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

Pakistan's EOBI employer contribution is 5% of the federal minimum wage, not of actual salary. At the current federal minimum wage of PKR 37,000 per month, that is a fixed PKR 1,850 per employee per month regardless of what they actually earn. For mid-market tech hires earning PKR 300,000 to 600,000 per month, the EOBI cost is far lower as a percentage of salary than in countries where social insurance is a percentage of actual wages.

The table below uses USD figures for cross-currency comparability, as most Pakistan tech employers pay in USD or USD-equivalent PKR. All entity cost figures are illustrative typical ranges.

All entity cost figures are typical ranges. They cover outsourced payroll bureau, FBR withholding tax remittance, SECP annual filings, bookkeeping, and HR admin for a small private limited company. They are illustrative. Actual costs vary with the complexity of your setup, whether you operate in one province or across multiple, and the benefits programme you run.

The Pakistan-specific twist: EOBI at 5% of minimum wage is a low fixed amount per employee. It does not compress the crossover the way a salary-percentage social insurance would. Provincial schemes (PESSI in Punjab, SESSI in Sindh) add a layer the EOBI figure does not capture; those rates vary by province and are not in the verified cache. Factor them in as additional overhead when modelling the entity side for Punjab or Sindh-based hires. 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 Pakistan headcount. This is the fixed variable cost. It grows linearly as you hire.

2. Estimate the entity fixed overhead

   Typically USD 1,500 to 3,000 per month for a small Pakistani private limited company. This covers payroll bureau, FBR compliance, EOBI, provincial social security admin, and first-point HR. This cost does not grow much until headcount exceeds 15.

3. Find the crossover headcount

   The crossover is where EOR monthly cost equals entity monthly overhead. For most Pakistan mid-market USD salary bands, this is typically around 8 to 12 employees. Use the Crossover Calculator for your own numbers.

4. Factor in non-financial triggers

   The maths gives you a headcount threshold. FDI registration, ESOP plans, permanent establishment risk, and market-validation reversibility are separate questions that may override the cost crossover in either direction.

5. Plan the graduation date

   Allow 8 to 12 weeks for entity formation before the first payroll on your own entity. FBR registration and bank account opening in Pakistan both add time. Start the GEMO process while EOR continues running.

These are typical ranges. There is no law that sets what a Pakistani private limited company costs to form. The range reflects real market rates for professional services. It varies with how many provinces you operate in, your share structure complexity, and whether you use a local company secretarial firm.

Why FBR registration is the hidden bottleneck

The Federal Board of Revenue NTN registration process and the linked employer withholding setup can take 4 to 8 weeks for a newly incorporated company with foreign shareholders. Banks in Pakistan frequently require the FBR NTN before opening a corporate account. Plan both steps in parallel, not in sequence. In practice, many Pakistan entity launches take 10 to 14 weeks from SECP filing to first payroll.

These figures are typical market ranges for a small Pakistani private limited company with 1 to 15 employees. They are illustrative. They are not law figures. Actual costs depend on whether you outsource or hire in-house, and whether you operate in one province or across Punjab, Sindh, and KPK simultaneously.

Above 15 employees, dedicated Pakistan HR and in-house finance typically become necessary. The cost band widens at that point. Provincial fragmentation also adds complexity: a company with employees in Lahore, Karachi, and Peshawar must register with PESSI (Punjab), SESSI (Sindh), and KPK ESSFWI separately, each with its own reporting cycle.

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 Companies Act, 2017

Under the Companies Act, 2017, every director of a Pakistani company must act honestly, in good faith, and in the best interests of the company. A director who signs accounts containing materially misleading statements can face personal criminal liability. The SECP has used enforcement powers against directors of non-compliant companies with increasing frequency since 2020.

