🌎 PEO vs. EOR: Why International Companies Choose a PEO When Expanding to the US
When international companies plan to enter the US market, one of the first challenges they face is hiring and managing employees while staying compliant with complex employment laws.
Two popular solutions Professional Employer Organizations (PEOs) and Employers of Record (EORs) allow you to outsource HR, payroll, benefits, insurance and compliance. But they work differently, and the best choice depends on your business goals.
If you’re serious about establishing a long-term US presence and building a strong employer brand, a PEO is often the smarter option. Here’s why and how to do it right.
🏢 PEO vs. EOR: What’s the Difference?
🚀 Why Choose a PEO?
1️⃣ You’re Committed to the US Market
If you’re ready to establish a US entity and build a long-term presence, a PEO is ideal. Employees are hired under your company, allowing you to build your culture and employer brand, while the PEO manages payroll, benefits, insurance and compliance.
2️⃣ You Need to Sponsor Visas
Only the legal employer can sponsor work visas like H-1B, E-2 or L-1. Since an EOR is the legal employer of record, they can’t sponsor visas on your behalf, but with a PEO and your own entity, you retain that ability. A PEO is the only solution if you want to relocate employees on a visa.
3️⃣ Protecting IP, Confidentiality & Enforcing Restrictions
Employees hired directly by your entity are bound by contracts you issue, making it easier to enforce:
- Non-compete and non-solicitation clauses
- Confidentiality & proprietary information agreements
- Intellectual property assignments.
These protections can be weaker or more complex when employees are formally employed by an EOR, as you’re not their direct employer of record.
4️⃣ Offering Attractive Incentives
With a PEO, employees are legally employed by your company, so you can:
- Offer a range of stock options or equity under your company’s plan. With an EOR you are limited to Non-Qualified Stock Options (NQSOs) which are not tax efficient.
- Align long-term incentive programs directly with company performance.
- Offer competitive benefits (healthcare, retirement plans, etc.) through the PEO’s group plans.
These kinds of incentive structures are difficult and sometimes impossible to implement properly through an EOR.
5️⃣ Cost & Control
Over time, a PEO is usually more cost-effective than an EOR. You avoid paying a premium for the EOR taking on full legal employer risk, and you maintain control over employment policies, branding, and strategy.
🔄 When an EOR Makes Sense
An EOR is better suited when:
- You want to test the US market with minimal commitment.
- You need to hire before your entity is set up.
- You want to move very fast, without waiting for registration & compliance processes.
- You want to fully outsource the legal risk and compliance burden.
It's possible with In2America to hire via an EOR solution and then transition to one of our PEO models. This is commonly executed when hiring someone in a new state. It could also be that you have built up enough experience, capacity, headcount or physcial presence that you feel comfortable to take on more employer responsibilities yourself.
📝 Timeline: Setting Up & Hiring
Here’s a realistic timeline comparing the two approaches:
💡 Final Thoughts
If you’re serious about scaling in the US, building a team under your own brand, protecting your intellectual property, and offering competitive incentive plans, a PEO is often the better long-term choice once your entity is established.
You get the best of both worlds:
✅ Control and ownership of your employees.
✅ Shared compliance and HR expertise from the PEO.
✅ Competitive benefits through the PEO’s plans.
✅ Stronger legal footing for IP protection and restrictive covenants.
If you’re just testing the waters or waiting for your entity to be ready, an EOR can help you get started fast — and you can transition to a PEO later.
A common step that puts people off the PEO option in the short term is that most PEO providers won't onboard companies with less than 5 employees. Those that do offer compromised benefit schemes. In2America is the only PEO provider to focus on startups and and enable onboarding with less than 5 employees. We provide a full solution from 1 person +.
📋 When to Choose a PEO
✅ You plan to establish a US entity.
✅ You want to sponsor employee visas.
✅ You want to enforce strong contracts and protect your IP.
✅ You plan to offer stock options and incentives.
✅ You’re focused on long-term growth and control.
👣 Next Steps
If you’re exploring US expansion and wondering which route is right for you, contact In2America. We can quickly tailor a plan to your specific needs and introduce you to all the suppliers you need to execute your strategy.