EOR vs Entity Setup: How Recruitment Firms Can Expand to the U.S. Faster

For ambitious recruitment agencies, the U.S. remains the ultimate growth frontier – a vast market with high demand, diverse industries, and strong margins. But while opportunity is abundant, entry can be complex. Each state has its own employment laws, tax obligations, and compliance requirements, which can slow down even the most experienced operators. 

So how do recruitment firms expand compliantly, and without unnecessary risk? Many may face the dilemma of choosing between using an Employer of Record (EOR) or establishing a U.S. legal entity of their own. However, the most successful firms often use both. An EOR helps you move quickly, compliantly, and with minimal upfront cost, while an entity provides long-term independence and control once your U.S. operation is established. Together, they form a strategic combination: launch fast, learn the market, then scale sustainably.
At Lead & Gain, we help agencies navigate this journey – choosing the right structure for their stage of growth, market validation, and operational investment. 
What is an Employer of Record? 

An Employer of Record (EOR) is a partner that allows you to hire in the U.S. without setting up a local company. The EOR becomes the legal employer of your team on paper, handling payroll, benefits, tax compliance, and HR administration – while you maintain full control over day-to-day work and performance. 

For recruitment firms, this structure is particularly effective. It means you can: 

  • Place candidates for U.S. clients within weeks 
  • Operate compliantly across multiple states 
  • Avoid the upfront legal and administrative cost of incorporation while you test a market 

In other words, an EOR gives you a fully compliant hiring framework, so you can focus on winning clients, building teams, and growing your footprint. 

What Does Setting Up a U.S. Entity Involve? 

Creating a U.S. entity – typically a Limited Liability Company (LLC) or C-Corporation – provides full independence and brand control. It allows you to contract directly with clients, manage invoicing in your own name, and employ staff under your company’s banner. 

However, it also means taking on every aspect of compliance, including: 

  • Incorporation and registration in one or more states 
  • Payroll and tax filings at federal and state level 
  • Workers’ compensation, insurance, and benefits administration 
  • Navigating employment law, which varies state by state 

For established firms with long-term revenue and a defined U.S. client base, this structure can make perfect sense. But for those still validating the market or building relationships, it can represent a significant investment of both time and resources. 

Why This Choice Matters for Recruitment Firms 

Recruitment thrives on agility. An EOR designed for staffing gives you that agility. It’s not just a compliance solution – it’s a growth enabler. By using an EOR that understands the recruitment model, your firm can: 

  • Onboard every worker type fast 
  • Operate seamlessly across multiple states 
  • Reduce risk around worker classification and payroll errors 
  • Scale up or down without being tied to a permanent structure 

At Lead & Gain, we’ve seen first-hand how recruitment businesses use the EOR model to test markets, build credibility with U.S. clients, and validate long-term growth potential – all without the friction of setting up a local entity too early. 

When to Transition from EOR to Entity Setup 

Over time, as your agency gains traction – consistent client revenue, strong U.S. placements, or a growing team – setting up your own entity becomes a natural next step. 

At that point, you’ll already have: 

  • A proven business case in the U.S. 
  • Established relationships and revenue streams 
  • A clear understanding of which states and sectors perform best 

The groundwork you’ve laid through your EOR partnership makes the transition smoother and more strategic. Many of our clients use the EOR model as a bridge – launching through us, then establishing their own entity once the commercial and operational foundations are secure. 

“An EOR isn’t a shortcut – it’s a strategic bridge into the U.S. market. For recruitment firms, it’s often the smartest first move before building a permanent presence.” 

Can you use both?  

The answer is yes! The smartest businesses don’t see an EOR or setting up an entity as either/or – they use both.  

For recruitment businesses looking to grow in the U.S., the question isn’t whether to enter – it’s how.
An EOR provides speed, compliance, and flexibility, helping you capture opportunities early and build traction with less risk. An entity setup, meanwhile, makes sense once you’ve validated your model and are ready for deeper, long-term investment. 

With the complexity of the U.S. market state-by-state, even after you set up an entity in your chosen state, you would still benefit from working with an EOR on placements made outside your state of incorporation.  

At Lead & Gain, we specialise in helping recruitment firms make this journey with confidence – from testing the market to establishing a lasting presence. 

Speak with our team to explore how our EOR model can support your U.S. expansion strategy.