Incorporation vs Employer of Record (EoR) in Vietnam: Which Path is Right for Your Business?

Key Differences Between Incorporation and EoR

Cost Implications:

• Incorporation Costs: Establishing a legal entity in Australia involves considerable costs, including registration fees, legal services, ongoing payroll, accounting, and compliance costs.
• EoR Fees: EoR providers typically charge based on the number of employees managed, which can be more cost-efficient for businesses with smaller teams or short-term operations.

Legal Liability and Compliance Requirements:

• Incorporation: When you incorporate in Australia, your business assumes full responsibility for adhering to Australian employment laws, including worker rights, tax obligations, and employee benefits.
• EoR: The EoR manages all legal and compliance matters, such as payroll taxes, social security contributions, and workplace safety regulations, reducing your business’s legal liabilities.

Scalability and Flexibility:

• Incorporation: Incorporating is a better option for long-term expansion and companies that want full control over operations. However, it’s less flexible if you’re testing the market or have short-term goals.
• EoR: An EoR offers greater flexibility, allowing you to scale your workforce up or down without the burden of setting up or dissolving a local entity.

Choosing the Right Option for Your Business

Small and Medium-Sized Enterprises (SMEs) vs. Large Corporations:

• SMEs: Small and medium-sized enterprises often benefit from the flexibility, reduced risk, and lower costs that an EoR provides. For businesses looking to quickly enter the Australian market without heavy investment, the EoR model is ideal.
• Large Corporations: Larger companies with long-term strategies and resources to manage local operations may prefer incorporation, as it offers more control and better alignment with long-term goals.

Long-Term vs. Short-Term Expansion Plans:

• Short-Term Market Entry: If your goal is to test the Australian market or hire a few employees for a limited time, partnering with an EoR is a smart, low-commitment option. You can scale up or down as needed without significant investment.
• Long-Term Expansion: If your business plans to establish a significant, permanent presence in Australia, incorporation might be the better choice. It provides full control over business operations and the ability to build a strong local presence.

How AYP Can Help

AYP provides tailored EoR services in Australia, allowing businesses to expand into the Australian market without the hassle of setting up a local entity. With AYP, you can manage your workforce confidently, knowing that payroll, tax, and compliance are handled according to Australian employment laws. This allows you to focus on growing your business while ensuring full compliance with local regulations.