TL;DR: Below roughly 4-5 employees in one country, an employer of record (EOR) wins and it isn't close. Past that, the math flips faster than the industry admits, especially if you run your entity's payroll on a platform instead of rebuilding a finance function locally. Shor supports both sides of the line: EOR at $299-449/month and own-entity payroll at $50-60/month per employee, some of the lowest published prices in the market. And when you're ready to cross it, we can help you set the entity up through our partners.
Disclosure: we build Shor, and we sell both of the options this page compares. Every third-party figure below comes from a provider's own published page or a linked independent guide, as of August 2026.
The question every EOR hopes you don't ask
An EOR charges you per employee, per month, forever. Your own entity costs a lump up front and a fixed amount per year, mostly regardless of headcount. So there is a headcount where the lines cross, and every EOR's revenue depends on you not calculating it.
Ask published guides where that line sits and you get anywhere from about five or six employees (Foothold America, writing about US expansion) to under 20 (RemotePass) to numbers that stretch well past 25. The spread isn't sloppiness. It comes from wildly different assumptions about what an entity costs to run, which is where we'll start.
What an entity actually costs: three countries
| India (private limited) | UK (Ltd) | Germany (GmbH) | |
|---|---|---|---|
| Setup cost | ₹7,000-25,000 (roughly $85-300) in government and professional fees | £50 filing fee, rising to £100 in February 2026, plus £50-150 for a formation agent | ~€1,000 in notary and court fees, plus €25,000 share capital (€12,500 paid up before registration) |
| Timeline | 7-10 working days to register; longer end to end for a foreign parent (bank account, FDI reporting) | Days | 3-8 weeks including notarization, capital deposit, and commercial register |
| The catch | At least one director resident in India 182+ days a year; statutory audit mandatory at any size | Employer registrations: PAYE with HMRC, then pension auto-enrolment for eligible staff | Notarization required; remote signing is hard in practice, so plan for a proxy with power of attorney |
Sources: India costs and SPICe+ timeline per IndiaFilings and Dugain Advisors; resident director rule per Treelife; UK fees per 1st Formations and ltd-companies.co.uk; Germany per firma.de and its notary fee guide.
Two things jump out. First, incorporation itself is cheap almost everywhere; India's SPICe+ form even bundles the EPFO, ESIC, professional tax, PAN, and TAN registrations into one filing. Second, the countries differ enormously in friction: a UK Ltd costs less than a nice dinner, while a GmbH wants €25,000 of capital and a notary appointment.
The costs everyone forgets
Setup is the small number. The recurring overhead is what the breakeven actually hinges on:
- Accounting and compliance retainers. UK small-company accountancy runs £60-350/month depending on turnover, VAT, and payroll, per TaxPound. In India, first-year compliance basics (auditor appointment, statutory audit, ITR, annual return) run ₹15,000-50,000 per IndiaFilings, and a foreign-owned subsidiary should budget meaningfully more once FEMA filings and transfer pricing enter the picture.
- Statutory audits. Every Indian company gets audited regardless of size. Most startup-scale UK companies qualify for the small-company audit exemption, but group rules can pull a subsidiary back in; confirm with your accountant.
- Transfer pricing. Paying your own subsidiary isn't a wire, it's an intercompany services agreement at an arm's-length markup, with annual documentation. India runs a formal safe harbour regime for IT and ITeS services with prescribed margins, per RSM India. This is a real recurring line, not a one-time legal doc.
- The small stuff that adds up. Registered office, confirmation statements (£34/year in the UK), company secretarial work, and director compliance. Miss India's resident-director requirement and fines run ₹50,000-5,00,000 per Treelife.
- Wind-down. Leaving is slower than arriving. An Indian strike-off now takes 3-6 months through C-PACE, and a full NCLT winding up runs 12-24 months, per Treelife. Germany requires a one-year creditor blocking period (the Sperrjahr), so a GmbH liquidation takes at least 13 months, per firma.de. An EOR relationship ends with notice; an entity ends with a legal process measured in quarters.
The breakeven math
Here is the worked model for India and the UK. Assumptions are stated so you can argue with them: entity payroll runs on a platform at $60/employee/month (Shor's published own-entity rate), and the annual fixed overhead is our estimate anchored to the sourced retainers above ($8,000-12,000/year for a foreign-owned Indian subsidiary including audit, filings, and transfer pricing documentation; $3,000-5,000/year for a small UK Ltd). EOR figures use Shor's published prices and the $599-699 stickers documented in our EOR pricing comparison. Statutory employer costs are excluded because you pay them on either path.
| Annual cost | India | UK |
|---|---|---|
| Entity: one-time setup | ~$1,000 | ~$300 |
| Entity: fixed overhead/year | ~$10,000 (est.) | ~$4,000 (est.) |
| Entity: payroll per employee/year | $720 ($60/mo) | $720 ($60/mo) |
| EOR per employee/year (Shor) | $3,588 ($299/mo) | $5,388 ($449/mo) |
| EOR per employee/year (typical $599-699 sticker) | $7,188-8,388 | $7,188-8,388 |
| Breakeven vs. Shor EOR | ~4 employees | ~1-2 employees |
| Breakeven vs. $599-699 EOR | ~2 employees | ~1 employee |
Sanity check for India: five employees on EOR at $299 is $17,940/year; the entity path is roughly $1,000 + $10,000 + $3,600 = $14,600. At three employees the EOR is cheaper. The line sits right around four.
