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

The table below uses USD 599 as the Teamed fee. Any NGN equivalent is illustrative. The actual NGN 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, state filings, PAYE administration across the relevant state revenue authorities, and HR admin for a small Nigerian limited liability company. They are illustrative, not law figures. Actual costs vary by state, by how many states your employees are based in, and by the complexity of your benefits programme.

The crossover point is sensitive to the NGN to USD exchange rate. At stronger NGN rates, the entity overhead reaches the EOR cost sooner. At weaker NGN rates, the crossover shifts toward higher headcount. Employer pension contribution at 10% of monthly emoluments applies on both sides of the comparison. It does not change the crossover, but it does affect the total employment cost on both sides. Run the Crossover Calculator with your own headcount and salary band.

1. Calculate the EOR cost

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

2. Estimate the entity fixed overhead

   Typically NGN 1.5 million to 3 million per month for a small Nigerian LLC. This covers payroll bureau across the relevant states, bookkeeping, filings, pension administration, and first-point HR. Budget toward the higher end if your hires span more than two states.

3. Find the crossover headcount

   The crossover is where EOR monthly cost equals entity monthly overhead. For most Nigeria professional salary bands, this is around 6 to 9 employees. Use the Crossover Calculator for your own numbers.

4. Factor in non-financial triggers

   The maths gives you a headcount threshold. Government contract eligibility, tax substance requirements, and equity compensation plans are separate questions that may override the cost crossover in either direction.

5. Plan the graduation date

   Allow 6 to 10 weeks for entity formation in Nigeria before the first payroll on your own entity. The CAC step is fast. Multi-state PAYE registration and bank account opening add the most time. Start the GEMO process while EOR continues running.

These are typical ranges. They are not law figures. There is no law setting what a Nigerian LLC costs to form. The range reflects real market rates for professional services and government fees. It varies with the number of states your employees are based in and how much professional support you need.

Why state tax registration is the hidden bottleneck

Nigeria operates a multi-state PAYE system. Employers must register with the State Internal Revenue Service (SIRS) in each state where an employee is resident. If your first Nigerian hires are spread across Lagos, Abuja, and Port Harcourt, you have three separate registrations to file. Each SIRS has its own timeline. Lagos SIRS is generally faster. Abuja and Rivers State can take 3 to 6 weeks. Budget for this before you commit a payroll start date.

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

Above 15 employees, dedicated in-country HR capacity and an in-house finance function typically become necessary. The cost band widens at that point. Companies with employees in more than two states should budget toward the higher end from day one.

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 CAMA 2020

The Companies and Allied Matters Act 2020 updated director duties significantly. Directors must act in good faith in the best interests of the company, avoid conflicts of interest, and not misapply company assets. A director who approves accounts they have not reviewed is personally on the hook for material misstatements. These duties cannot be delegated to a local agent or professional firm.

The compliance treadmill in Nigeria

• Annual returns: due within 42 days of the Annual General Meeting. Late filing attracts a penalty. Persistent non-filing can lead to CAC striking the company off the register and restoring it is costly.
• PAYE remittance: due to each state revenue authority by the 10th of the month following the payroll month. Missing multiple states on different deadlines creates concurrent exposure.
• Pension remittance: within 7 working days of each salary payment under the Pension Reform Act 2014. PenCom actively monitors this. Late remittance attracts penalties and can attract personal director liability.
• NSITF contributions: the Nigeria Social Insurance Trust Fund requires monthly contributions. Non-compliance is a criminal offence under the Employees Compensation Act 2010.
• National Industrial Court (NICN): Nigerian employment disputes go to the NICN. The court is more employee-sympathetic than many foreign directors expect. Even where there is no statutory severance formula, the NICN exercises broad discretion to award damages.

Each compliance obligation is individually manageable. Stacked across multiple states and multiple authorities, they consume real management attention and real NGN. An EOR carries all of these on its own entity.

• Under 6 Nigerian employees on average salaries: 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 in Lagos or Abuja to test commercial fit. Entity setup commits capital and management attention before you know whether the Nigeria market will deliver.
• Project-based hires: 6 to 12 month engagements where the formation cost will not amortise before the project ends.
• Multi-state spread without certainty: your hires are in 3 or more states but you are not sure whether all locations will be permanent. Adding state PAYE registrations is cheap; removing them is not straightforward.
• NGN volatility period: the NGN to USD rate has been volatile. If your salary bands are NGN-denominated and the rate swings significantly, the crossover maths shifts too. EOR gives you a single USD fee that insulates you from that variability.
• Acquired team you may divest: post-acquisition holding patterns where the full Nigerian entity structure creates wind-up complexity later.

• Sustained headcount above 9 Nigerian employees at typical tech or professional services salaries: the entity overhead amortises across enough people that per-head cost falls below the EOR fee.
• Equity compensation for local hires: Nigerian employees in senior roles increasingly expect company equity or share options. Issuing equity or options from a foreign parent through an EOR is difficult to structure cleanly. Your own Nigerian subsidiary creates a clear employment relationship under Nigerian law.
• Tax treaty substance: some cross-border structures require actual Nigerian presence (employees, address, banking) in your own entity. EOR employment does not count as your substance for treaty purposes.
• Nigerian government contracts: several government and parastatal contracts require the supplier to be incorporated in Nigeria with a local account and local FIRS tax ID. An EOR cannot fulfil this requirement on your behalf.
• Pension threshold: once you have 15 or more employees, you are required to set up a group pension scheme and enrol with PenCom. The EOR carries this for you. But at that scale, owning the pension relationship and the employer brand is often strategically important for retention.

The technical mechanic is contract novation: the employment contract transfers from the Teamed partner entity to your own Nigerian LLC on a specified date. All terms carry across. Salary, pension arrangement, leave entitlement, 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 Nigerian entity through GEMO, typically 6 to 10 weeks, while EOR continues running in parallel.
• Register the entity with the CAC, FIRS, all relevant state revenue authorities, PenCom, and NSITF.
• Open the entity PAYE schemes across the required states and transfer the pension fund administrator (PFA) arrangements.
• Novate every active employment contract on a single effective date.
• Migrate ongoing benefits without any lapse.
• Provide the same People Ops specialist as the post-graduation primary contact.

Allow 6 to 10 weeks for entity formation in Nigeria. The CAC step is fast. The multi-state PAYE registration and bank account opening add the most time. Start the GEMO process before you reach the crossover, not after.

Real HR and legal experts handle your Nigeria hires from the first offer letter through every state PAYE remittance and annual employer return. 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, itemised on every invoice. You see the pension line at 10%, the leave accrual for 6 days, and the NSITF levy. 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. Start from the Nigeria hiring overview. Key sources: Corporate Affairs Commission and National Pension Commission (PenCom).