Using an Employer of Record for US hires: taxes, fees and providers
EREditorial team · Updated 14 Oct 20269 min read20 providers compared8 sources
US$4,948 employer cost a month, US$50,000 salary: example with the median published fee (17 providers)Not all-in: what it leaves out is under the cost table.
US$99 lowest published starting fee in US dollars; several are global prices
US$699 highest published starting fee in US dollars
20 EOR providers we rank for the US
An Employer of Record puts your US hire on its own payroll and pays the employer share of federal employment taxes. As an example with the median published fee, a US$50,000 hire comes to about US$4,900 a month before state levies.
Short answer
The EOR's entity runs payroll and pays the employer share of Social Security and Medicare on each paycheck.
Published starting fees run from US$99 to US$699 a month; several are global prices rather than US quotes.
As an example with the median published fee, a US$50,000 hire costs about US$4,900 a month, before state taxes and workers' compensation.
Our verdict is allowed, with limits: federal tax looks at who controls the work, and states license co-employment.
Two limits apply. For federal employment tax, a business that hands payroll duties to a third party generally stays responsible for the taxes, and only an IRS-certified PEO (CPEO) is generally treated as the employer for the wages it pays. States can also license co-employment: Texas requires a licence from any PEO with even one covered employee there.
What one hire costs
Monthly cost of an employee on US$50,000 a year, employed through an EOR: an example with the median published EOR fee.
Assumes: federal taxes only; state unemployment insurance and state rules vary.
Total to employer, a monthUS$4,948
Gross salaryUS$4,16784%
Employer contributionsUS$3227%
EOR feeUS$4599%
Percentages are shares of the total, not of salary.
What one hire costs
Item
Rate
USD / month
Gross salary
—
4,167
Social Security (employer, up to the wage base)[4][1]
FUTA (after the maximum state credit, first $7,000 of wages)[5][1]
0.6%
4
EOR fee: median published fee (17 providers)
—
459
Example total with the median published fee (17 providers)
4,948
Federal FUTA is 6.0% on the first $7,000 per employee; the 0.6% line assumes the maximum 5.4% credit, which needs state unemployment tax paid in full and on time in a state that is not a credit reduction state. State unemployment insurance, state payroll levies and workers' compensation are not modelled and vary by state. The additional 0.9% Medicare tax above $200,000 is withheld from the employee only.
How an EOR works in the United States
The EOR hires the person on its own US payroll and your managers direct the daily work. On every paycheck the EOR’s entity pays the employer share of Social Security and Medicare and withholds the same rates from the employee, 6.2% and 1.45% on each side.[4] The cost table shows what those lines and the fee add up to for one hire.
Who does what when an EOR employs for you in United States
Your company signs a service agreement with the EOR provider and pays it the salary, the employer contributions and a fee.
The EOR provider is the legal employer in United States: it signs the employment contract and runs payroll, social contributions and benefits.
Your company and the EOR split duties by contract. For federal employment tax the IRS looks at who has the right to direct and control the work, not at what the contract says.
Your companyNo entity in United States
Service agreementYou pay salary, contributions and a fee
EOR providerLegal employer in United States
Employment contractPayroll, social contributions, benefits
EmployeeWorks in United States
Duties split by contract
Your company and the EOR split duties by contract. For federal employment tax the IRS looks at who has the right to direct and control the work, not at what the contract says.
Federal tax law does not go by what the contract calls someone. The IRS asks who has the right to direct and control what the worker does and how the job is done.[2]
States add the second limit. Texas, for instance, requires a licence from any professional employer organization (PEO) with even one covered employee there.[3] Federal law also leaves leave and notice open: the FLSA requires no paid vacation, sick leave or holidays and no notice before a termination, so state law and the contract fill that gap.[7]
EOR or your own US company
An EOR lets you employ someone in the US before any US company of yours exists. Once you form one, your company becomes the employer for federal and state payroll taxes, and the per-employee fee stops.
The work that moves to you is mostly about taxes and state accounts. Your company pays the employer share of Social Security and Medicare itself, files the federal unemployment return (Form 940) and, to claim the credit that brings FUTA down, pays into the state unemployment fund.[5] The payroll page covers that work in order.
The two cost shapes differ. Through an EOR you pay a monthly fee per person for as long as the arrangement lasts. With your own company that fee goes away, and the running costs of the company and its payroll take its place. The comparison of one hire puts both side by side.
Startups, growing companies and enterprises, the three segments Pebl writes a page for
Not for
Buyers who need a Contractor of Record: we list Pebl for contractor management, not COR
Top pro
Own SOC 2 Type 2 report and ISO/IEC 27001:2022 certificate, both on Pebl's security page
Top con
No live support channel named: Pebl lists its Alfie AI assistant, in-house experts and a Help Center; its pages say 24/7 support and do not say who answers
Lists EOR from $400 a month and notes that country prices may differ.
7.4Our score 7.4 of 10Limited dataOur EOR score
EOR price from
US$459per employee a month, billed annually
EOR countries160 claimed, 106 documented
Onboarding2–3 days
ServicesEOR · COR · Contractors · Payroll
Best for
Companies from startups to enterprises, going by Multiplier's segment pages
Not for
Buyers who need the deposit amount before signing: Multiplier calculates it per contract
Top pro
Own SOC 2 (Type I and II), SOC 3 and ISO 27001:2022 on its security page; the AWS certifications listed there are kept apart as the host's
Top con
The "from" prices assume an annual contract. Monthly EOR costs $499 on Core and $559 on Growth, about 11% of countries are priced differently, and compliance-mandated add-ons come on top of EOR and COR
Takes a refundable deposit equal to one month's salary for each employee.
