Incorporation vs Employer of Record (EoR) in Cambodia: What’s the Right Fit for Your Business?

Key Differences Between Incorporation and EoR

Cost Comparisons:

• Incorporation Costs: Incorporating a business in Cambodia requires significant investment in legal setup, hiring local employees, and managing compliance on an ongoing basis. This includes registration fees, legal and accounting costs, and ongoing operational expenses.
• EoR Costs: With an EoR, your business avoids the initial costs of incorporation, paying only for the employees you hire through the EoR. The EoR provider charges a fee based on the number of employees, making it a more flexible and scalable option for businesses looking to control costs.

Legal and Compliance Requirements:

• Incorporation: Businesses that incorporate in Cambodia are responsible for adhering to all local laws and regulations, including tax filings, labor law compliance, and social security contributions. Non-compliance can lead to penalties or legal disputes.
• EoR: The EoR manages all legal and compliance requirements on your behalf, ensuring that your business remains compliant with Cambodian labor laws. This is especially advantageous for foreign businesses unfamiliar with the local regulatory landscape.

Flexibility:

• Incorporation: Incorporating a business is ideal for long-term expansion and companies that seek full control over their operations. However, it is less flexible if your company is testing the market or has short-term goals.
• EoR: The EoR model offers greater flexibility, allowing you to scale your workforce up or down quickly, without the need to establish or dissolve a local entity. This is ideal for businesses that need to remain agile.

Choosing the Right Option for Your Business

Business Size and Goals:

• Small and Medium-Sized Enterprises (SMEs): SMEs often find the EoR model more appealing due to its lower costs, reduced risk, and simplified compliance. An EoR allows smaller businesses to focus on growth while the EoR handles the complexities of local employment.
• Large Corporations: Larger companies with long-term market plans may benefit from incorporating in Cambodia, as it offers full control over operations and a more permanent presence in the market. Corporations with the resources to manage compliance and HR can leverage incorporation to align their brand with local markets.

Market Entry Strategy:

• Short-Term Market Testing: If your business is exploring Cambodia as a new market or planning a short-term project, an EoR is the ideal choice. It allows you to hire local staff quickly and test the market without the long-term commitment of incorporation.
• Long-Term Investment: For businesses planning long-term growth and a permanent presence in Cambodia, incorporation offers more benefits. Incorporating provides full control over operations, deeper engagement with local markets, and the ability to build a strong, lasting brand presence.

How AYP Can Help

AYP provides seamless EoR services in Cambodia, offering businesses a hassle-free solution for market entry. With our EoR services, you can hire and manage local talent while we handle all employment-related compliance, payroll, and HR responsibilities. Whether you’re looking to test the market or grow your team in Cambodia, AYP ensures that your operations are fully compliant with local laws, allowing you to focus on what matters most—scaling your business.