calculate the EOR cost

   Multiply the Teamed fee (from $599 USD) by your planned Australian headcount. This is the variable cost. It grows as you hire.

2. Estimate the entity fixed overhead

   Typically AUD 4,500 to 6,500 per month for a small Pty Ltd. This covers payroll bureau, bookkeeping, BAS filings, superannuation administration, HR advisory, and workers' compensation insurance. Add state payroll tax on the entity side only once your own wages bill crosses the relevant state threshold; on EOR it applies from the first hire.

3. Find your crossover point

   The crossover is where EOR monthly cost equals entity monthly overhead. There is no fixed headcount for this: it moves with the per-employee EOR fee, the quote to set up and run your own entity, and how fast you are growing. Use the Crossover Calculator for your own numbers.

4. Factor in non-financial triggers

   The maths gives you a crossover point. Employee Share Scheme eligibility, Australian substance requirements, and government contract expectations are separate questions that may override the cost crossover in either direction.

5. Plan the graduation date

   Allow time to register the company and then to reach a first payroll on your own entity, shown as market estimates in the setup cost section. Multi-state workers' compensation registration typically takes longer than the ASIC incorporation itself. Start the GEMO process while EOR continues running.

These are typical ranges. They are not law figures. There is no law that sets what an Australian Pty Ltd costs to form. The range reflects real market rates for professional services. It varies with how many states your employees work in and how much structure and complexity your chosen advisors recommend.

Why workers' compensation is the hidden multiplier

Workers' compensation insurance in Australia is state-based. If you have employees in New South Wales, Victoria, and Queensland, you need a separate policy in each state. Each policy requires payroll registration with that state's workers' compensation authority. This is not optional. Failing to hold valid workers' compensation insurance is a criminal offence in every Australian state and territory. An EOR carries this obligation on its own entity across every state. You do not.

These figures are typical market ranges for a small Australian Pty Ltd with 1 to 15 employees. They are illustrative. They are not law figures. Actual costs depend on whether you outsource or hire in-house, how many states your employees work in, and the complexity of your payroll and benefits programme.

State payroll tax sits on top of these figures. In New South Wales the threshold is AUD 1.2 million in annual wages, taxed at 5.45%. In Victoria it is AUD 1 million at 4.85%, raised from AUD 900,000 on 1 July 2025. It does not appear in the monthly overhead table above, because it is charged as a percentage of wages rather than a fixed admin cost. The threshold is assessed per employer, or across the group where related Australian businesses are grouped. Your own entity is measured on its own wage bill, so a small team can sit under it. On EOR the legal employer is Teamed Australia Pty Ltd, which is already above every state threshold. That is why payroll tax is one of the few employer costs here that does not fall the same way on both paths.

Above 15 employees, dedicated HR capacity and an in-house finance function typically become necessary. The cost band widens significantly at that point.

Most cost comparisons skip the director-liability dimension because it is hard to put a number on. It is worth naming explicitly before you decide.

Personal director duties under the Corporations Act 2001

Under the Corporations Act 2001, every Australian director must act in good faith in the best interests of the company, exercise care and diligence, prevent insolvent trading, and disclose material personal interests. The insolvent trading duty (section 588G) is unique in Australian law: it creates personal civil and criminal liability for debts incurred when the company was insolvent or would become insolvent. Advisors and accountants cannot absorb this duty for you.

The compliance treadmill

• ASIC annual review: every year, with a fee of AUD 342. Paying late adds a late fee.
• Single Touch Payroll (STP): reported on or before each payday through ATO-registered software.
• Superannuation Guarantee payments: superannuation is now paid with each pay run under Payday Super (from 1 July 2026), not quarterly. Late or missed payment triggers the Superannuation Guarantee Charge.
• Business Activity Statement (BAS): quarterly for most businesses. Late lodgement attracts a Failure to Lodge penalty.
• Workers' compensation renewals: annually per state, each with its own form and payroll declaration.
• State payroll tax returns: monthly in most states once the threshold is crossed.

Each of these is individually small. Stacked across a year, they consume real management attention. An EOR carries all of these obligations on its own entity.

• While your Australian team is small: EOR is cheaper and faster every month. The entity overhead has nothing to amortise against.
• Market validation phase: you are hiring 1 or 2 people to test commercial fit. Entity setup commits capital and management attention before you know whether the Australian market will deliver.
• Project-based hires: 6 to 12 month engagements where the formation cost will not amortise before the project ends.
• Multi-state uncertainty: you are not sure which states your Australian team will work from. Workers' compensation obligations and payroll tax thresholds differ by state. An EOR absorbs the complexity of multi-state employment; your own entity multiplies it.
• No entity-specific incentives needed yet: senior hires are not expecting ownership stakes, or you are still pre-Series A. The Pty Ltd structure becomes more valuable once equity or employee share scheme incentives become a compensation lever.

• Sustained headcount past your crossover point: the entity overhead amortises across enough people that per-head cost falls below the EOR fee. State payroll tax pulls the crossover earlier in New South Wales and Victoria, because your own entity is assessed on its own wages bill.
• Employee Share Scheme (ESS): a qualifying ESS under the Australian tax rules needs the employee to work for the company issuing the options, or for its subsidiary. EOR employment does not qualify. Once senior hires expect equity as part of their package, entity formation becomes necessary regardless of the headcount crossover.
• Tax substance requirements: some international group structures need actual Australian substance (registered entity, employees, bank account) for treaty purposes or transfer-pricing compliance. EOR employment does not create that substance in your own entity.
• Enterprise customer or government contracting: some Australian enterprise customers and many government buyers expect a locally registered ABN-holding entity. Worth checking early in your sales pipeline before the question becomes urgent.

The technical mechanic is contract novation: the employment contract transfers from Teamed Australia Pty Ltd to your new entity on a specified date. All terms carry across. Salary, superannuation fund, annual leave balance, and continuous service date all remain unchanged. The employee sees a different employer name on their payslip. Nothing else changes.

What we do operationally:

• Stand up your Australian entity through GEMO, while EOR continues running in parallel.
• Register the entity with ASIC, obtain the ABN, and set up STP payroll reporting.
• Establish the entity's superannuation fund or default fund and workers' compensation policies in each relevant state.
• Novate every active employment contract on a single effective date.
• Migrate ongoing leave balances and entitlements without any lapse.
• File the final STP submission under the EOR and open the new STP under the entity from the novation date.
• Provide the same People Ops specialist as the post-graduation primary contact.

The multi-state nature of Australian employment means the workers' compensation transfer step can take longer than the incorporation itself. Plan the graduation date around the slowest state insurer, not the fastest.

Real HR and legal experts handle your Australian hires from the first offer letter through every STP submission and annual payment summary. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Every employer cost passes through at cost. Nothing is hidden inside the management fee.

EOR payroll, contractor onboarding, and entity setup all live on one platform. Run the Crossover Calculator to see the month the model flips for your Australian headcount. Start from the Australia hiring overview. Key sources: Fair Work Ombudsman and Australian Taxation Office.