Incorporation vs Employer of Record (EoR) in Thailand: Making the Right Decision for Your Business

Key Differences Between Incorporation and EoR

Cost: Incorporation vs. EoR

Incorporation involves significant setup costs, including government fees, legal expenses, and capital deposits. There are also ongoing operational expenses, such as tax compliance, office rent, and employee salaries. While incorporation can be costly, it may be necessary for companies looking to establish a long-term presence in Thailand.

On the other hand, an EoR typically operates on a service fee model, where the costs are tied to the number of employees managed. This makes it a more cost-effective option for businesses looking to hire a small workforce or expand on a trial basis. With an EoR, businesses avoid the hefty costs of incorporation while still gaining access to the local labor market.

Compliance: Incorporation vs. EoR

Compliance is a major consideration for businesses expanding into Thailand. With incorporation, companies are responsible for ensuring they adhere to Thai labor laws, tax regulations, and corporate governance requirements. This includes managing payroll taxes, social security contributions, and employee benefits, as well as meeting annual filing requirements with local authorities.

In contrast, an EoR handles all compliance responsibilities on your behalf, ensuring that your business operates in full compliance with local laws. The EoR manages everything from onboarding to termination, reducing the risk of non-compliance and penalties.

Scalability: Incorporation vs. EoR

For businesses looking to scale quickly, an EoR offers greater flexibility. Since there’s no need to set up a legal entity, companies can hire employees and expand their workforce without committing to the long-term costs associated with incorporation. This makes it an attractive option for businesses that are testing the market or expanding gradually.

However, for companies with long-term expansion plans, incorporation might be the better choice. Once a business reaches a certain size, the ongoing service fees associated with an EoR could outweigh the costs of incorporating a local entity. Additionally, businesses that want full control over operations and branding may find incorporation more suitable as they scale.

Choosing the Right Option for Your Business

SMEs vs. Large Corporations

For small and medium-sized enterprises (SMEs), the flexibility and lower costs of an EoR make it an ideal option. SMEs can quickly hire local talent, expand their presence, and test the Thai market without the financial burden of incorporation. Additionally, an EoR allows SMEs to focus on growth while the EoR handles all compliance and HR matters.

For larger corporations, incorporation might be the better option, especially if they have long-term plans to establish a significant presence in Thailand. Larger businesses may require full control over hiring practices, compensation packages, and HR operations, which an EoR cannot provide. Incorporation also allows larger corporations to build local partnerships, bid for contracts, and expand infrastructure in Thailand.

Business Goals: Short-Term vs. Long-Term

Your business goals will also influence the decision between incorporation and EoR. If your business is looking to test the market or enter Thailand on a short-term basis, an EoR provides the flexibility and low-risk entry needed to achieve those goals. An EoR allows you to quickly hire and manage employees while remaining compliant with Thai laws.

If your goal is to invest in Thailand and establish a long-term operation, incorporating a local entity may be the more strategic option. Incorporation gives you full control over operations, allows for greater scalability, and positions your business for sustainable growth in the Thai market.

How AYP Can Help

At AYP, we understand the complexities of expanding into new markets like Thailand. Our Employer of Record (EoR) services are designed to help businesses navigate the challenges of market entry by handling all aspects of employment, payroll, and compliance. With AYP, you can hire employees in Thailand without the need for a local entity, allowing you to focus on growing your business.

Whether you’re looking to expand on a short-term or long-term basis, AYP offers tailored solutions to fit your business needs. Let us help you make the right decision between incorporation and EoR, so you can achieve your business goals in Thailand with confidence.