The compliance treadmill

• SECP Form A (annual return): due within 30 days of the annual general meeting. Late filings attract a PKR 500 per day penalty plus potential director disqualification for repeat failures.
• Statutory accounts: due within 30 days of the annual general meeting. Failure to file is a criminal offence under the Companies Act, 2017.
• FBR monthly WHT return: due by the 15th of each following month. A director can be held personally liable for company tax defaults under the Income Tax Ordinance, 2001.
• EOBI monthly challan: due by the 15th of each following month. Employer and director liability for non-payment is explicit under the Employees Old-Age Benefits Act, 1976.
• PESSI or SESSI provincial filings: due monthly; the obligation and deadline vary by province but non-compliance carries provincial court exposure.
• Standing Orders compliance: companies with 50 or more workers must post standing orders. Non-compliance under the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 is an offence at director level.

Each filing is individually manageable. Stacked across provinces and regulators (SECP, FBR, EOBI, provincial social security, labour courts), they consume real management attention. An EOR carries all of these on its own entity.

• Under 5 Pakistan employees: EOR is cheaper every month. The entity overhead has nothing to amortise against at low headcount.
• 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 Pakistan market will deliver.
• Project-based hires: 6 to 12 month engagements where the formation cost will not amortise before the project ends.
• No multi-province scale yet: if all hires are in one city, the provincial fragmentation cost is low. If you plan to scale across Lahore, Karachi, and Islamabad, the provincial registration complexity grows quickly and may tip the decision earlier.
• Foreign currency payroll: many Pakistan tech hires expect USD-denominated salaries. An EOR can handle USD-equivalent PKR payroll cleanly. A company entity must navigate State Bank of Pakistan (SBP) foreign exchange remittance rules, which add operational complexity before scale makes it worthwhile.
• Acquired team you may divest: post-acquisition holding patterns where adding a Pakistan entity creates wind-up complexity later.

• Sustained headcount above 10 to 12 Pakistan employees at mid-market salaries: the entity overhead amortises and per-head cost falls below the EOR fee at that scale.
• FDI and local investment: to receive foreign direct investment through the Board of Investment (BoI) framework or to participate in Pakistan government tech contracts, you need a registered Pakistani entity. EOR employment does not constitute local corporate substance.
• ESOP or employee equity: stock option plans for Pakistan-based employees require a registered company. An EOR cannot grant SECP-registered options on your behalf.
• Permanent establishment risk: at high headcount, a Pakistan revenue authority may classify your EOR-employed team as creating a permanent establishment for tax purposes. Your own entity is a cleaner structure once team size reaches corporate-presence levels.
• Enterprise customer or government contracting: large Pakistan corporate and government clients sometimes require a locally incorporated vendor. Worth flagging early if relevant to your sales motion.
• Long-term talent retention: senior hires increasingly expect formal employment benefits, gratuity accrual under Pakistani law, and structured career progression. An entity signals permanence in a way an EOR arrangement does not always convey.

The technical mechanic is contract novation: the employment contract transfers from the Teamed partner entity to your new Pakistani private limited company on a specified date. All terms carry across. Salary, leave entitlement, and continuous service date all remain unchanged. Gratuity accrual under the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 transfers with the employee, not with the employer. The employee sees a different employer name on their payslip. Nothing else changes.

What we do operationally:

• Support your Pakistan entity formation through GEMO, typically 8 to 12 weeks, while EOR continues running in parallel.
• Open the entity FBR payroll registration, EOBI employer registration, and provincial social security registrations.
• Novate every active employment contract on a single effective date.
• Migrate ongoing benefits without any lapse.
• File final EOR-period EOBI and FBR submissions and open new filings on the entity from the novation date.
• Provide the same People Ops specialist as the post-graduation primary contact.

Pakistan entity formation takes longer than most markets because FBR registration and bank account opening run on separate government timelines. Plan the graduation 12 to 16 weeks ahead of the intended first payroll on your own entity.

Real HR and legal experts handle your Pakistan hires from the first offer letter through every FBR monthly remittance and EOBI challan. 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 EOBI employer line at 5% of minimum wage, and the leave accrual for 14 days. Nothing is hidden inside the management fee.

EOR payroll, contractor onboarding, and entity setup all live on one platform. When the maths tips to entity, we help you graduate. Until it isn't the right call, EOR keeps running. Run the Crossover Calculator to see the month the model flips. Start from the Pakistan hiring overview. Key sources: EOBI contribution rates and SECP company registration.