7.4Our score 7.4 of 10Our EOR score
EOR price from
US$399per employee a month
EOR countries180 claimed, 157 documented
Onboarding2–5 days
Deposit1 month
Minimum termNone
ServicesEOR · Contractors · Payroll
Best for
Companies from startups to enterprises: Playroll has pages for each, and its case studies include startups under 100 staff and mid-market firms of 100 to 1,000
Not for
Contractors who want to be paid other than through Payoneer, the only payout route Playroll uses
Top pro
Its own country pages document EOR hiring in 151 countries + 6 territories, against a claim of 180+
Top con
A refundable deposit of one month's salary per EOR employee; the unused part comes back within two months of the last working day, or once claims are settled if that is later
Enterprise teams and small and growing businesses (SMEs), in RemotePass's own words
Not for
Buyers who must review EOR contract terms up front: no EOR agreement is public
Top pro
EOR from $349 per employee a month with tax included; 13 of 20 other EOR prices in dollars start higher
Top con
No EOR agreement is public: the Terms say EOR runs under a separate Consultant Agreement "available on the Site", which we did not find. The public legal documents are the Terms, the Privacy Policy and the Acceptable Use Policy
Its US page gives a price from $599 per employee a month.
6.6Our score 6.6 of 10Our EOR score
EOR price in United States from
US$599per employee a month
Entity in United States
Own entity
EOR countries180 claimed, 151 documented
Minimum termNone
ServicesEOR · Contractors
Best for
A first hire in one new country or a team spread over many, at a startup, mid-market firm or enterprise (G-P has a page for each)
Not for
Buyers who rank EOR providers mostly by the monthly fee
Top pro
G-P claims EOR in 180+ countries; its Globalpedia country guides document 148 countries + 3 territories one by one
Top con
EOR from $599 per employee a month; 15 of 20 other EOR prices in US dollars that we compare start lower; volume discounts are offered but not quantified
Startups, scaling companies and enterprises, the three groups Native Teams writes for
Not for
Buyers who want to read the EOR or COR agreement before talking to sales: the terms of service are the only contract text online
Top pro
EOR from $99 per employee a month, below all 20 other per-employee EOR prices in USD we compare
Top con
The terms of service are the only contract text online. The EOR and COR agreements are not published, and the terms say a separate signed contract takes precedence
Crypto and web3 teams paying contractors in stablecoins or crypto, a segment Rise names (startups, web3 startups, DAOs, global agencies)
Not for
Companies that need an EOR in countries beyond the US and the UK today
Top pro
Prices are published per head: $49 a contractor a month (discounts for startups and non-profits), $299 for Agent of Record, $399 an employee for EOR
Top con
EOR is documented in 2 countries (US, UK) against a claim of 90+. The parent, Rise Works, Inc., is on the GLEIF register; no own entity is documented in either country
Publishes no EOR list price; the fee comes as a quote.
5.9Our score 5.9 of 10Limited dataOur EOR score
EOR price
Custom quote
Entity in United States
Own entity
EOR countries80 claimed, 59 documented
ServicesEOR · Contractors · Payroll
Best for
Small businesses, including teams under 10 employees, startups and enterprises: the segments Rippling has pages for
Not for
Buyers who want to compare an EOR price before a sales call
Top pro
Contractor onboarding in 185+ countries and payments in 50+ local currencies, per its contractor page; 160 countries + 2 territories are documented here
Top con
No price for EOR, contractor management or global payroll: the pricing page asks for a custom quote
The $599 a month is a platform fee; benefits premiums and FX conversion are billed on top.
5.8Our score 5.8 of 10Our EOR score
EOR price in United States from
US$599per employee a month
Entity in United States
Own entity
EOR countries160 claimed, 146 documented
ServicesEOR · AOR
Best for
Enterprise-level companies, the audience Atlas's enterprise page names
Not for
Buyers who need a Contractor of Record: under Atlas's AOR the contract stays between the client and each contractor
Top pro
EOR in 141 countries + 5 territories documented here, against a claim of 160+ with wholly owned entities
Top con
At $599 per employee monthly, the EOR price is above 15 of the 20 other USD EOR prices we compare and equal to 4; local employer services, FX and benefits premiums are billed on top
Is an Employer of Record legal in the United States?
Yes, with limits. For federal employment tax the IRS looks at who has the right to control the work, not at the contract, and states can require a licence for co-employment.
Do I need a US company to use an EOR?
No. The person is hired by the provider's own or partner US entity, and your company signs a service agreement with the provider.
Who is liable for US payroll taxes when an EOR runs payroll?
The EOR pays them, but handing payroll duties to a third party generally leaves the employer responsible for the taxes. Under the IRS test the employer can be the company that directs the work; an IRS-certified PEO is the main exception.
How much does an EOR cost in the US?
Fees published in US dollars start between US$99 and US$699 a month per employee. As an example with the median published fee and federal employer taxes, a US$50,000 hire comes to about US$4,900 a month; the median includes low starting plans.