The UK number looks absurd until you remember what it's really saying: a UK entity is so cheap to run that on fees alone it wins almost immediately. Which means the honest reason to use a UK EOR was never the fee math. It's that the EOR is the legal employer, so employment liability, pension auto-enrolment duties, and HMRC filings are its problem, and your first UK hire can start in days instead of after an entity build-out. Those non-financial factors, speed to hire, severance liability transfer, and admin burden, are what keep EOR winning below the line in every country.
Why the calculators disagree
Both Deel and Rippling publish EOR-vs-entity calculators, and both also sell entity setup and global payroll services, so they earn revenue whichever answer the calculator gives. Deel's own blog estimates a US business setting up a UK entity at $78,000 to $128,000 in total setup costs. Companies House charges £50.
Both numbers are true answers to different questions. The £50 prices a certificate. The $78,000+ prices a full operational build-out: legal advice, an in-house HR and payroll capability, benefits setup, and ongoing administration, capitalized into "setup." If you accept that framing, the breakeven lands at 15-25 employees and switching early looks reckless. If entity overhead is actually audit, filings, a retainer, and platform payroll, the breakeven lands at 2-4. The assumption about who runs payroll is doing almost all of the work in every calculator you'll find, including the model above.
The middle path: bring your entity, keep the platform
The option most calculators skip is running your own entity's payroll on a platform, sometimes called BYOE (bring your own entity) or managed payroll. You own the entity, employment contracts are yours, and the platform runs payroll, statutory calculations, filings, and payslips in the same dashboard you used for EOR. Shor does this at $50-60/employee/month depending on country.
This is exactly what moves the breakeven earlier. The scary part of entity ownership was never the £50 filing fee, it was rebuilding payroll operations in a country where you don't know the rules. Delete that line and the entity path is setup plus a compliance retainer plus $60 a head. It also makes the switch itself boring: same dashboard, same payment rails, new legal employer.
You don't have to source the setup alone either. Shor works with local partners to help you stand the entity up, and because we run the payroll flows on both sides of the switch, the same team helps you through the whole transition: start on EOR, incorporate when the math says to, move your people onto your own entity's payroll without changing platforms. For India specifically, our India guide covers what changes when your entity becomes the employer.
When to stay on EOR
Honest concessions, because the math above cuts both ways:
- Below 3-4 employees in a country, EOR nearly always wins once you price your own admin time, and it's not worth revisiting until headcount is real.
- Testing a market? EOR exits with notice. Entities exit through a 3-24 month legal process. If there's a real chance you leave, that asymmetry is worth more than the fee difference. Our side of it adds nothing: month-to-month, no initial term, no early termination fee, so the exit cost is the statutory one for the employee, which varies by country.
- No local leadership? The model assumes someone competent signs for the entity. India's resident-director requirement makes this literal. If you'd be renting a director, that's another recurring cost and risk.
- Some countries never pay off at startup scale. A GmbH's €25,000 capital, notarization, and 13-month liquidation mean Germany's entity math needs conviction and headcount that most startups don't have. Premium-market EOR at $449/month is often the right answer indefinitely.
- Entity math changes if you already have local leadership, an existing entity, or a finance hire in-country. Then the fixed overhead is partly sunk and the breakeven moves even earlier.
All third-party pricing and cost figures referenced are from each provider's published pages or the cited guides as of August 2026 and may change; confirm current figures with each provider and confirm legal and tax specifics with your counsel and accountant. All trademarks belong to their respective owners, and no provider mentioned here is affiliated with or endorses Shor.
FAQ
At what headcount should I switch from EOR to my own entity? With platform-run entity payroll, the fee breakeven is roughly 4 employees in India and 1-2 in the UK against Shor's EOR prices, and earlier against $599-699 EORs. Add a buffer for admin burden and commitment: most teams should start the entity conversation around 4-5 employees in one country with plans to grow, and not before.
Why do published breakeven estimates range from 5 to 25+ employees? Because of what each model assumes an entity costs to run. Estimates that capitalize a full in-house HR and payroll build-out (Deel's UK setup estimate is $78,000-128,000) push breakeven past 15-25 employees. Models where payroll runs on a platform and overhead is audit, filings, and a retainer land at 2-4 employees.
What is BYOE or own-entity payroll? You own the local entity and employ people directly; a platform runs the payroll, statutory calculations, filings, and payslips. Shor prices this at $50-60/month per employee, versus $299-449 for EOR, which is the gap that makes the entity path pay off early. If you don't have the entity yet, we can help you set one up through our local partners and stay with you through the switch.
What does it cost to shut an entity down if I leave the country? More time than money, usually. An Indian strike-off takes about 3-6 months through C-PACE and a full winding up 12-24 months; a German GmbH liquidation takes at least 13 months because of the mandatory one-year creditor blocking period. Budget professional fees for the process and factor the timeline into any decision to incorporate somewhere you might exit.